Recovery of legal costs is a process otherwise known legally as the detailed assessment process, whereby a party in litigation seeks to reclaim its legal expenses from the opposing party. The general rule is that the losing party will usually be ordered to pay the winning party’s costs (pursuant to CPR 44.2(2)(a)). However, the Court has discretion to deviate from this principle depending on the case’s specific circumstances. In this article, we explain how ARC Costs can support you in the recovery of legal costs if your claim is successful.

The overriding objective, as set out in CPR 1, requires procedural fairness. When determining the final costs order, the Court will take into account various factors, including the conduct of the parties, whether the winning party succeeded on all issues or only some, and whether any settlement offers were made but unreasonably refused. If the successful party is not deemed entirely successful, the Court may issue an issue based or percentage costs order, limiting the Receiving Party to recovering only a portion of their litigation costs.

Costs are assessed by the Court on either a standard or an indemnity basis. The standard basis, which applies by default in most proceedings, requires costs to be both reasonable and proportionate, with any uncertainties resolved in favour of the Paying Party. This ensures that costs remain fair and not excessive.

In contrast, costs assessed on the indemnity basis must only be reasonable, without the requirement of proportionality, and any doubts are resolved in favour of the Receiving Party. Such assessment orders are generally only made in cases where misconduct issues arise or if the Receiving Party has beaten their own Part 36 Offer on judgment being handed down.

The Process of Detailed Cost Assessment

Once a Court costs order or agreement establishes liability for costs, the next step is to quantify or agree on the amount. This can be done informally, but if an agreement cannot be reached, the parties must proceed with detailed assessment.

There are two main methods for assessing costs: summary assessment and detailed assessment. Summary assessment is a faster process, typically used for shorter hearings, such as interim applications lasting a day or less. In this case, costs are determined immediately at the hearing, with no further steps needed to finalise them.

In contrast, detailed assessment is a more comprehensive procedure reserved for complex or high-value cases where costs are disputed.

CPR 47 applies when a party seeks to recover costs from another party under a costs order, but the amount remains in dispute. This process typically follows the principle that “costs follow the event”. This means the losing party must pay the winning party’s reasonable costs. If parties cannot agree on the sum, a detailed assessment under Civil Procedure Rule Part 47 is required.

The Receiving Party must initiate detailed assessment proceedings within three months of the final costs order. Late Service is possible but may incur interest sanctions under CPR 47.8. The process begins with serving a Notice of Commencement (Form N252) alongside a bill of costs, which provides a detailed breakdown of the legal costs incurred. To ensure accurate quantification and verification of costs, the assistance of an expert Costs Draftsman or Costs Lawyer is required.

The Paying Party has 21 days to respond with Points of Dispute, challenging specific items in the bill. If they fail to do so, the Receiving Party can apply for a Default Costs Certificate, enabling them to recover the full amount without further contest.

If Points of Dispute are raised and the parties remain unable to reach an agreement (noting that negotiations can occur at any stage), the matter may proceed to a detailed assessment hearing before a Costs Judge or Master. The Court will consider arguments from both sides, either through written submissions in a provisional assessment or via oral submissions at an attended hearing. Following this, a Final Costs Certificate is issued, which will specify the amount of costs and formally order that party to pay.

Once the Final Costs Certificate is issued, the Paying Party is generally required to settle the assessed legal costs within 14 days unless the Court directs otherwise.

Detailed assessment applies to cases where legal costs are not subject to fixed costs and need to be determined by the Court. These claims include multi-track cases, High Court claims, Part 8 proceedings, and legal aid cases. For small claims and fast track cases, detailed assessment is generally not the usual procedure due to the fixed recoverable costs regime under CPR 45.

Case Study – Recovery of Legal Costs Regarding a Personal Injury Claim and Settlement Reached within 2 Weeks

At ARC Costs, we recently assisted a client in recovering their costs following a personal injury claim, with recovery of legal costs achieved within 2 weeks of service of the Bill. The Claimant in the personal injury claim, was assigned work by the Defendant on a scaffolding site and attended an induction. He was tasked with dismantling scaffolding with three colleagues, one acting as the foreman. However, the foreman did not brief him and instead assigned him to rope work.

After a break, the Claimant returned to find his harness moved. Despite this, the colleagues handed him materials, and while lowering gear, he grabbed a handrail that spun. A colleague had undone a gate, causing the Claimant to fall 45 feet onto a concrete floor, resulting in severe injuries.

The Claimant had sustained fractures to his pelvis, right superior and inferior pubic rami, right scaphoid, proximal left fibula, and five right-sided ribs, whilst also suffering a lung contusion and injury to both knees requiring surgery.

The Claimant’s solicitors formally served a Letter of Claim on the Defendant. The Defendant later made a Calderbank offer of £200,000. Following Counsel’s advice, the Claimant’s solicitors accepted the offer, settling the claim save for costs.

Following this, the Solicitor for the Claimant instructed the team at ARC Costs to settle the Bill of Costs, which was completed within three working days and drafted at approximately £19,000. The Bill was served informally (as the case had settled pre-issue and so a Notice of Commencement could not be served), with negotiations ensuing within a week.  The final settlement was reached at £16,000, reflecting our upper valuation of the claim, and reflecting an 84% recovery of the amount claimed, and achieved within two weeks of having received initial instructions.  Through effective negotiation, our team secured a highly favourable recovery for our client, in a professional and time efficient manner.

How can ARC Costs Assist with the Recovery of Legal Costs?

ARC Costs is a highly experienced and independent team of specialist Costs Draftsman and Costs Lawyers. As independent experts, we assist both Paying and Receiving Parties in resolving costs disputes effectively. We also regularly assist Litigants in Person by providing expert advice and representation when they have received a costs order in their favour.

For Receiving Parties, we excel in preparing Costs Budget and Bills of Costs, providing legal costs negotiation services, and drafting Points of Reply. Our goal is to maximise your cost recovery to ensure you are not left out of pocket by the litigation process and/or as a legal firm, maximise your profitability of the case, which is particularly important if you run CFA cases and need to offset the cost of failed matters.  We offer clear advice on settlement parameters to our clients from the outset, ensuring you have a realistic expectation of your potential recovery.

Likewise, when acting for Paying Parties, we specialise in drafting Points of Dispute and negotiating to minimise legal cost liabilities.  We can also provide representation at detailed assessment hearings to challenge the costs claimed before a Judge.

If you would like more information on any of our services or wish to speak to a member of our expert costs team about your legal costs, then please do not hesitate to contact us. Please call one of our independent experts at 01204 397302, or email one of our costs experts direct on info@arccosts.co.uk.

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