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Knocker & Foskett

Litigation and Dispute Resolution: Fees and Services for Businesses: debt recovery guidance

For our individual and business clients, we offer a full range of dispute resolution procedures and where appropriate we can bring and defend Court claims, including debt recovery matters and take any necessary enforcement action. We are pleased to provide outline information in relation to the services we provide and give a broad indication of the fees which we are likely to charge our business clients for the work we will carry out in relation to pursuing their debt recovery claims in the following guidance:
•    Litigation services  
•    Solicitors in our Litigation and Dispute Resolution team
•    Typical timescales 
•    Guide costs
•    Court claims: key stages 

Litigation services  
Our costs are based upon the factors set out in our Terms of Business. We do not provide fixed fee litigation services and our firm’s fees are based on the actual amount of time the work takes. 

Frequently it is extremely difficult to estimate how much time is likely to be involved in dealing with a particular claim because at the outset we will not know how things may develop.  The timescale and the costs involved in pursuing and defending claims is very much dependent on the attitude of the other party.  Even pursuing apparently straightforward contractual debt claims can prompt complicated counterclaims and set-offs. As each case is different, the particular steps required and the timetable to be followed will depend on the facts and circumstances and the nature of the parties’ dispute. There are also factors that cannot be predicted in advance; such as action taken by the other side, evidence that emerges during the case and directions or orders given by the Court, etc.  Sometimes, for example, it may become necessary to amend the formal pleaded basis for a case or make or defend certain applications, including in respect of security for costs.  For the same reasons, it is often very difficult to provide clients with an estimate of the length of time that their matter is likely to take and anticipate what disbursements (if any) are likely to be incurred.  

The time and cost that it takes to reach the conclusion of your matter depends largely on the stage at which your case is finally resolved. Where a business claim in relation to an unpaid invoice is not disputed and Court enforcement action is not needed, we would ordinarily expect to be able to resolve matters promptly and certainly within a matter of days or a few weeks from taking your initial instructions.  Even if a debt recovery case is initially contested and it becomes necessary to issue a Court claim, the matter could still be resolved quickly on the basis that the other side pays promptly on receipt of Judgment in default or wishes to avoid an application for summary judgment. Alternatively, if the other party continues to dispute your case, then your claim will need to be determined by the Court and proceed to a contested trial. If this is the case, we will discuss with you the further and much more extensive work required and provide you with revised advice about costs as appropriate. If enforcement action is needed, the matter will take longer to resolve.

Solicitors in our Litigation and Dispute Resolution team
We have 2 experienced solicitors in our firm’s Litigation and Dispute Resolution team (and depending on the type of the case other solicitors in different departments may be involved too). The 2 main solicitors specialising in litigation work that could be involved in your matter are Chris Hugo (Partner and Head of Department, hourly rate £315) and Brian Robson (an Associate Solicitor, who was appointed a Deputy District Judge in 2010, hourly rate £315). VAT must be added to these costs when the work is billed.  Between them, our litigation team has in excess of 65 years' collective legal experience in delivering high quality work in commercial and civil litigation practice. Our team conduct cases through the Courts system and has particular expertise in cases of breach of contract, agency and professional negligence claims, debt recovery, probate and property disputes and where appropriate we are experienced in negotiating out-of-court settlements on favourable terms.

We are happy to consider potential business debt claims with clients, explore the issues in dispute and advise on the likely timescale and our estimate of the costs which are likely to be involved in their particular matter.

How long will my matter take? 
The information set out in the table below provides a very rough guide typical timescales.

Straightforward undisputed debt claim Around 4 to 8 weeks
Medium complexity and contested debt claim Around 9 to 14 months
High complexity and contested debt claim 12 to 18 months, plus

As we say, this is a rough estimate only and as each case is different our litigation team will be pleased to discuss matters with you and advise in relation to a more accurate timescale in your particular matter.  

Guide costs 
As a very broad guide we might anticipate that the range of average costs in terms of pursuing business debt claims up to £100,000 might be along the following lines (exclusive of VAT, expenses and disbursements): 

•    Straightforward undisputed debt claims between £1,000 to £3,500 
•    Medium complexity and contested debt claim between £8,500 to £25,000
•    High complexity and contested debt claim between £30,500 to £100,000

Anyone wishing to proceed with a business debt claim should note that in each case, VAT must be added to these costs and the VAT element of our fee cannot be reclaimed from your debtor. Secondly, the costs do not include the court issue fees and the separate disbursement expenses that are payable to third parties, such as any barrister’s fees and expert’s fees and ‘After the Event’ insurance cover. We would usually handle the payment of the court fees and pay the disbursements on your behalf to ensure a smoother process.

As part of our money laundering obligations, we may carry out Anti-Money Laundering checks on clients. These will cost £10 plus VAT per person and £20 plus VAT per company.

We do not usually undertake instructions and carry out work under a conditional fee agreement (CFA) or damages-based agreement (DBA), but if clients want us to act on such as basis in Court proceedings it will be necessary for us to assess the viability of their case before we agree to accept it. We are happy to explore different methods of funding potential claims with you, including considering obtaining ‘After the Event’ insurance cover.

Court Fees and other expenses and disbursements
In addition to solicitor’s fees, it is often necessary for a client to pay what solicitors call “expenses and disbursements” – i.e., costs related to your matter that are payable to third parties. These expenses and disbursements are usually court fees and barrister’s fees. In some claims, expert evidence is required, and this would involve further fees payable to that expert for their work for the Court.

The Government sets Court “issue fees” and claimants are required to pay these in order to start a claim in the Court system. The fee payable is calculated on a scale relative to the amount of debt being pursued, which means that the larger the debt, the higher the fee there is to be paid.

Issue fees are, in summary, as follows:

Claims valued at up to £5,000:  Court issue fee up to £205.
Claims valued at between £5,001 to £10,000: Court issue fee up to £455.
Claims valued at £10,001 to £200,000: Court issue fee up to 5% of the debt value.
Claims valued over £200,000: Court issue fee of £10,000. 

Some claims can be issued at Court in an online system, and the fees for doing so are slightly lower than issuing them at Court on paper.

If a Court hearing is required, an additional Court hearing fee is levied in advance by the Court, again on a sliding scale ranging from £25 in the smallest value claims up to £1,090 for higher value claims.

We would ordinarily recommend that a barrister is instructed to be advocate at any hearing. This is often the most cost-effective way of making sure you are represented at a hearing.  In most cases, barristers will charge a ‘brief fee’ which, depending on the seniority of the barrister and the complexity of the case, is approximately equivalent to an hourly rate charge usually put between £150-£275, plus VAT. This covers the barrister’s time for advance preparation for, and attendance at, the first day of any Court hearing.   In multi-day cases, a barrister is also likely to charge a ‘refresher’ fee for subsequent days required in representing a party at a hearing in Court.

Court claims: key stages
To help put matters in context, including the legal costs and timescale, the following key stages are typically involved in a contested business debt claim being taken through to trial in Court:
•    Taking your initial instructions and reviewing the papers. 
•    Dealing with any detailed investigations, including instructing third parties and barristers. 
•    Advising you on the merits and the likely prospects of the potential claim, and the likely level of compensation which might be awarded (this will be revisited throughout the matter and might be subject to change). 
•    Sending pre-action correspondence, e.g. a letter before action or a letter.
•    Reviewing and advising on a claim or response from other party and litigation strategy.
•    Exploring any appropriate pre-claim dispute resolution procedures to see whether a settlement can be reached and negotiating settlement throughout the process.
•    Preparing filing and serving your statement of case and considering the other side’s pleadings. 
•    Preparing costs schedules and budgets as appropriate.
•    Preparing for (and attending) Court case management and any direction / application hearings.
•    Preparing your list of documents and exchanging copy documents with the other party.
•    Taking witness statements, drafting statements and agreeing their content with witnesses. 
•    Reviewing and advising on the other party's witness statements.
•    Instructing experts (if any) and considering the side’s expert evidence where applicable.
•    Preparing the bundle of documents and core bundle for trial. 
•    Agreeing a list of issues, and preparing a chronology and/or relevant case authorities. 
•    Preparation for and attendance at trial, including instructions to barristers. 
•    Any further necessary steps in connection with the Court proceedings and enforcing Judgement, including serving a statutory demand, commencing bankruptcy or winding-up insolvency proceedings.

The stages set out above are an indication of the broad steps in terms of Court proceedings in a contested business debt claim and if some of these stages are not required, then the time involved will be less and the legal fees would be reduced accordingly.  Conversely, when an unforeseen complexity arises or where the way in which a client asks us to proceed means additional work, this is likely to increase the overall costs in a client matter.

TEAM MEMBERS - Litigation and Dispute Resolution Department                                              CHRIS HUGO - Partner View Profile                       BRIAN ROBSON - Senior Solicitor View profile    

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