The costs of litigating a case should be in proportion to the value of the dispute. Official – but forgotten repeatedly.
The Ministry of Justice, the judges, everyone – says the costs of going to law should bear some sort of rational relationship to the value of the dispute. Yet this rule is frequently and flagrantly ignored. Focus Mediation frequently finds the main issue in dispute in mediation is the costs of proceedings at court. So, in one case where flat owners were arguing over noise between their flats (one flat was over the other), the costs were £62,000. There was at the pre-trial review. The judge heard that the budget for costs to go to trial was a further £30,000 including the lawyers and the experts. The agreed costs of the works of noise proofing between the flats was under £4000! The costs had become the issue. If one party could ‘Win’ then the other would lose twice, they’d .have to pay all the costs. The judge had little paddy and said they had to mediate. Now this is unusual, as actually the courts have no power to force people to mediate, but he was incensed enough at the flagrant breach of the rule of proportionality on costs to send everyone away for mediation. The Focus mediator settled the case. One flat owner bought the other’s flat, not even a result the judge could not have imposed he’d wanted to. This is a classic example of conflict having a life of its own, of the disputants losing the plot and ending up in a ridiculous situation, where their litigation costs were the main issue. There are many reasons this can happen.
The lawyers may advise that they cannot advise as to whether someone’s going to win the case or not, until they have seen adequate “disclosure” of documents, witness statements and expert evidence, enabling them to advise who is likely to have the best evidence and hence who will win or lose. The problem is that the cost of getting the case this far alone can be out of all proportion to the value of the case. Suddenly the issue is no longer just the liability for or ownership of the decombobulating sprocket, there is another issue – who is going to pay all the costs? Since the Jackson Reforms in 2013 there is far more pressure to mediate and a refusal to mediate can mean you don’t get all your costs even if you win. Nonetheless the number of mediations is still not rising to the levels required by any sort of rational approach to resolving court disputes. Why not?
At Focus we wonder this all the time. We think there are many reasons including:
- The conflict has a life of its own, one or both parties cannot back down. Their irrational emotional right brain is engaged, they feel they simply must win, even though the costs make it a pointless and empty victory even if they win and they may lose but
- Backing down is unthinkable. The identity of one or more participants is threatened by not winning or fighting
- The adrenaline rushes of the amygdala in the brain is priming the fight, freeze or flee -a pre-historic response to conflict. The modern interpretation of fleeing or fighting the tiger can often be the ritualised combat of your chosen combat representatives, your lawyers
- The costs may be insane but ‘It’s because I’m worth it’. This can often be the case in a divorce, where one party may want to punish the other with massive costs, drag out the fight, to try to get control of their resolution process (in their dreams, it has a life of its own). They may seek the fight for continuing connection, to delay the waiting void after it is over, the ritual of litigation may be an expression of their grief and loss, there are so many reasons.
- A completely mistaken understanding of likely court adjudicated outcomes. For example, the divorce client arguing over a family pot of no more than £500,000, whose London lawyer had advised her that their hourly rate of £600 was worth it, as they would get her such a good settlement the extra money would pay the costs. Again, in your dreams! However, by the time the truth dawns, it is too late.
- In some cases there may be a conflict of interest between the lawyers and their clients over costs. The National Audit Office reported on this in their report into Family Mediation in 2007. They found lawyers in some instances have a contrary interest to their clients to earn fees and that resolving a divorce by mediation was 75% quicker than going to court and cost a fraction of litigation. This isn’t true of many lawyers, who do refer to mediation, it is just that many don’t or leave it too late to save much.
So what can you do? Like many things the answer is both simple and hard to do:
- Have a sense of proportion, work out the value of what you are arguing over. Set a budget for the costs of a sensible percentage of that figure and resist exceeding it. 10/20/30%, something rational.
- Keep proposing mediation, even if you go to trial and lose, if the other person refuses mediation, you may benefit on a costs order. If you mediate you may well settle the case.
- Pocket your pride, be ready to engage in resolution and move on with your life
- Talk to a mediator, call us on 01908 231132
Collateral Damage. The Hidden Cost of the Courts.