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Cost disputes including security for costs applications

It may seem unusual for a firm of solicitors to put as one of their topics ‘costs’ but the fact of life is litigation in English is expensive.

• Court fees always seem to be increasing; a few years ago, the highest court fee was circa £2,000, now the top fee is £10,000.  That is not an amount of money to be ignored.

• In the English Court oral submissions still play a crucial role as do cross-examinations.  This means trials can take a long time.  Opening and closing submissions can often be both oral and in writing and if in writing frequently can become extensive.

• Further, when law firms are getting bigger, often through mergers and the percentage of non-fee earning staff is growing, the firm’s earnings have to cover this.

• Traditionally solicitors charge on an hourly basis, particularly in litigation.  For years solicitors’ costs have been assessed on the basis that a solicitor can dictate 10 standard letters an hour and thus solicitors charge in six-minute units.  In the days of email communication that seems to be somewhat unrealistic but it is the current practice.

Whist the English courts have expressed concern at the ever-increasing cost of litigation, their attempts to introduce costs controls have added to the overall expense.  It costs money to prepare costs budgets and if the solicitor handling a case considers the approved budget is likely to be exceeded he must make an immediate application to the Court (at even more cost) or face incurring a loss for his client.

All of this is highly significant because unlike 25 years ago, when costs were dealt with in the last five minutes of a Court Application or at the end of a trial, costs issues can become a major debate.  Now there are barristers specialising in costs, specialist cost courts (where it takes months to get a hearing), a new profession of costs drafts-men and even costs law reports.  Therefore, to ignore the topic of costs can have serious consequences.

Apart from controlling a client’s costs exposure to his solicitor, one significance of all this is that unlike in many other jurisdictions, a party to an English Court case is at risk of not only having to bear his own costs of the litigation but also having to pay the other side’s costs even if he wins. These days, a three or four day Court case can run quickly into hundreds of thousands of pounds.

When the Court reaches a decision after trial or on an application the winning party normally will obtain an order that his costs be paid by the losing party but that is not always the case.  A strategically thinking hands-on lawyer will try to position his client at the earliest opportunity to avoid an adverse finding of costs by, for example, making offers either without prejudice or in accordance with the Court rules known as a Part 36 offer.  The Part 36 Offer was introduced in 1998 to enable both sides to state at an early stage what they are prepared to offer in respect of the claims made by or against them.  It has to be a genuine offer to settle.  If not accepted, it can have severe consequences and sanctions for the party who rejected the offer.

This also has significance in relation to litigation involving foreign claimants without assets in the jurisdiction of the English Court or impecunious claimants.  The Court Rules (modified in some cases by statute regulation) enables a Defendant to ask the Court to order the Claimant to provide security for the Defendant’s costs of the case.  The Defendant is not permitted to use such an application to stifle legitimate claims.

At GSC this features very often in the sort of litigation we do with an international element and is something we readily advise upon.  We are a dedicated small firm and intend to stay that way.  We keep a tight rein on our overheads and this enables us to keep our charging rates very competitive indeed.  We like to think and advise and not simply process and we read the papers in detail.  That gives our clients an enormous advantage in litigation.

‘A small firm which punches well above its weight’ GSC Solicitors LLP undertook leasing transactions for several blue-chip corporate tenants, particularly in the media sector. It acted for a number of hotel owners regarding the acquisition and development of new hotels.

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“We have often used different legal firms for IP and other work in the past, but GSC’s commercial approach and professionalism, coupled with the excellent working relationship we have built up over a number of years makes it our preferred choice.”

“As a Financial Advisor I have been personally using and recommending GSC for over thirty years. I have referred clients of mine to them and only ever been thanked for the recommendation, which should convey the confidence I have in the individuals, and the firm.”

“Great result today. Just wanted to say thank you for your continued hard work in fighting our corner on this case. You have both been amazing. Michael incredible support and good ideas.”

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Have a question?

For every part of your life and business, talk to GSC

GSC Solicitors LLP
31-32 Ely Place, London EC1N 6TD
DX: 462 London/Chancery LN (View on map)

+44(0)20 7822 2222
[email protected]