Don Peel

Partner

Commercial Dispute Resolution


The cost of litigation

Don Peel

Litigation has always been about getting the right result, and then getting your costs paid by the other side. However, from 1st April new costs legislation will bring sweeping reforms to litigation. Don Peel, partner at Fraser Brown explains how you should think carefully about how you are going to pay before starting a claim.

Solicitors will no longer be able to offer no win, no fee and expect the other side to pay them a success fee.

As an alternative, solicitors will be encouraged to offer clients’ damages based agreements (DBA’s) where the solicitor can take a slice of the damages awarded – in personal injury claims this will be limited to 25% of the damages. It is doubtful whether a solicitor will be prepared to take on a DBA because there is no incentive. The costs the solicitor incurs is often going to be more than the percentage share of the damages that they can charge at the end of the case.

Another consequence is that insurance premiums paid by a client for insurance to cover the opponent’s costs (ATE insurance) will not be recoverable from your opponent. Should a client with ATE win a case then the costs of the premium will be met from the money recovered by the client; effectively reducing the money they receive when they win.

Summary

Clients with strong cases but limited funds to pay will struggle to get anyone to take on their case. It is now more important than ever to get the right solicitor who you feel comfortable with and who can guide you through the difficult process of funding even before you start your claim.

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