Resolving Disputes: the cost of litigation

By Molly Frankham, Birkett Long Solicitors

Published in Suffolk Director business magazine 2019

Paying for business disputes doesn’t need to be complicated. There are now many payment options available.

Protecting the Director

When entering into a legal dispute, there are a number of cost-effective options available to businesses.

Hourly rate:

This is the most common and it can be the cheapest arrangement. No success fee is paid; however, the fee is not based on the outcome of the case and you have to pay, win or lose.

Fixed fees:

You agree costs for a case, or more usually each stage of a case. The fee will apply irrespective of the amount of work carried out, giving you certainty and help with budgeting.

Third party funding:

This is where an independent third party provides the finance. If you are unsuccessful, you do not have to repay the monies, however, if you are successful then the third party will receive a percentage of what you recover.

Conditional fee agreements or ‘no win no fee’:

You are not charged if you lose your case. However, if you win then you pay your solicitor their normal hourly rate and a success fee. The success fee cannot be recovered from your opponent and you must pay this yourself. It may be as much as 100 percent of your solicitor’s normal hourly rate charges.

Damages-based agreement:

You agree that a percentage of what you are awarded is paid to your solicitors. If you are unsuccessful then there is no charge. If you are successful you may have to pay up to 50 percent of your award to your solicitor.

Before the event insurance:

You may be able to make a claim on an existing insurance policy. The insurers would pay the legal costs. Policies are usually quite restrictive, and your insurers will try to make you use their panel solicitors, rather than your own.

Pursuing smaller disputes:

Businesses are reluctant to pursue smaller disputes because they are worried about costs. Although some disputes hinge on the principle (rather than the value), if the costs outweigh the amount in dispute, you might think twice before instructing a solicitor. 

Some forward-thinking law firms are offering to fix their fees from the outset for smaller claims of between £10,000 and £25,000 (‘small’ in the eyes of the court at least!). You can enter into the dispute process knowing what it’s likely to cost you, what the result could be, and how long it might take. A good firm will also warn you about any additional costs that might crop up (like court fees for example). An even better firm will try to avoid you getting as far as issuing court proceedings altogether.

Resolving disputes can take considerable time and effort that you could better use to operate or grow your business. A solicitor should help you resolve a dispute as cost-effectively and amicably, as possible because you often need to continue to work alongside those involved in a dispute.

If you have a business dispute worth between £10,000 and £25,000 you can count on Birkett Long to fix the fee from the outset. Contact Molly Frankham on E: T: 03301 075143 or visit: Twitter @birkettlong

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