Legal Costs Explained

Costs Terminology

It can be daunting as a client to receive a document full of legal jargon related to your case. This easy to understand jargon buster will help you understand the common terminology used in the field of legal costs.

Act as a solicitor – To perform those acts that only a solicitor may perform

Additional liability – The success fee, the insurance premium or the additional amount in respect of provision made by a membership organisation, as the case maybe.

Admissible offer – An offer to settle that is not an offer to which costs consequences under Part 36 apply and which is capable of being drawn to the Court’s attention.

ADR – Abbreviation for alternative dispute resolution

Advocacy services – Any services that it would be reasonable to expect a person who is exercising, or contemplating exercising, a right of audience in relation to any proceedings, or contemplated proceedings, to provide.

After the Event Insurance – Legal Expenses insurance (a form of general insurance) incepted after the event giving rise to the claim to which the insurance relates, usually specific to a single claim.

After the Event premium – A premium payable for after the event insurance.

Alternative dispute resolution – Collective description of methods of resolving disputes otherwise than through the normal trial process.

Appropriate authorised body – In relation to any person claiming to be entitled to rights of audience by virtue of 27(2)(a)(i) of the Courts and Legal Services Act 1990, the authorised body (a) granting that right and (b) of which that person is a member

Assisted Person – A person who is in receipt of legal aid or a person within the statutory provisions relating to legal aid.

Authorised advocate – Any person who had a right of audience granted by an authorised body in accordance with the provisions of the Courts and Legal Services Act 1990; no superseded by the term ‘authorised person’

Authorised Court officer – Any officer of the county court and its hearing centres, a district registry, the principal registry of the family division, the costs office.

Base Costs – Costs other than the amount of any additional liability

Base Rate – The interest rate set by the Bank of England, which is used as the basis for other bank rates.

Before the event insurance – Legal expenses insurance that is incepted before the event giving rise to any claim.

Budget – An estimate of the reasonable and proportionate costs (including disbursements) that a party intends to incur in the proceedings.

Budget discussion report – a document based upon Precedent R that is prepared for the Court and which contains a records of (a) those figures that are agreed for each phase, (b) those figures that are not agreed for each phase and (c) a brief summary of the grounds of dispute.

Bullock Order – A co-defendant order whereby the claimant is to pay the successful defendant’s costs, but is permitted to add those costs to the costs to be recovered from and unsuccessful defendant.

CCFA – Abbreviation for conditional fee agreement

CFA Lite – A colloquial phrase used to refer to a conditional fee agreement whereby the monies paid to the legal service provider are limited to those costs that are recovered from an opponent.

Collective conditional fee agreement – A template contract for services that may be applied to individual cases to form conditional-fee-agreement-like arrangements, either for the benefit of the counterparties or other persons.

Conditional fee agreement – An agreement enforceable under s 58 of the Courts and Legal Services Act 1990. An agreement with a person providing advocacy or litigation services that provides for that person’s fees and expenses, or any part of them, to be made payable only in specified circumstances.

Contentious business – Business done, whether as a solicitor or advocate in or for the purpose of proceedings begun before a court. Not business which fall between the definition of non-contentious or common form probate business contained in section 128 of the senior courts act 1981.

Contentious business agreement – A contact of retainer that is compliant with the requirements of s 59 of the Solicitors Act 1974 and which, subject to certain safeguards, will allow the solicitors to recover their fees for contentious work as if those fees were an ordinary debt.

Contingency fee agreement – A contact of retainer under which the legal representatives fee usually in relation to contentious business, is calculated by reference to the amount of money that is reserved for the client.

Contract of retainer – A contract for services pursuant to which a legal services provider agrees to provide legal services for valuable consideration.

Costs – Include, charges, disbursements, expenses, remuneration, reimbursement allowed to a litigant in person under CPR 46.5, and any fee or reward charges by a lay representative for acting on behalf of a party in proceedings allocated to the small claims track. Where appropriate, any additional liability incurred under a funding arrangement may be included, but this would be under the pre-2013 CPR 43.2(1)(a) rather than the present-day equivalent.

Costs capping order – An order limiting the amount of future costs (including disbursements) that a party may recover pursuant to an order for costs subsequently made.

Costs Judge – A ‘taxing master of the Senior Court’ also referring to regional costs judges

Costs management – The ability of the Court to manage the costs to be incurred by the parties to litigation by making costs management orders.

Costs management order – An order that will (a) record the extent to which the budgeted costs are agreed between the parties, (b) in respect of the budgeted costs that are not agreed, record the Court’s approval after making appropriate revisions, and (c) record the extent (if any) to which incurred costs are agreed.

Costs office – The Senior Courts Costs office

Costs officer – collective term for a costs judge, a district judge or an authorised court officer

Damages-based agreement – An agreement that complies with the provisions of the damages-based agreements regulations 2013

DBA – Abbreviation for damages-based agreement.

Deemed Order – An order that is deemed to be made on the happening of a specified event, especially where (a) a party allows Court fees to remain unpaid after having been given notice to pay by the Court, (b) a party accepts a Part 36 offer of (c) a party discontinues a claim.

Default costs certificate – A costs certificate that is issued in default of paying party not serving points of dispute.

Detailed assessment – The procedure by which the amount of costs is decided by a costs officer in accordance with Part 47

Detailed bill – A statue bill that contains detailed items and therefore is not a gross sum bill.

Detailed breakdown – A document, often in a similar familiar to a bill of costs, which contains particulars of the costs that have already been claimed in a gross sum bill.

Director – The person designated as the Director of Legal Aid Casework pursuant to s 4 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 or person entitled to exercise the functions of the director

Disburse – To pay monies (usually disbursements)

Disbursement – Money paid on behalf of the Client. As between solicitor and client, those monies that are not profit costs or taxes, but which can be properly be included within a statue bill. As between opposing parties, recoverable monies paid by the client to persons other than their legal services provider.

Discounted conditional fee agreement – A type of conditional fee agreement whereby reduced (discounted) costs are payable in the event of the case not ultimately being successful.

Final costs certificate – A document that states the amount of costs which have been assessed and, unless the Court orders otherwise, will include an order to pay the costs to which it relates.

Fixed Costs – Costs, the amounts of which are fixed by the CPR, whether or not the Court has discretion to allow some other amount or no amount, and which include: (a) the amounts that are to be allowed in respect of legal representatives’ charges in the circumstances set out in Section 1 of Part 45; (b) fixed recoverable costs calculated in accordance with CPR, r45.11; (c) the additional costs allowed by r 45.18; (d) fixed costs determined under CPR, r45.21; and € costs fixed by CPR r 45.37 and 45.38.

Fixed price agreement – A contract of retainer that provides for remuneration of a legal services provider on a predetermined, fixed basis.

Forthwith order – An order made prior to the conclusion of proceedings for the purposes of allowing a party’s costs to be assessed notwithstanding the general rule (in CPR 47.1) that the costs of any proceedings are not to be assessed by the detailed procedure until the conclusion of the proceedings.

FPA – Abbreviation for a fixed price agreement

Fund – Includes any estate or property held for the benefit of any person or class of person and any fund to which a trustee or personal representative is entitled in their capacity. Colloquial term used to refer to the Legal Aid Fund or the CLS fund.

Funder – A third party who has funded litigation. A person agrees to fund the provision of advocacy or litigation services to another person. The party to a collective conditional agreement who, under that agreement, is liable to pay for the legal representative’s fees.

Funding arrangement – An arrangement whereby a person has (a) entered into a conditional fee or collective fee agreement that provides for a success fee within the meaning of s58(2) of the Courts and Legal Services Act 1990, (b) taken out an insurance policy to which s 29 of the Access to Justice Act 1999 applies or (c) made an agreement with a membership organisation to meet the person’s legal costs.

Future costs – Costs incurred in respect of work done after the date of a cross capping order, but excluding the amount of any additional liability. Informal term for any costs yet to be incurred.

General retainer – A contract of retainer pursuant to which a legal services provider provides services generally rather than in respect of a specific claim or matter.

Gross sum bill – A statute bill that lacks detailed items; used only in relation to contentious business.

Indemnity – A right to recover from a third party the whole amount that the recoverer is liable to pay.

Indemnity basis – A basis of assessment whereby the Court will resolve any doubt as to whether the costs were reasonably incurred or were reasonable in amount in favour to the receiving party; under the CPR, the costs would not be subjected to a test of proportionality.

Insurance – The payment of one or more, commonly called ‘premiums’, by one party, in return for which the other party under-takes to pay a sum of money on the happening of a specified event, which event must be one that is adverse to the interests of the policyholder. After the event insurance.

Insurance premium – The consideration required of the assured in return for which the insurer undertakes its obligation under the contract of insurance. A sum of money paid or payable for insurance against the risk of incurring a costs liability in the proceedings, taken out after the event that is the subject matter of the claim.

Interim costs certificate – A certificate containing an order for an interim payment of costs made after the receiving party has filed a request for a detailed assessment hearing.

Interim statue bill – A statue bill (that is, not a request for a payment on account) that is rendered by a solicitor to a client prior to the determination of the relevant retainer.

Joint liability – A single liability jointly between parties; each party can be held liable for the whole of it.

Legal activities – An activity that is a reserved legal activity within the meaning of the Legal Service Act 2007

Legal aid – Civil legal services made available under arrangements made for purposes of Part 1 of the Legal aid, Sentencing and Punishment of Offenders Act 2012.

Legal representative – A barrister, solicitor, solicitors’ employee, manager of a body authorised under s 9 of the Administration of Justice Act 1985. A person exercising a right of audience or conducting litigation on a party’s behalf.

Litigation funding agreement – An agreement between a party in litigation and a third party whereby the latter, in return for valuable consideration, provides commercial funding for the purposes of funding the former’s involvement in the litigation.

Litigation services – Any services that it would be reasonable to expect a person who is exercising, or contemplating exercising, a right to conduct litigation in relation to any proceedings, or contemplated proceedings to provide.

LSC-funded client – An individual who receives service funded by the Legal Service Commission as part of the Community Legal Service within the meaning of Part 1 of the Access to Justice Act 1999.

Membership organisation – A body prescribed for the purposes of s 30 of the Access to Justice Act 1999

Non-contentious business – Any business done as a solicitor that is not contentious business

Non-contentious business agreement – A contract of retainer that is compliant with the requirements of s 57 of the Solicitors Act 1974 and which, subject to certain safeguards allow the solicitor to recover their fees as if were an ordinary debt.

Non-party costs order – An order against a person who is not a party to the litigation, but who is in some way connected to it.

Notional premium – An additional amount payable to a membership organisation pursuant to s 30 of the Access to Justice Act 1999.

Paying Party – A party liable to pay costs.

Payment on account – A payment made pursuant to an order made under CPR r 44.2(8). A payment made on account of costs that is not made in satisfaction of a statue bill.

Percentage Increase – The percentage by which the amount of a legal representative’s fee can be increased in accordance with a conditional fee agreement that provides for a success fee.

Porrect to – To put forward or submit a bill for examination or correction.

Postponement charge – That a percentage increase, if any, which relates to the costs That part of the percentage increase, if any, which relates to the cost of the legal representative of the postponement of the payment of their fees and expenses; also know as postponement element or a charge for postponement.

Practice form – form to be used for a particular purpose in proceedings, the form and purpose being specified by a practice direction.

Pre-action protocol – Statements of best practice about pre-action conduct that have been approved by the Head of Civil Justice and are listed in Practice Direction.

Privilege – The right of a party to refuse to disclose a document or to produce a document or refuse to answer questions on the ground of some special interest recognised by law

Pro bono representation – Legal representation provided free of charge

Profit costs – The fees (that are not disbursements) charged by a solicitor for the legal services they have provided.

QOCS – Abbreviation for qualified one-way costs shifting.

Qualified one way costs shifting – A procedural fetter on the recovery of costs in certain personal injury and fatal accident cases such that (unless the claimant has been fundamentally dishonest), only the claimant may recover the costs of the claim.

Receiving party – a party entitled to be paid costs.

Regional costs judge – A specialist judge who has been appointed to hear certain high-value or complex detailed assessments.

Regulated person – Any class of persons which consist of or includes (a) persons who are authorised by the body to carry on an activity which is reserved legal activity; (b) persons who are not so authorised but are employees of a person who is so authorised.

Request for payment on account – An invoice (other than a statute bill) rendered by a solicitor to a client requesting payment on account of costs.

Reserved instrument activities – Collective phrase for the act of (a) preparing any instrument of transfer or charge for the purposes of the Land Registration Act 2002 (d) making an application or lodging a document for registration under that act (c) preparing any other instrument relating to real or personal estate for the purposes of the law of England and Wales.

Reserved legal activity – Activity including (a) the exercise of a right of audience (b) the conduct of litigation (c) reserved instrument activities (d) probate activities € notarial activities and (f) administration of oaths.

Right of audience – The right to exercise any of the functions of appearing before and addressing a court, including the calling and examining of witnesses.

Right to conduct litigation – (a) the issuing of proceedings before any court in England and Wales (b) the commencement, prosecution and defence of such proceedings (c) the performance of ancillary functions in relation to such proceedings.

Rules of Court – The civil procedure rules 1998. Rules made by the authority having power to make rules or orders regulating the practice and procedure of the Court. Rulings of the Court in individual cases.

Sanderson order – A co-defendant order whereby an unsuccessful defendant is ordered directly to pay the successful defendant costs.

Service – Steps required by rules of the court to bring documents used in court proceedings to a persons attention.

Several liability – liability whereby a person may remain liable for the whole claim even where judgement has been obtained against the others with whom they share liability.

Standard basis – A basis of assessment whereby the court will resolve any doubt as to whether the costs were reasonably incurred or where reasonable in a mount in favour fo the paying party; under the CPR, the costs would be subjected to a test of proportionality.

Statute bill – An invoice rendered by a solicitor to a client that is bona fide compliant with the requirements of s 69 of the solicitors Act 1974

Success fee – A type of additional liability that is the product of a percentage increase and the base costs to which, pursuant to a conditional fee agreement, it applies.

Third-party costs order – A non-party costs order.

Unqualified person – A person who has not been admitted as a solicitor and who does not hold a current practising certificate.

Wasted costs – Costs other than the costs ordered pursuant to the Court’s inherent jurisdiction, which are ordered against a legal representative as a result of that persons negligent, unreasonable or improper behaviour.

Wasted costs order – An order (a) that the legal representative pay a specified sun in respect of costs to a party or (b) for costs relating to a specified sum or items of work to be disallowed.

Without prejudice – 1. Without loss of any rights 2. Restriction on circumstances in which the content of negotiations conducted with a view to settlement may be revealed to the Court,