How Much Should You Budget for a Court Case?

Budgeting is one of the most difficult parts of preparing for a court case. With many factors to consider, it can be difficult to know how much you will need to spend. By considering several factors – ranging from the type of court that your case will take place in to your claim – you can prepare a rough budget ahead of time.

Since court cases can vary from small disputes into large, costly cases, it’s difficult to apply a one-size-fits-all rule of budgeting to your case. The different factors covered in this article will all have a significant impact on the cost of your court case.

Court case budgeting
photo credit: Douglas Palmer

The different courts and their influence on the cost of your case:

The cost of going to court varies dramatically depending on the type of court that your case will take place in. A case in Small Claims Court, for example, will be much less costly than a detailed case heard before the High Court.

There are several different courts in which your case could take place, including:

  • 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

As the names suggest, each court specialises in a different type of case. A simple court case regarding unpaid bills or a very minor financial claim will be heard by Small Claims Court, while a more significant commercial dispute might take place in the Commercial Court.

It’s worth noting that the courts listed above only consider civil cases. All criminal cases occur in a different court, which has its own set of variables and costs for you to consider. In most cases, the higher the court’s jurisdiction, the more expensive it will be in terms of legal fees and additional expenses.

How time and other variables affect the cost of going to court:

Most of the time, cases that are complicated are more costly than straightforward cases. This is due to the significantly greater amount of time needed to settle more complicated cases, and the potential for hearings to take place in multiple courts and further increase the amount of time required to reach a settlement.

Occasionally, cases are settled before going to trial, reducing the costs for both of the parties involved. This is primarily due to the shorter duration of the cases – any case that is settled before trial will cost less than a prolonged, more complicated case.

Due to the immense cost of involvement in a prolonged court case, many people are investigating alternative means of dispute resolution. Mediation has become more popular in the last few years, often as a way of minimising court-related expenses.

Why do complex, challenging cases cost more for all parties?

For most parties involved in a legal dispute, the greatest cost involved in any case is time. Complicated and difficult cases require more time for research and hearings, as well as more experienced and specialised legal counsel.

This means that a claim for damages – for example, a dispute regarding property that was damaged by a tenant made by a property owner – costs significantly less for both parties than a detailed and nuanced dispute regarding a large commercial contract.

Cases that require expert testimony and analysis can often cost far more than both parties originally anticipated. For example, a case that requires forensic accounting services or the testimony of a medical or technical expert introduces new costs that may push its budget beyond original expectations.

Simply put, the more variables a case involves – from contract stipulations to claims and expert testimony – the more expensive it will be. Because of this, it’s important to carefully weigh the benefits of pursuing a complicated case before initiating any legal proceedings.

How can clients make sure their cases are affordable?

Forecasting the cost of a court case is very difficult, especially when details are very limited. However, it is possible to calculate an estimate of the cost of a case using its primary elements and potential complexity.

Solicitors are able to look at more than just the merits of a particular case. A skilled and experienced solicitor will also look at the likely number of hours required for a case, the additional legal resources, and other expenses before coming to a budget.

Due to recent reforms, the era of retainer fees and limited transparency are largely over, and today’s legal clients have a far greater degree of understanding about the cost of going to court. Because of this, clients can access whether a case is worth its anticipated expense before deciding on whether to go to court.

These recent reforms have been strengthened by the Civil Procedure Rules, which were passed on April 1, 2013. The Civil Procedure Rules demand that both sides of any legal dispute prepare budgets early in the proceedings in order to prevent the costs of a case from spiralling out of control.

court case in session
photo credit: easylocum

How can lawyers help their clients in funding court cases?

Today, solicitors are obligated to offer advice regarding funding options to clients interested in opening a court case. They must also discuss funding with any clients that are interested in responding to a court case filed against them.

This requires that the case have a clear and accurate budget ready, detailing major expenses and projected costs. Today, many clients are using third party funding services instead of legal aid of their own capital to pay for their cases. As part of a third party funding agreement, funders typically take a share of the damages in exchange for covering some or all of the costs incurred during a case.

This is a risky proposition, and as such third party funders are known for taking a risk-averse attitude to many cases. Funders typically reject more than 90% of all applications, preferring to take on cases with a high chance of success instead of higher-risk, potentially higher-reward cases.

The popularity of third party funders extends beyond those that can’t afford to pay for their own cases. Using a third party funding service allows clients to avoid the potentially massive losses of a failed case, while sacrificing just 20 to 50 per cent of the damages awarded to them following success in court.

As well as third party funders, clients have several other funding options available for use in pursuing or responding to a court case. These include before-the-event (BTE) insurance and after-the-event (ATE) insurance, both of which are paid for on a monthly or annual schedule in exchange for insurance for future legal expenses.

The massive amount of variables involved in every court case makes it difficult to provide a general rule regarding budgeting. However, historical costs can give an accurate – at least reasonably so – assessment of the costs of litigation. A case in the High Court, for example, will likely cost at least £50,000 in most cases.

Clients interested in beginning or responding to a court case should be prepared to carefully weigh their financial options before choosing how to fund their case. One of the best options is to seek a knowledgeable law firm that’s up to date with all of the current funding laws to prepare a detailed, transparent case budget.

An experienced, reliable firm will take budgeting seriously and allow you to further explore the costs – and risks – of going to court.

About the Author: This article was written by Vannin Capital. Visit their website to learn more about funding a court case.