Courts are tightening the costs that can be recovered by the 'winner' in a money claim, so that now claims for money valued below £100,000 have a fixed level of recoverable costs. Most solicitors should be able to offer a good service level within the fixed costs for claims between £25,000-£100,000. For money only claims below £25,000 it is likely legal costs would exceed the fixed costs.
So what can you do to avoid overspending on litigation lawyers when you're already owed money?
There are ways to save on legal costs (or even reduce disputes in the first place). Your litigator will thank you too, as it will save time and they are more likely to come in on budget. Whilst this guidance is aimed at businesses owed debts, the same rules will largely apply to other would-be litigants so will always make your lawyer smile.
1. Make your terms tight - most money claims will be a dispute about a contract. You can help to make it easier for the Court to agree with your position (or reduce the risk of a dispute altogether) if you make sure your terms are clear. They would ideally include:
- a straightforward explanation of who will do what and when;
- exactly how a cost is calculated;
- an uncomplicated termination or cancellation clause, including a clear explanation of any penalties for terminating / cancelling;
- if you want to charge interest on unpaid costs, set it out, but make sure it is a reasonable amount - a punitive amount would be reduced or disallowed by the Court. [For B2B relationships the Late Payment of Commercial Debts (Interest) terms are usually a good inclusion.]
2. Make sure your contract is evidenced in writing. It doesn't have to be a professionally drafted or lengthy document. It might be an exchange of emails for example, but having clear evidence of exactly what was agreed will help the Court. Having a lawyer check over your terms once you have drafted them is usually a sound investment - I am always happy to give a free view as to the clarity of terms and any improvements that I think could be made.
3. Follow your terms to the letter. It may be obvious, but if you have taken the time to do 1 & 2 above, don't then breach the terms you have set down. That is likely to lead to a dispute when it comes time to pay.
4. KEEP YOUR DOCUMENTS SAFE. I cannot stress this enough. It's all very well spending time drafting contracts and terms, but if you have lost or destroyed them when it comes to a court hearing, not only will it leave it to the Court to interpret what was agreed or has happened BUT it might also stand against you. The Court can make a finding that documentation was intentionally destroyed, which can lead to adverse findings and even a punishment in costs! When I say documents this includes anything electronic or physical. On that note, please don't alter or mark them (including highlighting), or forward emails to your lawyer. Any marking or forwarding changes the original and that could add costs too.
5. Consider having a consistent and clear credit control policy. Treat every customer the same and let them know what to expect in advance (usually in your terms). This gives a good flow to a trigger point for instructing solicitors and deals with some of the necessary pre-action work you would normally pay for.
6. Act promptly in the case of a dispute that you can't resolve alone. Prolonging a dispute in an attempt to persuade an intractable customer to your way of thinking is simply going to delay payment and probably increase legal fees later on with more documents to review and / or preparing lengthier witness statements. An early view from a solicitor (and maybe a solicitor-drafted letter for you to send) could unlock the dispute. We offer a fixed fee legal advice service, including reviewing documents and an interview with follow up written advice, which could be used for this situation.
7. Try to amicably resolve things before instructing your solicitor. The Court will expect you to have tried to resolve the dispute without legal intervention. There are so many routes available for what is deemed 'alternative dispute resolution' (ADR) including mediation, early evaluation by a legal professional, round table meetings and good old negotiation. If the Court considers insufficient attempts have been made at ADR it can pause the proceedings to order to allow the parties to try again and / or penalise parties in costs.
Ideally you will have followed the guidance above before seeking out advice (and you'll likely hit the ground running as you have instantly saved your lawyer a good deal of work and yourself a few hours of legal fees).
If you're already in a dispute you can't resolve, don't despair. There are still costs savings to be had by getting your documents together, in chronological order (or, for extra 'great client' points, in one pdf) with a very short summary of what has happened. That will still raise a smile.
