Costs in Litigation

Costs in Litigation Before the Courts in England (including IPEC, High Court and Part 36) 

The costs you may need to pay in litigation depend on the court, the stage reached, and how the case is conducted. In this context, ‘costs’ means the sums incurred by way of fees and disbursements (and any applicable VAT) by each party.

Important information about costs generally 
It is normally the case that the costs awarded “follow the event”, meaning that the losing party is ordered to contribute a proportion of the winning party’s total costs. However, this is not always the case. 

Our fee estimate(s) relate(s) to your liability for our fees and disbursements; it is not an indication of any costs you may recover from, or pay to, another party. 
The other party may not be ordered to pay a contribution to your costs at all, or fail to pay a costs order (for example because they don’t have the resources to pay). It is even possible that  you may not recover any costs even if you are successful. 

General costs principles

  1. Courts assess costs by considering proportionality, reasonableness, the strength of each party’s case, settlement conduct and the CPR costs rules.
  2. Interest may be added to awarded costs. We will account to you for such interest to the extent that you have paid our fees and disbursements on account, but we are entitled to the rest of that interest.  

Costs regimes differ between the High Court, the Intellectual Property Enterprise Court (IPEC) and the UKIPO.

High Court and Appeal Courts (excluding IPEC) Costs Regime 

Generally, following judgment and any costs award being made, a proportion of this total costs award is paid “on account” within a specified timeframe (typically two weeks). This is an interim payment towards the total costs award.

The remaining balance (that is, the portion not paid on account) is then subject to negotiation between the parties. If agreement cannot be reached, the successful party may commence “detailed assessment” proceedings. In such proceedings, the Court will scrutinise the reasonableness and proportionality of the costs claimed.  

Such assessment will either be on the “standard” or “indemnity” basis, though generally on the standard basis. As a very general rule, where the detailed assessment proceeds on the standard basis, the successful party should expect to recover only 60–70% of the total costs award. Detailed assessment proceedings are time-consuming and expensive, and parties ordinarily settle the remaining costs figure out of court.

Therefore, even if you are entirely successful and have conducted the litigation reasonably, you should expect to recover only 60%-70% of your total costs at best. If you are unsuccessful, you may be ordered to pay this substantial proportion of the other party’s costs, plus interest, in addition to your own costs.  

Judges and Masters in the High Court are also able to award costs on the indemnity basis rather than the standard basis. This means that the Court can award the successful party its costs even if those costs are considered to be disproportionate to the matter in issue. That means that the amount of costs awarded is generally higher than on the standard basis. However, costs awards will never exceed the actual amount of costs incurred, and even on the indemnity basis, a costs award is unlikely to exceed 80–85% of your total costs. Indemnity costs are awarded in exceptional cases, such as where the opposing party has acted unreasonably or in bad faith.

You should also note that some applications to Court can result in orders for payment of the costs of that application within 14 days of the order. Also, the Court has the power to order “summary” payment of costs to be paid during the course of the proceedings. In such cases, there is no negotiation over the amount of costs owed by the unsuccessful party, and no detailed assessment.

Worked examples can be provided on request to help illustrate how costs awards typically operate in practice.

IPEC Costs Regime

The IPEC has a structured cost‑capping system designed to keep litigation affordable. There are exceptions to this (e.g., court fees, costs relating to enforcement of any order, and wasted costs), but as a result of the system, whilst your exposure to the other side’s costs is limited if you are the losing party, if you are the successful party a large part of your legal costs will not be recoverable. 

Overall caps

Approximately £90,000, made up of:

  1. £60,000 limit for liability issues.
  2. £30,000 limit for an inquiry into damages or an account of profits.

Stage-by-stage caps (to liability determination)

  1. Particulars of claim: £9,000
  2. Defence and counterclaim: £8,000
  3. Reply and defence to counterclaim: £7,000
  4. Reply to defence to counterclaim: £3,500
  5. Case management conference: £6,000
  6. Applications: £4,000
  7. Disclosure: £6,000
  8. Witness statements: £8,000
  9. Experts’ reports: £9,000
  10. Trial preparation and attendance: £20,000
  11. Determination on the papers: £5,500

These caps apply to each stage, but the overall cap of £60,000 remains the hard ceiling for the liability phase.

Stage-by-stage caps (for each stage of an inquiry as to damages or account of profits)

  1. Points of claim: £4,000
  2. Points of defence: £4,000
  3. Attendance at a case management conference: £5,000
  4. Making or responding to an application: £3,000
  5. Providing or inspecting disclosure: £3,000
  6. Preparing witness statements: £6,000 
  7. Preparing experts' report: £7,000 
  8. Preparing for and attending trial and judgment: £10,000 
  9. Preparing for determination on the papers: £3,000 

These caps apply to each stage, but the overall cap of £30,000 remains the hard ceiling any inquiry as to damages or account of profits.

Part 36 settlement offers

Settlement offers under Part 36 of the Civil Procedure Rules carry defined costs and interest consequences. We will advise you when to make or accept a Part 36 offer. See CPR Part 36 for the full code, but note in particular: 

  1. Failing to beat an opponent’s compliant Part 36 offer at trial can shift costs and interest significantly, and you may have to pay enhanced interest, indemnity costs or additional sums.
  2. In some circumstances, IPEC cost caps may be uplifted by 25% if a Part 36 offer is not beaten.