Budgeting for a court case is difficult, and knowing how much you’ll have to spend gives you the ability to better prepare for legal action. Unfortunately, it’s difficult to forecast the costs associated with a court case due to a number of factors.
After all, court cases can range from simple family disputes to multi-million dollar lawsuits. Given the different scale and expectations, it’s tough to say exactly how much you’ll need to spend on a court case.
How the type of court affects the cost of a court case
One of the biggest variables related to the cost of going to court is the type of court that your case will take place in. There are many different types of court, such as:
- Small Claims Court
- Patents County Court
- County Court
- Defamation Court
- Mercantile Court
- Technology and Construction Court
- High Court
- Commercial Court
- Supreme Court
- Court of Appeal
If you are involved in a civil court case, you will need to adjust your budget based on the type of court (from those listed above) that your case will be heard in. The above courts only consider cases in civil court criminal cases will take place in a different court with its own unique costs and other variables.
Generally speaking, the higher the jurisdiction of the court, the more it will cost you in legal fees and other expenses. A case that goes to the Supreme Court, for example, will always cost more than a minor civil case that remains in Small Claims Court.
How time and complexity affect the cost of a court case
As well as the type of court, an important factor to consider is the complexity of the case and the amount of hearings that it will require. Hearings in multiple courts can prolong a case and make it significantly more expensive for all parties involved.
On the other hand, a case that is settled before going to trial will be significantly less expensive than a case which goes through a prolonged period of hearings followed by a trial. In simple terms, the shorter the case’s duration, the lower the expenses.
Because of the costs of protracted court cases, a growing number of people are using alternative methods of dispute resolution such as mediation to settle disputes while avoiding the immense costs of going to court for a trial.
Why do complicated, nuanced court cases typically cost more?
Generally speaking, the more complex and difficult a court case is to investigate and present to a court, the more it will cost. Complex cases require experienced counsel, greater legal resources, and far more time for research, hearings, and trial.
Because of this, a simple claim for damages between two individuals for example, a dispute over damaged property between a tenant and a property owner is less expensive than a complicated contract dispute involving hundreds of litigants.
In complex cases, the expenses related to the case often go far beyond what many expect. As well as paying for counsel, the case may also require expert medical or technical witnesses that bring their own expenses into the case itself.
The more variables are added to the case, the more the cost of research and legal assistance will increase. Simply put, the more elements are involved in a case, the more it will cost for everyone involved.
How can the cost of a court case be managed effectively?
While it’s impossible to accurately forecast the cost of any court case at the outset, it is possible to calculate the approximate cost of a court case by carefully looking at its complexity and core elements, and budgeting appropriately.
A good solicitor will not just look at the merits of a court case – they will also look at the projected cost of the case. This includes estimating the number of hours that will be required in order to run the case and achieve the desired legal result.
Thankfully, the days of vague retainers and little information other than an hourly rate are largely gone in the legal world. This means that it’s far easier to project the approximate costs of a court case before deciding if the case is financially viable.
These changes have been backed up by legislation in the form of the Civil Procedure Rules, implemented on April 1, 2013. These rules require both sides of a court case to draw budgets early in a dispute, which must be approved by the judge and court.
For clients, this legislation has numerous advantages. As well as controlling costs by making sure budgets are proportionate to the claim, the new rules add transparency in the form of controlled, standardised costs throughout the case.
How can your solicitor help you fund a court case?
Solicitors now have a professional obligation to discuss funding options with clients when opening or responding to a court case. In order for this to happen, the solicitor must prepare an accurate and meaningful budget prior to meeting with their client.
Over the last few decades, the legal funding environment has changed substantially, with fewer clients depending on legal aid and self-funding, and a growing number of clients using third party funding sources to finance their court cases.
In a third party financing agreement, a commercial funder manages some or all of the legal costs associated with a case. They are typically reimbursed via a share of the damages from the case, if the event that the case is successful.
Because of the high risks associated with funding court cases without any guarantee of success, third party funders are very selective. Over 90 per cent of applications to third party funders are rejected, largely due to a low chance of success.
This high rejection rate means that if your case is accepted, it generally has a good chance of proving successful. Many clients use third party funders as without any funds, they would not be able to bring their cases to court in the first place.
Even clients that can afford their own legal fees will often use a third part funder, as doing so diverts the risk of a failed court case. Losing 20 to 50 per cent of damages to a funder is perceived as a minor loss compared to the possibility of failed court case that leaves a client with significant legal fees.
Other options include legal expenses insurance, which is available as both before-the-event (BTE) and after-the-event (ATE) insurance. BTE insurance is paid on an annual or monthly basis to an insurance company in order to cover potential legal expenses in the future.
ATE insurance, on the other hand, is taken out following the event that led to the court case. After-the-event legal protection insurance is frequently used by clients working with no-win, no-fee solicitors to ensure that legal fees will be paid in the event of a loss.
Because of the incredible amount of variables, it’s very difficult to forecast the cost of a court case. Despite this, it’s possible to estimate the minimum cost of going to court for a certain type of case
For example, a typical High Court case generally costs upwards of $50,000 at an absolute minimum. While this may seem overly costly, third party funding is one way of making the cost of going to court more manageable.
As a client, your best option is to work with an up-to-date, reliable law firm that is well versed in the recent changes to costs legislation. A good law firm will take an ethical, serious approach to budgeting to make sure you get a fair deal in court.
This article was written by Vannin Capital. Visit their website to learn about specialist litigation funding.