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A novel approach to litigation costs

With margins becoming ever tighter, the potential cost of commercial litigation can dissuade retailers from bringing legitimate claims.

Through a product designed by Clarke Willmott it is, however, possible to introduce absolute certainty into the retailer’s own lawyers’ legal costs and at a cost to fit your budget. This means that proper provision can be made for the costs liability without over-burdening the balance sheet with nervous lawyers’ estimates of the worst-case costs bill.

Clarke Willmott’s product was the first to be given approval by the Court of Appeal (and the Law Society) in January this year and we have been rolling it out to retail clients ever since.

This funding agreement works in relation to claims or defences and on the basis that:

  • we cap our fees at an agreed (and then discounted) level so that the you know the absolute maximum costs that will be payable and know this from the start; and
  • the quid pro quo for the discounted and capped fees is that the difference between the standard hourly rate and the discounted rate, together with an uplift on those rates of up to 100% can be recovered from the other party to the dispute in the event that you are successful in the litigation.

The availability of the uplift from the losing party means that we can be far more imaginative in the ways we structure costs agreements. The existence of an agreement such as this has to be revealed to the other party in the dispute. This generally has the effect of bringing the other party to the negotiating table, knowing that its opponent’s costs risk is limited.

The result is more certainty on costs for the retailer at reduced rates while the lawyers back their commercial judgement and share some of the risk in exchange for passing on an uplifted claim for costs to the opponent in the event of success.

The claim is ideally suited to many commercial disputes. It will not be appropriate in every case but we are happy to discuss this with you.

For more information on agreements such as this in commercial litigation matters please contact Paul Chapman, partner in our commercial litigation team.