Debt Claims (up to £100,000) Debt Claims (up to £100,000)
Claiming a debt which is owed to you or your business is not always straightforward; it can become quite time consuming and costly. It is always worth weighing up your options before instructing solicitors and making a claim. Below we provide details on our costs and some useful tips and information in relation to debt claims. If court proceedings do become necessary, we will always ensure that the case is prepared (or defended) properly, meticulously and always in the best interests of our clients.
- Our Costs
Our time is charged on an hourly basis when acting in relation to all debt claims. Our hourly rates range from £150 plus VAT per hour to £595 plus VAT per hour depending on the seniority of the solicitor required. Very senior solicitors will only be involved in complex matters. Every claim differs from the other and so do the clients requirements. It is therefore very difficult or almost impossible for us to provide a definitive number of hours which it takes to issue a claim and follow the Court’s ‘directions’.
In certain instances, we may agree a fixed fee for taking initial client instructions, considering any relevant documents and providing initial advice and guidance.
We will always provide our clients with time estimates where possible and keep them updated as to the amount of time spent. We will produce detailed breakdowns of time spent on a regular basis and deliver interim bills as and when possible. Our aim is to be clear and transparent at all times by billing regularly and keeping you updated. Please note that we will also request a payment of funds on account at the outset of our instructions.
It may also become necessary during the course of our instructions to instruct legal experts or to pay disbursements (expenses paid to third parties on your behalf) such as barrister’s fees, cost lawyers fees and court fees. Please click here to see the Court Fees.
We will never make any such payments without your prior authorisation. If we are dealing with cross jurisdictional estates, then the fees of any foreign lawyers will also be notified to you in advance.
- Chargeable Activities
Chargeable activities include, but are not limited to, the following:
- Considering the matter
- Taking your instructions throughout the matter
- Providing initial advice and drafting client care/retainer letter or e-mail
- Obtaining and verifying due diligence documents from you, any related persons and companies
- Completing the file opening process
- Preparing bills of costs
- Collating documents and preparing bundles
- Drafting detailed breakdowns of bill of costs/time recording
- All incoming and outgoing correspondence including emails and letters
- Telephone calls
- Meetings with you and others
- Preparation of court pleadings, applications, documents and attendance notes
- Drafting and preparation of documents
- Legal research
- Monitoring and complying with deadlines
- Photocopying and scanning of documents
- Advising you throughout the matter
- Answering any questions you may have
- Providing you with copies of documents and correspondence
- Instructing counsel and/or experts
- Bank transfers
- Travel time to and from the court or meetings; and subsistence cost.
Please note that the majority of our correspondence will be by way of e-mail.
- Average / Range of Costs
It is impossible to predict how much our total fees will be in order to act on behalf of a client in bringing or defending a debt claim. The overall cost will depend on items including: the complexity of the issues in dispute, the amount of documentary and witness evidence, the value of the claim, whether there is any counterclaim and the length of trial. There are also other unknown factors such as whether any interim applications will be needed and the way in which the other party conducts the litigation.
However, if your claim valued between £25,000 – £100,000 (assuming: a medium level of complexity, around 500-1,000 pages of documentary evidence, between 2-4 witnesses for each party, a trial length of 3-4 days and with no interim applications) our costs, on average, are likely to be between £30,000 – £50,000 plus VAT. Please note that this is only an average estimate and the final amount could be less or importantly, could end up being more.
This estimate does not include disbursements such as barrister’s and Court fees which will be in addition. Barrister’s fees will depend entirely on your chosen barrister and their level of expertise and seniority; Court fees will depend on the value of the claim (or any counterclaim).
- Factors to Consider Before Making a Claim
Before instructing solicitors and making a claim various factors need to be considered including:
- the possibility of settling the claim directly with the debtor;
- the available evidence which you have to show that you are owed the debt;
- what is the likelihood of the debtor making a counterclaim against you (often called a cross claim);
- the time it will take you to deal with the claim (i.e. time away from your business where you would otherwise be earning income);
- legal costs and court fees which you will need to cash flow;
- the time it will take for the matter to go to court and be heard;
- consequences of losing the claim;
- recovery of legal costs;
- even if you are successful, will you be able to enforce any judgement against the debtor (i.e. does the debtor actually have any assets); and
- the overall stress and time involved.
Court action is always the last resort. We will always do our best for our clients to reach a settlement out of court, if possible and agreeable to all parties. If court proceedings are necessary, we will always ensure that the case is prepared properly and meticulously and in the best interests of our clients.
- Pre-Action Protocols
As with most claims, parties are encouraged to explore the possibility of settlement before any court claim is issued. The claimant should always also afford the defendant the opportunity to pay up before issuing a claim. The parties (and their legal representatives) must consider the potential impact of their behaviour at the pre-action stage of any dispute. This applies to all areas of litigation. As such, parties are expected to follow any applicable Pre-Action Protocol.
In relation to debt claims, as from 1 October 2017 there applies a Pre-Action Protocol for Debt Claims. The ‘Debt Protocol’ only applies in certain situations, namely, it applies to any business, including sole traders and public bodies (creditor), claiming payment of a debt from an individual, including a sole trader (debtor). It does not apply to business-to-business debts unless the debtor is a sole trader.
The Debt Protocol has various aims, which include:
To promote early communication between the parties, including early exchange of information about the debt, to assist with identifying the issues in dispute.
To enable the parties to resolve the dispute in a cost-effective way without the need for court proceedings, including by agreeing a repayment plan or considering using a form of alternative dispute resolution.
To encourage the parties to act reasonably and in a proportionate manner and to support the efficient management of proceedings that cannot be avoided.
- Which 'Track'
Once a claim is issued at Court, it must be allocated to a ‘track’. This will determine how the case is handled by the court and is based on the value and complexity of the claim. This also determines what happens in respect of costs at the end of the final hearing. Generally, there are three tracks:
- Small Claims. This is for debts below £10,000. The small claims track is a simplified procedural system for dealing with lower value claims. The trial will be listed quickly, usually within 6 months, and will usually not last longer than 1/2 day. The successful party will not be awarded their costs apart from the court fee, some nominal fixed solicitors costs and expert costs and certain travel and accommodation expenses incurred attending hearings.
- Fast Track. This is for debts between £10,000 and £25,000. The trial will usually take place around 1 year after the claim has been issued and will last for no more than 1 day . The court’s case management of and involvement in Fast Track Claims is more than in Small Claims. Usually, the successful party will be awarded their costs but it is important to note that, usually, this will not be 100% of their costs incurred. The general rule of thumb is to expect around 65%-75% of costs to be repaid along with the court fees. Further, in fast track cases, recoverable trial costs can be limited.
- Multi Track. This is for debts above £25,000, for complicated matters, for matters where the trial is estimated to last more than 1 day or where considerable expert evidence will be required. The final hearing may take longer than 1 year to take place and will usually last longer than 1 day. The length of the hearing often depends on the amount of evidence and witnesses. Usually, the successful party will be awarded their costs but it is important to note that, usually, this will not be 100% of their costs incurred. The general rule of thumb is to expect around 65%-75% of costs to be repaid along with the court fees. This could increase or decrease at the court’s discretion and depending on various factors, such as, the overall behaviour of the losing party and any reasonable offers for settlement which were made during the proceedings by the successful, but rejected by the losing party.
At Protopapas, our specialist litigation team handles debt claims of all values and complexity; however, having said this, we generally do not deal with Small Claims. This is because our costs would most likely be disproportionate to the amount being claimed which would result in costs being higher than the claim itself.
- Recovery of Costs
Recovery of legal costs is a significant issue in bringing or defending a claim. As touched on above, the general rule for most claims (that we deal with) is that the losing party will pay the costs of the successful party. It is important to note that, usually, this will not be 100% of the costs incurred. The general rule of thumb is to expect around 65%-75% of costs to be repaid along with the court fees. This can increase or decrease at the court’s discretion.
Another important note is that if a losing party is ordered to pay the successful party’s costs and if those costs are not agreed between the parties, the losing party can in some instances require that the costs are assessed by the court. This is called ‘Detailed Assessment’. It is crucial to note that what is awarded by way of Detailed Assessment and what the successful party must actually pay their solicitors are two separate matters. The successful party will still have to pay their solicitors/legal costs in full, as agreed between them and outlined in any retainer, irrespective of what is awarded by Detailed Assessment.
If you are contemplating using court proceedings to recover a debt, bear in mind that the recoverability of costs will be affected by when and how the matter is concluded.The main points to note are that:
If the matter settles pre-action, the party seeking repayment has no entitlement to costs, although the parties may agree a figure.
If the matter settles pre-action and the parties agree who should pay the costs but not how much should be paid, the parties can refer the costs to Detailed Assessment.
If the matter settles after proceedings have been commenced, the parties will usually agree costs, but if they cannot do so and refer the matter to the court, the court may exercise its discretion to determine the matter.
If the matter is decided at trial, the court will decide what is recoverable. That will usually be strongly influenced by the ‘track’ to which the claim was allocated along with various other considerations.