One of the most common questions people ask before starting or defending legal proceedings is whether they can recover their legal costs.
In England and Wales, the general rule in civil litigation is that the unsuccessful party may be ordered to pay a proportion of the successful party’s legal costs. However, the reality is often more complicated.
The amount that can be recovered, and whether costs will be awarded at all, depends on the type of claim, the conduct of the parties, the court involved, and the decisions made throughout the litigation process.
At Penerley Solicitors, we regularly advise individuals and businesses on civil disputes, litigation risk, and cost recovery.
How Do Legal Costs Work in Civil Claims?
Legal costs in civil proceedings typically include:
- Solicitors’ fees
- Barristers’ fees
- Court fees
- Expert witness fees
- Other litigation expenses
The court has broad discretion when deciding who should pay costs and in what amount.
The general principle is often described as “costs follow the event,” meaning the losing party usually contributes towards the winning party’s costs.
However, this does not necessarily mean the successful party recovers every pound spent.
In many cases, only a proportion of the legal costs are recoverable.
The court may assess whether the costs incurred were proportionate and reasonably incurred in relation to the dispute.
The value of the claim also matters.
For example, claims allocated to the Small Claims Track usually operate differently.
In most small claims matters, each party generally bears their own legal costs regardless of the outcome, except for limited recoverable expenses such as court fees and certain fixed costs.
This is one reason why parties should carefully consider the financial practicality of litigation before commencing proceedings.
For larger or more complex disputes allocated to the Fast Track or Multi-Track, greater costs recovery may be available.
What Can Affect Cost Recovery?
Several factors can influence whether legal costs are recovered and how much is awarded.
One of the most important factors is conduct.
The court expects parties to behave reasonably throughout litigation and comply with the Civil Procedure Rules.
Conduct issues that may affect costs include:
- Refusing reasonable settlement offers
- Failing to engage in pre-action discussions
- Delaying proceedings unnecessarily
- Pursuing weak or exaggerated claims
- Failing to comply with court orders
Settlement offers can also play a major role.
Part 36 offers are formal settlement offers made under the Civil Procedure Rules and can have significant costs consequences.
For example, where a party rejects a reasonable offer and later fails to achieve a better outcome at trial, the court may impose adverse costs consequences.
The court will also consider proportionality.
Even where legal work was genuinely carried out, excessive or disproportionate costs may not be recoverable.
Businesses involved in litigation should also consider the commercial realities.
Winning a case does not always guarantee immediate recovery of costs, particularly where the losing party lacks the financial means to pay.
This is why enforcement risk should be assessed early in any dispute.
How Can You Protect Your Position?
Obtaining early legal advice can significantly improve a party’s position regarding costs.
A solicitor can help assess the merits of the claim, estimate likely costs exposure, and identify strategic opportunities for settlement.
Parties should also maintain clear records of:
- Legal expenses incurred
- Settlement offers made
- Correspondence exchanged
- Attempts to resolve the dispute
- Compliance with court directions
Alternative dispute resolution methods such as mediation can also help reduce legal costs and may be encouraged by the court.
In some cases, refusing mediation without good reason may itself have costs consequences.
Litigation funding and legal expenses insurance should also be considered where appropriate.
Businesses involved in commercial disputes may already hold insurance policies that provide some litigation cover.
At Penerley Solicitors, we advise clients across England and Wales on civil litigation, commercial disputes, debt recovery, property disputes, and settlement negotiations.
We work closely with our clients to provide practical advice regarding litigation strategy, costs exposure, and dispute resolution.
If you are considering bringing a civil claim or defending proceedings, contact Penerley Solicitors today for expert litigation advice.
