Litigation in cases involving brain injury is generally expensive; compared to the average non-brain injury personal injury case, there will be more issues, of greater complexity, requiring more evidence, with more experts of increasing specialisation and professional standing charging higher fees.
At the end of a successful case, the defendant will ordinarily be ordered to pay the claimant’s costs, but will in all likelihood challenge the costs that have been incurred. The parties might come to some agreement reflecting concession to the paying party’s concerns about the costs, or the costs dispute might have to proceed to a detailed assessment hearing to have the court determine the issues and assess the costs that the defendant has to pay. In all but very rare cases, the costs the defendant pays will be less than the claimant has to pay to their own solicitors (and can never be more), and sometimes much less.
The reason for that reduction is that under the rules of court, the ‘Civil Procedure Rules’ (CPR), the costs payable by the defendant are assessed by the court applying a test that involves making sure the costs were, on a ‘standard basis’ assessment, reasonably and proportionately incurred, and are reasonable and proportionate in amount; the court might sometimes apply a more generous test (the ‘indemnity basis’), where costs are assessed to judge only whether they were reasonably incurred and are reasonable in amount (CPR 44.3).
Costs as between the solicitor and client may be entirely reasonable, but still be reduced when it comes to determining how much the Defendant should pay. Whilst made in the context of a large commercial matter, the comments of Mr Justice Legatt (in Kazakhstan Kagazy Plc & Ors – v – Baglan Abdullayevich Zhunus & Ors (2015) EWHC 404 (Comm)) have particular resonance in relation to personal injury claims involving the complex issues encountered in relation to brain injury, and illustrate the point:
‘In a case such as this where very large amounts of money are at stake, it may be entirely reasonable from the point of view of a party incurring costs to spare no expense that might possibly help to influence the result of the proceedings. It does not follow, however, that such expense should be regarded as reasonably or proportionately incurred or reasonable and proportionate in amount when it comes to determining what costs are recoverable from the other party. What is reasonable and proportionate in that context must be judged objectively. The touchstone is not the amount of costs which it was in a party’s best interests to incur but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances. Expenditure over and above this level should be for a party’s own account and not recoverable from the other party.’
Those comments followed changes to the CPR in April 2013, that changed the meaning of what was proportionate (with the new definition found at CPR 44.3(5)) and allowed the court to disallow or reduce costs that it thought were disproportionate, even if it accepted that it was necessary for them to be incurred and they were reasonable in amount. The new definition of proportionality provides that costs are proportionate if they bear a reasonable relationship to; the sums in issue in the proceedings; the value of any non-monetary relief; the complexity of the case; any additional work that had to be done because of how the opponent dealt with the case; and any wider factors involved in the claim such as reputation or public importance.
The terms are (necessarily) loose and there have been a number of cases providing further guidance as to how the test of proportionality is to be applied to costs (for an important recent example see Suzanne West – v – Stockport NHS Foundation Trust (2019) EWCA Civ 1220)), but it remains that the court has a wide discretion in determining how much of a claimant’s costs the defendant has to pay, and which can be exercised in a way that may seem unfair.
April 2013 also brought other changes to the CPR, notably introduction of ‘costs management’, which is (very broadly) the process by which the court determines in advance how much in costs a litigant will be able to recover from their opponent at the end of the case. The court sets a ‘budget’ for each party, which determines how much it can recover for each ‘phase’ (which is a very broad category of work, all work on witness evidence for example) of the proceedings. That stops the opponent having to pay more than was provided for in the budget (subject to exceptions) but doesn’t prevent the litigant or their solicitors spending more than the budget.
The question in all of this is: ‘what happens to the shortfall between what you have to pay and what your opponent has to pay?’ That will depend on the ‘retainer’ with your solicitor, which is the contract for their supply of legal services to you, setting out what they can charge and in what circumstances, and will usually be agreed at the beginning of a matter. Whilst there are limits on how much a solicitor can charge as a ‘success fee’ under a ‘no win no fee’ agreement (25% of damages excluding future losses for proceedings at first instance, and 100% of those damages in other proceedings, so an appeal for example) which can’t be recovered from your opponent, this does not include and is different to the potential general ‘shortfall’ in costs described above.
Some solicitors will want to be paid for all of the work they do, even if it isn’t recovered from the opponent, and so will want their client to pay the shortfall, while others might be willing to run a claim in return only for the costs that are recoverable from the opponent, and not ask for payment of any shortfall. There will be others in between who might be willing to limit the amount of any shortfall you have to pay. There is no saying which of these is right for any particular person or situation, but if your case involves complex issues relating to brain injury, the cheapest option might not be the best option. The important thing however is to be sure that you understand what happens to that shortfall under the retainer with your solicitor before agreeing to it and instructing them; if it isn’t clear or isn’t what you had understood would happen from your discussions with the solicitor, talk to them about it and make sure the contract reflects what you want.
If you are agreeing to a contract of retainer that allows the solicitor to ask you to pay the shortfall on costs recovered from the opponent, talk to them about how they will manage the costs to make sure the shortfall is as low as possible, whether there are any particular costs that might be difficult to recover in principle or amount, and what you can do to limit any costs you have to pay at the end of the case. Where your solicitor anticipates incurring costs that won’t be recovered from your opponent, consider what benefit they have to your claim. These are all issues your solicitor will be happy to discuss with you and have an important impact on the money you eventually recover if a claim is successful.
With thanks to Partners in Costs (PIC)
Partners in Costs (PIC) are civil litigation costs specialists who specialise in catastrophic injury claims, specifically brain and spinal injuries. They also have teams who specialise in clinical negligence, personal injury, professional negligence and commercial litigation.
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