Different Costs Scales In Determining Legal Costs
We recently discussed the legal concept of taxation of bills of cost after a case has been finalised and a legal costs bill has been provided to a client. For more details, you can view that discussion on our website under the article heading Taxation of Legal costs.
Upon finalisation of a case, a court can make a decision on the degree to which the “losing” or unsuccessful party has to make a contribution to the “successful” party’s legal costs.
There are 3 different scales of costs which the court can allow and this will often depend on the complexity of a case or a party’s conduct and cooperation throughout a matter. It is most common for a court to award cost on a Party and party scale (meaning costs between two parties at a conservative tariff determined rates).
- Party and party costs (standard costs such as described in prescribed Tariffs)
- Attorney and client costs (costs higher than standard costs)
- Attorney and own client costs (special costs)
The first scale of Party and party costs awards are simply a contribution to legal costs to assist the successful party in paying his or her attorney.
Party and party costs only represent some of the costs that may be recovered from the losing party. This is usually only seen as the minimum reasonably necessary costs such as going to court, preparing documents and communicating with the opponents. Any amount that an attorney charges that is higher than the rate recovered will be for the client’s account as most agreements are based on a fee higher than a standard Tariff rate.
The second scale referred to as an attorney and client scale, may include costs and items higher than only the basic items allowed on a party and party scale. It is not unusual for an attorney and a client to have an agreement that a higher fee is charged, especially taking into consideration the time, finances, risk, and specialised knowledge required to be successful in complex legal matters. A court may rule that a defendant has to be contribute for more items than what would be expected on a standard basis and this is often done as a form of punishment where the defendant has caused unnecessary costs or delay.
The third type of scale is referred to as Attorney and “own” client costs.
These are the actual fees in terms of the agreement between a client an attorney, (in which the hourly rate is not restricted to the standard court tariffs). They’re not generally awarded by the Courts, which has the result that a client will have to carry the balance between the standard rate and the higher rate agreed on with the attorney.
It is important to remember that any legal costs that are recovered do not form part of the capital award that is made. The costs are a separate decision which are not taken into account when deciding what amount of compensation to be awarded to a plaintiff. An example of how cost recovery is applied to the final account to a client can be seen in our article Explanation of Fees.
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