Costs disputes can become litigation after the litigation. By the time the substantive claim has ended, the parties may already have spent years in conflict. A further dispute about costs can be expensive, slow, emotionally draining and commercially unproductive.
That does not mean every costs dispute should settle. Some points need to be fought. Some cases require a decision. But many costs disputes are better resolved by negotiation, mediation or another form of alternative dispute resolution, particularly where the cost of fighting is becoming disproportionate to the sum at stake.
I act as a costs mediator and advise parties in costs mediations and costs ADR. I am also instructed as counsel in costs disputes which are being mediated. My work includes solicitor and own client costs, commercial costs, litigation funding disputes, retainers, deductions from damages, non-party costs, wasted costs, detailed assessment disputes and costs issues arising from group litigation.
Why mediate a costs dispute?
Costs mediation is not a soft option. It is a structured way of resolving a dispute where continued litigation may produce delay, expense and risk out of proportion to the benefit.
Mediation may be particularly useful where:
- The parties have already incurred substantial costs;
- The remaining dispute is commercially important but capable of compromise;
- The legal position is uncertain;
- The assessment process is likely to be expensive;
- The dispute involves reputational or relationship issues;
- There are multiple stakeholders, such as solicitors, clients, funders and insurers;
- The parties need a practical settlement rather than a binary decision;
- The costs of continuing the fight are becoming self-defeating.
A good mediation does not avoid legal analysis. It uses legal analysis to help the parties understand risk, value the dispute and make a commercial decision.
When I am instructed
I am commonly instructed in costs mediation and ADR involving:
- Solicitor and own client costs disputes;
- Challenges to retainers, CFAs and DBAs;
- Deductions from damages;
- Commercial costs disputes;
- Detailed assessment disputes;
- Costs budgeting disputes;
- Part 36 and settlement costs consequences;
- Consequentials costs issues;
- Payments on account and interest;
- Litigation funding disputes;
- ATE insurance and adverse costs issues;
- Non-party costs disputes;
- Wasted costs disputes;
- Professional liability and costs overlap;
- Group litigation and collective proceedings costs;
- Disputes between solicitors, clients, funders and insurers.
These disputes may arise before assessment proceedings are issued, during assessment, after a preliminary issue has been decided, after judgment, or when the parties want to avoid the next procedural stage.
Acting as mediator
When acting as mediator, my role is to help the parties reach their own settlement.
A costs mediator needs to understand both the legal framework and the commercial pressures. Costs disputes are often technical, but they are also practical. The parties may need to know not only what the court might do, but what the dispute is likely to cost, how long it may take, what risks remain, and whether the fight is still worth having.
My approach is practical, evaluative where appropriate, and focused on settlement. I will test the parties’ positions, explore risk, reality-check assumptions, and help identify a range within which settlement may be possible.
The mediator does not decide the case. But a mediator who understands costs law can help the parties see where the real issues lie.
Acting as counsel in costs mediation
I am also instructed as counsel for parties attending costs mediation.
In that role, I help clients prepare for the mediation, assess the merits, identify the strongest and weakest points, value the claim, develop settlement strategy, prepare position statements, and advise during the mediation itself.
This can be particularly useful where the dispute involves technical costs points, such as:
- Whether a retainer is enforceable;
- Whether a bill can be challenged;
- Whether deductions from damages were authorised;
- Whether a funding structure creates risk;
- Whether an indemnity costs argument is realistic;
- Whether a non-party costs application is worth pursuing;
- Whether detailed assessment is likely to produce a better outcome than settlement.
A mediation position should not be a pleading in disguise. It should persuade, inform and create settlement movement.
Solicitor and own client costs disputes
Solicitor and own client disputes are often well suited to mediation.
They may involve substantial sums, but they may also involve trust, communication, expectation and professional sensitivity. The client may feel surprised or aggrieved by the bill. The solicitor may feel that years of work are being attacked unfairly. Both may face the cost and uncertainty of assessment proceedings.
Mediation can help resolve disputes involving retainers, estimates, bills, success fees, deductions from damages, CFAs, DBAs, informed consent, interim bills and final bills.
These disputes often benefit from a process which allows the parties to discuss commercial resolution without requiring either side to concede that the other is right.
Commercial costs disputes
Commercial costs disputes can justify mediation where the sums are large, the issues are numerous, or the assessment process will be expensive.
A commercial costs dispute may involve budgets, incurred costs, proportionality, hourly rates, counsel’s fees, expert fees, disclosure costs, applications, Part 36, issue-based costs orders, indemnity costs, interest and payments on account.
Mediation can be particularly useful where both parties face risk. The receiving party may be confident of substantial recovery but exposed to reductions. The paying party may have good points but face the cost of fighting them. A negotiated outcome may preserve commercial value and avoid another layer of costs.
Litigation funding and multi-party disputes
Costs ADR can be especially valuable where there are multiple stakeholders.
In funded litigation, settlement may involve the client, solicitors, counsel, funder, ATE insurer and sometimes a defendant or paying party. There may be disputes about the priority of payment, deductions from damages, adverse costs, premiums, funding returns and unpaid professional fees.
Group litigation and collective proceedings can add further complexity. The question may not simply be “what is the bill worth?” It may be “how should the available fund be distributed, and who bears which costs risk?”
I mediate and advise in costs disputes involving funding structures, ATE insurance, group claims, collective proceedings and competing claims to settlement proceeds.
Non-party and wasted costs disputes
Non-party costs and wasted costs applications may also be suitable for mediation.
These disputes are often serious and sensitive. A non-party may face unexpected exposure. A solicitor or counsel may face professional criticism. An applicant may have a real costs order but no obvious route to recovery from the named party.
Mediation can provide a private and controlled setting in which the parties can assess risk, explore compromise and avoid the cost and uncertainty of a contested application.
That will not be appropriate in every case. Some allegations need determination. But many such disputes are capable of commercial resolution if the parties receive clear advice and the process is handled carefully.
Timing of mediation
The timing of mediation matters.
Mediation may be useful:
- Before assessment proceedings are issued;
- After points of dispute and replies have clarified the issues;
- Before a preliminary issue hearing;
- After a preliminary issue decision;
- Before a detailed assessment hearing;
- After judgment but before a consequentials hearing;
- Before a non-party or wasted costs application is heard;
- When settlement monies have been received but distribution is disputed.
The best time is usually when the parties know enough to value the dispute, but before they have spent so much that settlement becomes psychologically or commercially harder.
Preparing for costs mediation
A costs mediation is more likely to succeed if the parties prepare properly.
That usually means identifying:
- The amount claimed;
- The amount realistically in dispute;
- The main points of principle;
- The best and worst points on each side;
- The likely cost of continuing;
- The risks of assessment or application;
- The available settlement range;
- Any non-financial terms needed;
- Who has authority to settle.
The papers should be proportionate. The mediator needs the key documents, not the entire history of the litigation unless the history is the point.
What to send when instructing me as mediator
When inviting me to mediate a costs dispute, it is helpful to send:
- A short summary of the dispute;
- The bill, schedule or costs claim;
- Points of dispute and replies, if served;
- The retainer, CFA, DBA or client care documents, if relevant;
- Any costs estimates or costs updates;
- Any costs orders or judgments;
- Any Part 36 or Calderbank offers;
- Any funding agreement or ATE policy, if relevant;
- The amount claimed and the amount in dispute;
- The procedural stage;
- The proposed mediation date or timetable;
- The names of the parties and representatives.
For availability, it is usually best to contact my clerks at Hailsham Chambers.
What to send when instructing me as counsel
When instructing me as counsel in a costs mediation, it is helpful to send:
- The key costs documents;
- The order or judgment giving rise to the costs issue;
- The bill, points of dispute and replies;
- Any relevant retainer, CFA, DBA, funding agreement or ATE policy;
- The key correspondence;
- Any offers already made;
- The mediation date;
- A note of the client’s objectives;
- A realistic assessment of the settlement range, if one has already been considered.
A clear note identifying what the client wants to achieve is often more useful than a large unexplained bundle.
The aim of costs ADR
The aim of costs ADR is not compromise for its own sake. It is to make a better commercial decision.
Sometimes that means settlement. Sometimes it means narrowing the dispute. Sometimes it means identifying that a point has to be fought. But even then, mediation may reduce the number of issues, the length of the hearing, and the cost of the next stage.
A good costs mediation should leave the parties with a clearer understanding of risk, value and practical options.
Instructing me
I act as mediator in costs disputes and as counsel for parties attending costs mediation or other forms of costs ADR.
For mediator availability, counsel availability, fee arrangements and urgent enquiries, please contact my clerks at Hailsham Chambers.