Legal Matters - Heigh Ho, Heigh Ho, It’s Off to Court We Go... But What are the Costs of Suing?
“Agree, for the law is costly” (Marcus Tullius Cicero)
As Roman lawyer and statesman Cicero pointed out two millennia ago, litigation comes at a cost. So first prize will always be to settle out of court. If you can’t settle and decide to sue, arm yourself with “deep pockets and nerves of steel”, particularly if you end up in the higher courts.
The upside is that if you win your case, you are likely to benefit from a costs order in your favour, our law generally following the rule that “costs follow the result”. There are however a few things to bear in mind with that –
- No matter how “watertight” you may think your case is, litigation always carries an element of chance, and the hard fact is that you could lose for any number of unforeseeable reasons – evidence going badly, grey areas of law being interpreted against you, misdirections by whichever court you are in – those are just some of the risk factors you face. And if you do lose, you will be paying two sets of legal costs!
- There are also exceptions to the “costs follow the result rule” – for example in labour matters, employees will normally not be ordered to pay any costs at all. Our courts have also been known to exercise their discretion to depart from the general rule in order to spare unsuccessful litigants from an adverse cost order where principles of fairness or special circumstances are involved, such as an attempt to protect the interests of minors or other vulnerable groups.
- Remember also the “Pyrrhic Victory” factor - it’s all very well getting a costs order in your favour, but enforcing payment is another thing entirely, particularly if you are suing a debtor pleading poverty or an adversary skilled at dodging your attempts at recovery.
- You are in any event unlikely to recover more than a portion of your costs. That sounds unfair but it’s how it works. To understand why, read on…
Three categories of legal costs
You will in practice come across three main types of costs -
1. “Party and Party costs”: These are the costs you are most likely to be awarded if you win. They will be “taxed” by a court official at whatever tariff applies to the court you find yourself in, and the tariffs vary widely – ask your lawyer for details.
These tariffs are applied strictly and will only include your lawyer’s necessary costs for the actual litigation, not for pre-litigation consultations and the like. Nor will they include additional work carried out by your lawyer which the taxing official regards as not strictly necessary to the conduct of the case.
2. “Attorney and Client costs”: These costs are also subject to the same tariffs but their scope is broader, and the taxing official may allow for example additional attendances and correspondence, travel costs and the like. An example commonly given is correspondence to you from your lawyer keeping you advised of progress in the case – not strictly necessary for the litigation itself, but likely to be allowed as a recoverable “attorney and client” charge.
You will only be awarded attorney and client costs where either they are specified in a contract with the other party (it’s a particularly common clause in property-related and commercial agreements), or where a court decides for whatever reason to punish your opponent with a “punitive” costs order.
3. “Attorney and Own Client costs”: These are additional costs you must pay your lawyer at whatever rates you have agreed to. The rates are normally incorporated in a mandate which you agree to when you first seek legal help, and they are not capped by the tariffs mentioned above. You cannot in practice recover them from the other party.
Alternative sources of funding
If you can’t afford to sue, or if you don’t want to risk your own money to fund a court case, ask about alternative sources of funding such as -
- Contingency (“No Win, No Fee”) arrangements, which are offered by some attorneys, most commonly in personal injury cases.
- Legal Aid is available to “poor” people who pass a Means Test and whose case meets all the other criteria set by Legal Aid South Africa.
- Litigation Funding is normally only available for larger matters, and the funders apply strict criteria.
Although these alternatives should protect you from costs if you win the case, check what risk you run if you lose and an adverse costs order is made against you.
Litigate with your eyes open!
Go into litigation with your eyes open. Make sure you understand your prospects of success, what resources of time (and stress!) you will have to commit to the cause, what costs you might recover from your opponent and what you won’t, what you might have to pay the other side if you lose and so on.
Provided by Anthony Whatmore & Company
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The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.