Taking legal action is a huge decision, not just emotionally but from a financial perspective also. This is relevant to both individuals and businesses. Whether you’re trying to enforce a contract, recover a debt, or defend a claim, before you step foot in a court room, it’s crucial that you carefully consider the financial aspects involved in pursuing or defending a litigation. This blog provides an overview of the key factors to consider.
When considering the cost of raising an action, it is important to remember that the cost of legal proceedings are not solely about winning or losing; there are financial risks for all parties involved. Some of the key factors are:
- Court fees and outlays
- Your Legal fees
- Expert reports or witnesses
- Your opponent’s expenses
Court Fees and Outlays in Scotland:
To firstly consider court fees, the cost of raising an action varies depending on the court you are raising the claim in and the value of the claim. For example, raising an action in the Sheriff Court is slightly more affordable than in the Court of Session, but both have administration fees which you will require pay upon first lodging your case and throughout.
Various fees which may be payable to the court throughout an action include:
- Lodging an Initial Writ
- Lodging Defences
- Lodging a Motion
- Obtaining a copy of process (court papers).
Outlays may also require to be paid throughout your case. This involves payment of fees to third parties who assist or carry out work in respect of your case in some manner. This can include payments such as:
- Sheriff Officer fees for service of documents
- Court Reporter/Shorthand writer fees
- Translator fees (if applicable)
Scottish Legal Fees:
Possibly one of the largest financial components to consider if you are planning on raising or defending a court action are your own legal fees. If you’re instructing a solicitor, fees will be agreed with your solicitor and there are various ways fees can be charged dependent on things like the type of action raised, the complexity of your case and the value of your claim. Some cases, such as a simple procedure action can potentially be handled on a fixed fee basis, meaning that a set price is agreed and paid in advance. More commonly, if you are involved in a litigation, due to the complex and unpredictable nature of the work, legal fees will be charged on the basis of an hourly rate, which breaks down the work into individual units, and you are charged on a continuous basis for the work completed on your file. For example, at Complete Clarity, we call this Time & Line billing and issue fees to our clients on a twice monthly basis. If you want more information about how this works in practice, please head to our website.
Legal fees can also be heavily impacted if the use of an advocate is employed. Engaging an advocate is often necessary, particularly in complex or high-value cases. If you are pursuing your case in the Court of Session, the use of an advocate may be a requirement. Instructing counsel for representation in higher courts or for specialist advice can add to overall costs in addition to the fees paid to your solicitor. However, the use of an advocate can often provide an added layer of expertise and knowledge to your case, and is therefore often deemed a worthwhile expenditure.
Expert Reports & Witnesses:
Another cost element can be added to your case if expert evidence is needed. For example, this could include a report from an independent building surveyor or a medical professional which comments on the particular element of dispute in your case. This can at times add significant costs, and the fee is dependent upon the type of work being undertaken and the level of experience of the expert you are instructing. Having an experienced, independent expert witness provide evidence in support of your case can be of huge benefit to your claim.
It is important to consider however the location of any witnesses, both expert and non-expert. The expectation of the court will generally be that your witnesses are available to provide testimony in court. This may require you to pay travel or accommodation costs for your witnesses.
Judicial Expenses:
The final essential component to consider is the potential that you may have to pay your Opponent’s Costs, more commonly referred to as expenses. The general rule of thumb is that expenses follow success, meaning that if you are successful in your claim, the other party could be ordered to contribute towards your legal fees. The reverse principle however means that if you lose your case, you may have to contribute towards your opponent’s legal expenses. This can often amount to a significant sum of money. An award of expenses is not however guaranteed.
If awarded expenses, the sum awarded is calculated in accordance with the Act of Sederunt (Taxation of Judicial Expenses Rules) 2019. The sum awarded will generally not therefore equate to the total sum you have paid to your solicitor. An award of expenses is not however guaranteed. The court has discretion in such matters and there may be occasions where no award of expenses is made for a variety of reasons.
Further, if awarded expenses (or if successful in being awarded a principal sum), you will require to enforce this against the other party. Recovery of sums awarded is therefore heavily affected on the other party’s ability to pay the sums due.
Funding an action:
There are different ways to fund a court action. Most commonly, you will be self-funding, meaning that you are directly paying your legal fees upfront. In some cases, depending on your financial situation and the nature of your claim, legal aid could be available to you. Alternatively, a no win-no fee arrangement could be agreed depending on your case, or sometimes you may be able to get help with legal costs from some business or home insurance policies.
Conclusion:
Litigation is often complex and multifaceted. Success can never be guaranteed in any case. It is therefore important that you weigh up the financial considerations of an action as a whole. This raises the question, is there another way to resolve matters? Given the costs involved, court action can at times be seen as a last resort, and things like issuing formal correspondence, negotiation or mediation can be an effective way of resolving matters before it reached court, which may in the long run be more cost effective.
Every case is different, and the financial impact of going to court can be significant. That is why getting expert legal advice early in your case is essential to be able to carefully weigh the risks versus benefits to determine the best strategy for your case. If you’re considering legal action, or need help weighing up the costs and benefits, contact our team today for clear, practical advice tailored to you.
