Another legal costs negotiating trap

Negotiating settlement of legal costs can be difficult at the best of times. However, the last thing one wants at the end of a difficult negotiation is to discover that there has been no settlement at all or, at least, not on the terms that you thought.

In the case of Amer v London Borough of Barnet [2009] EWHC 90146 (Costs) the Claimant served a bill of costs totalling £15,816.45. After points of dispute were served by the Defendant, the Claimant wrote to the Defendant with the following offer: “I would be prepared to agree a reduction in the amount of the bill from £15,816.45 to £14,800″.

The Defendant replied: “In the interests of resolving this matter my client has agreed your proposals. I have requested cheque and will forward asap”.

The Claimant then requested payment of interest in addition to the £14,800, which the Defendant opposed on the basis that the sum proposed by the Claimant’s solicitors and accepted by the Defendant should be regarded as a sum inclusive of any interest.

When the dispute reached court, the costs judge concluded that the key words in the original offer were: “I would be prepared to agree a reduction in the amount of the bill from…”. He held: “I do not accept that the failure to mention in that email either interest or the costs of assessment should be treated as an implied inclusion of those sums in the £14,800 proposed. … Interest on costs and the costs of assessing costs are incidental extras to the amount of the costs claimed in the bill. The email expressly refers to a reduction in the amount of the bill only and I do not accept that it should be treated as impliedly referring to the incidental extras I have described”. He therefore allowed interest in addition to the amount agreed.

In a previous posting I warned of the Part 47.19 trap. This is another lesson in the need to be very careful in the wording of any negotiations on costs. As a general rule, always make clear that any offer is to be treated as fully inclusive of interest and the costs of detailed assessment.

One thought on “Another legal costs negotiating trap

  1. Simon

    You and I come from opposing sides in this wonderful creation the "costs war"

    It is amazing how lax some Defendant Solicirors are in their CPR 47.19 offers.

    I accepted a 47.19 offer which per Crosbie v Munroe is deemed to include costs disbs vat and cost drafting fee and interest.

    I duly sent a note of the assessment costs having served the N252 and read the PODS and all hell broke loose with assertions that I was acting contrary to any other costs company encountered etc etc.

    The upshot was that I settled Replies and set the case down for hearing only to be contacted a wek before the hearing and invited to advise what I would accept for my costs.

    Answer was £1,750 which some insurer had to stump up as I doubt the solicitor concerned admitted his error.

    The upshot?

    The solicitor has noted my name for future dealings !!!

    Oh dear oh dear !

    Kevyn Thompson
    abacus legal costs limited

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