In the UK, civil litigation costs can make or break a legal case—both for the claimant and the defendant. Unlike criminal law, where the Crown prosecutes and covers the expense, civil cases often involve disputes between private individuals or businesses. As such, the allocation of costs becomes a critical consideration.
This article explores everything you need to know about who pays civil litigation costs, when they must be paid, and what exceptions, rules, and strategies come into play. Whether you’re about to file a claim or facing a defence, understanding the financial landscape of civil litigation could save you thousands during the civil litigation process UK.
What Are Civil Litigation Costs?
Civil litigation costs refer to the expenses incurred in pursuing or defending a civil legal action. These are not limited to solicitors’ fees but cover a wide range of direct and indirect costs associated with preparing and running a case through the courts.
Common Types of Civil Litigation Costs:
- Solicitors’ fees: Charged for legal advice, document preparation, negotiations, and court appearances.
- Barristers’ fees: Instructed for advocacy in court and sometimes advice on complex legal matters.
- Court fees: Paid to the court to issue claims, file applications, or set a case down for trial.
- Expert witness fees: If the case involves technical or specialist evidence.
- Travel and accommodation: Particularly relevant for hearings held outside a party’s local area.
- Administrative costs: Including photocopying, document bundling, courier charges, and legal research.
Importantly, costs can accrue rapidly, even in routine litigation. The court’s approach to awarding costs is therefore a major part of risk assessment in any case.
Who Pays Civil Litigation Costs in the UK?
In general, the loser pays the winner’s costs. This principle, known as the “costs follow the event” rule, is a cornerstone of the UK’s civil justice system. However, it’s not automatic or absolute. The court retains discretion and may depart from this rule based on conduct, proportionality, or fairness.
The Default Rule: Costs Follow the Event
Under Civil Procedure Rule 44.2, the court will usually order the unsuccessful party to pay the successful party’s reasonable costs. This encourages parties to settle early and discourages frivolous litigation.
But “reasonable” and “proportionate” are key qualifiers:
- Costs must reflect the complexity and value of the case.
- Excessive or unnecessary costs may be disallowed on assessment.
Exceptions to the Default Rule
Courts often vary from the default where circumstances justify it. For example:
- Unreasonable conduct: If a winning party behaved poorly (e.g., ignored settlement offers or caused delays), the court may reduce or disallow their costs.
- Part 36 offers: Special cost consequences apply when a party makes a formal offer to settle that is not accepted but later bettered at trial.
- Split success: If both parties win on different issues, the court may order a proportionate split in costs.
Example Scenarios
- A claimant wins the case but exaggerated their claim amount: the court may award only part of their legal costs.
- A defendant loses but made a strong Part 36 offer that the claimant failed to beat at trial: the defendant may pay reduced costs or none at all.
Who Pays in Small Claims?
In the Small Claims Track (usually for disputes under £10,000), each party is expected to bear their own costs regardless of outcome. Only limited expenses are recoverable, such as:
- Fixed court fees
- Witness travel expenses
- Loss of earnings for attending court (subject to limits)
This makes small claims less financially risky but also less rewarding in terms of cost recovery.
When Are Civil Litigation Costs Paid?
Timing is just as important as liability when it comes to civil litigation costs. Understanding when costs must be paid helps parties manage risk and avoid enforcement complications later on.
1. Costs Payable Immediately or at a Fixed Time
The most common scenario is when the court makes a costs order at the conclusion of a hearing or trial. The order will usually specify:
- That one party must pay the other’s costs
- Whether the costs are “summarily assessed” or subject to “detailed assessment”
- The timeframe for payment (often within 14 days)
Summary assessment is used for shorter hearings, where the judge decides the amount of costs on the spot.
Detailed assessment is reserved for more complex cases and involves a separate procedure to evaluate costs line-by-line.
2. Costs Orders After Interim Hearings
Costs can also be awarded during the life of a case—particularly after interim hearings. For example:
- A party makes a failed application: the court may order them to pay the other side’s costs.
- A party succeeds in an interim injunction: they may recover costs related to that hearing.
These interim cost orders are typically payable immediately, unless deferred by the judge.
3. After Settlement or Withdrawal
If a case settles out of court, the parties usually agree who pays what costs and when. This is documented in a settlement agreement or consent order. If the issue of costs isn’t clearly resolved in the agreement, further litigation may arise just to determine costs liability.
If a party discontinues (withdraws) their claim, CPR 38.6 generally requires them to pay the defendant’s costs incurred up to that point, unless the court orders otherwise.
4. Payment on Account of Costs
In some cases, the successful party can request a payment on account—an advance payment of costs before the full assessment is completed. This avoids cash flow problems during prolonged assessments and is encouraged under CPR 44.2(8).
Understanding the Role of Cost Budgets and Precedent H
In multi-track claims (usually complex or high-value cases), cost budgeting is an essential process that helps the court and parties manage and control civil litigation costs from the outset.
What Is a Cost Budget?
A cost budget is a formal document that outlines the estimated legal costs each party expects to incur throughout the proceedings. It breaks down anticipated costs by litigation phase—such as disclosure, witness statements, trial preparation, and trial itself.
The key document used is called Precedent H.
What Is Precedent H?
Precedent H is a standard form used to prepare cost budgets. It includes:
- Incurred costs: what has already been spent up to the date of the budget
- Estimated costs: projected future costs for each stage of litigation
- Justification for each cost item, often with assumptions and contingencies
When Is Precedent H Required?
- In most multi-track cases, each party must file and exchange budgets at least 21 days before the first Case Management Conference (CMC).
- Failure to do so can result in severe penalties, including being limited to recovering court fees only—even if you win.
How Cost Budgets Affect Recovery
Once approved or adjusted by the court, a cost budget forms the basis for assessing recoverable costs at the end of the case. A party who exceeds their budget without good reason may not recover the extra expenditure from the other side.
This is designed to:
- Prevent disproportionate litigation
- Encourage early and realistic planning
- Promote fairness between parties with unequal resources
Revising Budgets
Cost budgets can be updated if circumstances change significantly—such as unexpected complexity or a new claim being added. The court must approve any such revision through a Precedent T application.
Fixed Costs vs Assessed Costs: What’s the Difference?
When it comes to claiming civil litigation costs, the method of calculation depends heavily on the case type and track allocation. The court will either apply fixed costs or require costs assessment. Each approach carries different expectations and recovery limits.
Fixed Costs Regime
Fixed costs are predetermined amounts set by legislation. They apply automatically to certain types of cases and are intended to promote speed, certainty, and proportionality.
Where Fixed Costs Apply:
- Low-value personal injury claims
- Road Traffic Accidents (RTA)
- Employers’ liability and public liability claims
- Debt recovery under Part 45 of the Civil Procedure Rules
Under fixed costs rules, the successful party can only recover specified amounts for different stages of litigation—regardless of their actual spend. The intention is to prevent runaway costs in routine claims.
Benefits:
- Transparency and predictability
- Faster cost resolution
- Reduced scope for disputes
Drawbacks:
- May undercompensate parties with complex or unusually costly cases
- Limits solicitor discretion in running a claim
Assessed Costs (Detailed or Summary)
When fixed costs don’t apply, costs must be assessed—either summarily or in detail.
Summary Assessment:
- Typically done immediately after short hearings
- Judge decides on the spot what costs are reasonable
- Common in interim applications and one-day trials
Detailed Assessment:
- Used in more complex, longer, or high-value claims
- Requires formal procedure under Part 47 CPR
- Costs are broken down and reviewed line-by-line
- Often takes months to complete
During detailed assessment, the receiving party submits a Bill of Costs, and the paying party may challenge it with Points of Dispute. The court then determines what’s payable, usually following a hearing before a Costs Judge.
Who Is the Paying Party and Who Is the Receiving Party?
In cost orders made by the court, the two parties are labelled based on their relationship to the flow of money. Understanding these roles is key when navigating civil litigation costs and preparing for settlement or enforcement.
The Receiving Party
The receiving party is the person or entity entitled to recover their legal costs from the other side. Usually, this is the successful litigant—the party that prevailed in the claim or defence.
Responsibilities of the Receiving Party:
- Prepare and serve a Bill of Costs (if costs are to be assessed)
- Cooperate with cost assessment procedures
- Enforce payment if costs are not paid voluntarily or on time
The receiving party is also typically entitled to interest on unpaid costs, often from the date of the costs order.
The Paying Party
The paying party is the one ordered to cover the other side’s legal costs. Most often, this is the losing party in the dispute, but as we covered earlier, this can vary depending on:
- Settlement terms
- Conduct of litigation
- Part 36 offers
- Interim applications
Responsibilities of the Paying Party:
- Comply with the costs order and pay within the specified time
- Review and respond to the Bill of Costs (if applicable)
- Raise Points of Dispute during detailed assessment
- Settle or challenge enforcement proceedings if payment is not made
Failure to pay can lead to enforcement action, including charging orders, third-party debt orders, or writs of control.
The Impact of Part 36 Offers on Civil Litigation Costs
Part 36 of the Civil Procedure Rules provides a formal mechanism for making offers to settle. It’s not just about resolving disputes — it’s a powerful strategic tool that can swing costs liability in or out of your favour depending on how it’s used and responded to.
What Is a Part 36 Offer?
A Part 36 offer is a written settlement proposal that complies with strict legal formatting under CPR Part 36. It can be made by either party at any stage of the proceedings — even before a claim is issued — and can relate to the whole claim or just part of it (like liability or quantum).
It must:
- Be in writing and state that it is made pursuant to Part 36
- Remain open for at least 21 days
- State whether it relates to the whole claim or part of it
- Be capable of acceptance without further discussion
Why Part 36 Offers Matter for Costs
The real power of a Part 36 offer lies in cost consequences. If a party refuses an offer that turns out to be better than what they achieve at trial, the court may penalise them heavily on costs.
Claimant’s Offer Rejected — Claimant Does Better at Trial:
The defendant may be ordered to:
- Pay indemnity costs from the end of the 21-day period
- Pay interest on those costs (up to 10% above base rate)
- Pay interest on damages
- Pay a 10% uplift on damages awarded
Defendant’s Offer Rejected — Claimant Fails to Do Better at Trial:
The claimant may be ordered to:
- Pay the defendant’s costs from the expiry of the offer
- Pay interest on those costs
- Lose the right to recover their own post-offer costs
Tactical Benefits
Part 36 offers can be used to:
- Apply pressure during negotiations
- Secure costs protection
- Influence settlement timing and terms
- Force the opposing party to assess their litigation risk more realistically
Practical Considerations
- Offers should be timed strategically — too early, and they might be ignored; too late, and they may not affect costs.
- Always take advice before accepting or rejecting a Part 36 offer. The cost risks are substantial if misjudged.
Cost Orders: Types and How They Work
A cost order is the court’s official instruction about who must pay legal costs, how much, and by when. It may be made after a hearing, at trial, or during interim stages of litigation. There are several types, and each carries different consequences for both the paying party and receiving party.
1. Standard Costs Order
The most common type. It allows the receiving party to recover their reasonable and proportionate costs, subject to detailed assessment if not agreed.
Example: “The defendant is to pay the claimant’s costs of the claim, to be assessed if not agreed.”
This type of order encourages restraint. If the costs claimed are excessive or loosely documented, the court will reduce them on assessment.
2. Indemnity Costs Order
This is a more favourable order for the receiving party. It allows for recovery of all reasonably incurred costs, without the proportionality test. The burden is on the paying party to show the costs are unreasonable.
When granted: Usually awarded when a party has behaved unreasonably or improperly, or when a Part 36 offer has been bettered at trial by the offering party.
3. Costs in the Case / Costs in Any Event
- Costs in the case: The party who ultimately wins the case will recover their costs for the interim issue too.
- Costs in any event: The winning party of the specific application will recover their costs regardless of the final outcome of the case.
These are typically used at interim stages to deal with applications like disclosure orders or strike-outs.
4. No Order as to Costs
Each side bears their own costs. Often used where:
- Both parties have had mixed success
- The application was unnecessary or premature
- The court wants to neutralise cost consequences
5. Wasted Costs Order
This rare but serious order allows the court to make a solicitor (not the client) personally liable for costs due to misconduct or negligent conduct of litigation.
Example: A solicitor fails to attend a hearing without good reason, causing the other side to incur unnecessary expense.
6. Interim and Final Costs Orders
- Interim costs orders are issued during the litigation and usually payable within 14 days.
- Final costs orders are made after the judgment or settlement and deal with the total costs liability.
What Happens If You Can’t Pay Civil Litigation Costs?
Being ordered to pay civil litigation costs can be financially devastating — especially if the sum runs into tens of thousands. The law provides several enforcement methods to compel payment, but there are also limited defences and negotiation options available to the paying party.
1. Time to Pay: Standard Deadline
Most costs orders specify that payment must be made within 14 days. Failure to comply gives the receiving party the right to enforce the order, often without further notice.
2. Negotiating Payment Terms
If a party can’t pay immediately, they can:
- Request an extension or payment plan
- Offer a lump sum in full and final settlement
- Propose a Tomlin Order (a form of consent order) to structure payment over time
Courts may agree to such arrangements if they promote fairness and compliance, especially where hardship is genuine.
3. Enforcement Options for Receiving Parties
If no payment is made, the following enforcement actions may be pursued:
a) Writ or Warrant of Control
- Authorises enforcement agents (bailiffs) to seize goods and assets
- Commonly used in the High Court
b) Third Party Debt Order
- Freezes and redirects money owed to the paying party by a third party (e.g. from a bank)
c) Charging Order
- Places a legal charge on the debtor’s property
- Can be followed by an order for sale in extreme cases
d) Attachment of Earnings Order
- Deducts payments directly from the paying party’s wages (used mainly against individuals)
e) Order to Obtain Information
- Forces the paying party to attend court and disclose assets and financial details under oath
4. Consequences of Non-Payment
Ignoring a costs order is not only financially risky — it can also damage future litigation prospects:
- A party may be barred from pursuing future claims unless they pay (“unless orders”)
- Creditworthiness may be affected
- Interest on unpaid costs (typically at 8% per annum) accumulates rapidly
5. Limited Defences
There are few valid reasons to avoid paying costs, but some potential defences include:
- Costs not properly assessed or agreed
- Disputes over the amount owed
- Genuine financial hardship, potentially raised to delay or vary enforcement
- Bankruptcy or insolvency (though this triggers a separate legal process)
Frequently Asked Questions
What are civil litigation costs in the UK?
Civil litigation costs refer to the legal expenses involved in bringing or defending a civil case. These include solicitors’ and barristers’ fees, court fees, expert reports, administrative expenses, and any other costs directly linked to the litigation process.
In most cases, the losing party may be ordered to pay the winning party’s costs, subject to assessment and court approval.
Who is responsible for paying civil litigation costs?
The general rule is that the loser pays the winner’s civil litigation costs, known as “costs following the event.” However, the court has discretion to vary this rule depending on factors such as the parties’ conduct, any offers made to settle, and how the litigation was handled.
In small claims, each party usually bears their own civil litigation costs, except for fixed expenses.
When do civil litigation costs have to be paid?
Civil litigation costs are usually payable:
- Immediately following a court order (commonly within 14 days)
- At the conclusion of interim applications
- After settlement, based on agreed terms
- Following detailed assessment if costs are disputed
Failure to pay on time can lead to enforcement action, including interest, property charges, or bailiff involvement.
Can I recover all my civil litigation costs if I win my case?
Not always. Even if you win, you’re unlikely to recover 100% of your civil litigation costs. The court may only allow reasonable and proportionate costs, meaning some expenses may be disallowed—especially if they were excessive, unnecessary, or outside the approved cost budget.
In some cases, only fixed costs apply, further limiting recovery.
What happens if I lose and can’t afford to pay the other side’s civil litigation costs?
If you lose your case and can’t pay the civil litigation costs, the winning party can enforce the cost order through:
- Bailiffs (writs or warrants of control)
- Third party debt orders (e.g. bank accounts)
- Charging orders against property
- Attachment of earnings (for individuals)
You may be able to negotiate payment terms or apply for instalments, but interest will continue to accrue on unpaid amounts.
How do Part 36 offers affect civil litigation costs?
Part 36 offers are a major factor in civil litigation costs. If you reject a reasonable Part 36 offer and fail to beat it at trial, you could be penalised—even if you technically win. Penalties may include:
- Paying the other side’s costs
- Interest penalties
- Losing your right to claim your own post-offer costs
Always seek legal advice before accepting or rejecting a Part 36 offer.
What’s the difference between fixed costs and assessed costs in civil litigation?
Fixed costs are predetermined amounts recoverable in certain cases, especially low-value personal injury or debt claims. They are strict and apply regardless of what a party actually spent.
Assessed costs, on the other hand, are calculated based on actual legal expenditure, subject to scrutiny for reasonableness and proportionality. Assessment can be summary (quick) or detailed (full breakdown).
Do I need a cost budget in my civil case?
If your case is allocated to the multi-track, you will likely need to submit a cost budget using Precedent H. Failing to do so can severely restrict the amount of civil litigation costs you can recover—even if you win.
Proper budgeting is essential to secure your right to claim full costs later on.
Can I get insurance to cover civil litigation costs?
Yes. There are insurance products designed to cover civil litigation costs, including:
- Before the Event (BTE) insurance, often included in home or business policies
- After the Event (ATE) insurance, which can be purchased once a dispute arises
These can protect you against the risk of losing and having to pay the other side’s costs, but they come with premiums and exclusions.
Can civil litigation costs be appealed?
You can challenge or appeal civil litigation costs in some situations:
- If you believe the court made a mistake in its costs order
- If you disagree with the outcome of a detailed assessment
- If you believe the winning party’s Bill of Costs is inflated or unreasonable
However, appeals must be timely and are subject to strict procedural rules.
What is a costs capping order?
A costs capping order is a court-imposed limit on how much can be claimed in civil litigation costs, typically used in public interest or high-risk cases. These orders are rare and usually applied where one party lacks resources and needs cost protection to fairly pursue or defend a claim.
Can civil litigation costs be enforced internationally?
Yes — in cross-border disputes, civil litigation costs orders made in UK courts may be enforceable overseas through reciprocal enforcement treaties or international conventions, such as the Hague Convention. However, this often requires additional legal steps and local court approval in the foreign jurisdiction.
Don’t let unexpected costs catch you off guard.
Whether you’re pursuing a claim or defending one, understanding civil litigation costs is just as important as understanding the merits of your case. Costs can swing the financial outcome dramatically — even in situations where you win on the facts. From court orders and Part 36 offers to enforcement and budgeting, every stage of the process involves strategic cost considerations.
At Axis Solicitors, we help individuals and businesses navigate the complex rules governing civil litigation costs.
Contact us today for consultation with one of our litigation specialists.
