Costs risks before bringing a claim

Litigation costs risk includes both the money spent on your own case and any order to contribute to the other side's costs. CPR Part 44 sets the general framework, while particular tracks and regimes modify the position. ^[1]

Establish the likely costs regime

Ask which track and rules are expected to apply, whether fixed recoverable costs are relevant and what expenditure may remain unrecoverable. On the small-claims track, costs recovery is restricted but not eliminated in every circumstance. ^[2]

Explain any contract clause, funding arrangement or insurance that may affect the assessment. A funding offer should be read for exclusions and responsibilities, not just the advertised upfront price.

Review risk when the case changes

Update the assessment after important evidence, offers or orders. Conduct, unsuccessful applications and procedural failures can affect costs decisions. Winning one issue does not necessarily guarantee recovery of every expense incurred across the dispute.

A staged budget shows the likely cash commitment. Offers to settle may change the risk of continuing. Record the advice and the business decision at each significant stage, especially before spending more than the realistically recoverable amount or pursuing a point with limited practical value.

Separate your funding contract from a court costs order Ask what you owe your own adviser under the engagement terms and what a court might order between the parties. Those are different obligations. A reduced upfront fee or conditional arrangement may change your funding without eliminating exposure to the opponent's costs. Obtain an explanation of disbursements, termination provisions and any circumstances in which you must pay despite an unsuccessful claim. Keep the written terms available when reviewing risk, rather than relying on a short marketing description of how the service is funded.

If insurance or another source of cover may respond, check notification, approval and scope before committing expenditure in reliance on it. Identify any excess, limit, excluded step or requirement concerning the merits of the case. A policy covering advice may not cover every application or enforcement stage. Ask who will obtain the necessary confirmation and retain it with the instruction. Where coverage is uncertain, show that uncertainty in the decision record instead of assuming the insurer will reimburse whatever the litigation later requires.

Identify the regime that governs the opponent's recovery Under the general Part 44 framework, the court has discretion about costs, with the usual starting point concerning the unsuccessful party subject to a different order where appropriate. That framework is modified by specific tracks and rules. Ask whether fixed recoverable costs apply and how allocation or a change in the case might affect the assessment. The opponent's own solicitor bill is not automatically the sum you would have to pay, but it may still indicate the scale of the dispute being conducted. [1]

For an allocated small claim, Part 27 restricts recoverable costs while allowing particular categories and possible consequences for unreasonable behaviour. Do not treat the phrase small claim as a guarantee of zero adverse exposure. Equally, do not assume that a represented opponent can recover an unrestricted professional bill merely because they win. Give the adviser the actual allocation and orders so the risk can be explained under the relevant provisions, including any application or conduct issue that requires separate attention. ^[2]

Review the cost of pursuing marginal issues A case may contain a strong central claim and several weaker allegations that add little recoverable value. Ask whether each additional issue justifies the documents, witnesses or expert work it requires. Part 44 allows the court to consider conduct, partial success and the reasonableness of pursuing particular matters. Inflating a claim or maintaining an allegation after its factual basis has failed can affect the costs assessment. Keep the pleaded case and litigation strategy aligned with the evidence as it develops. [1]

Consider procedural applications as separate risk decisions. An application may be necessary to protect the case, but it can also produce its own costs consequences before final judgment. Ask what the application would achieve, whether a narrower agreement is possible and what happens if it fails. Do not pursue an application solely because the opponent has behaved irritatingly. Link the proposed step to a concrete procedural need and compare its likely benefit with the expense and risk of asking the court to decide it.

Reassess after offers and adverse developments When a settlement offer arrives, obtain advice about its effect under the applicable regime before deciding to continue. A change in evidence can alter the risk even where the original claim value is unchanged. Record the advice, assumptions and decision-maker's reasons at significant points. This is especially useful when a business has several people involved in approving litigation: the finance director should understand the present exposure, rather than a reassuring assessment given before an important witness or document became unavailable.

If a costs order is made, read its amount or assessment provisions and payment requirements promptly. Distinguish an immediate sum on account from costs whose final amount remains to be determined. Obtain advice about any available challenge and the relevant procedure, while recognising that disagreement does not itself suspend the order. Update the overall risk position to reflect what is now an actual liability. A continuing case should be managed using the current orders and evidence, not the assumption that eventual success will reverse every earlier expense.