When talking to a client about what costs they can expect to incur, it’s all too easy to churn out a list of different fees. To a lay client, not only can this be confusing, but it often makes it sound more complicated that it is.
The process is often complicated further because different lawyers use different terms for the same thing; as an example, legal costs and solicitor costs can often be the same thing, and a court fee is a disbursement. To offer some clarity, we have broken this down into two main groups and is what you can often expect to see on an invoice – Legal Costs and Disbursements.
Legal Costs (or legal fees)
Legal costs or fees are what you pay your lawyer for their service. Whether that’s for a phone conference, drafting documents, submitting court proceedings, or general advice. Usually, a lawyer will either charge you a fixed fee or charge you per unit (also known as non-fixed fees as they vary on the length of time spent).
Depending on the legal action you are involved in and the value, then you may be able to recover both fixed and non-fixed fees from the other side.
Fixed fees – where you have agreed to a set fee for a piece of work or advice to be completed
Non-fixed fees – generally, a lawyer’s hourly rate is broken down into six-minute units (and so there are ten units per hour). For every six minutes (or part thereof) spent on the agreed work, the lawyer will charge you one unit. For example, an hourly rate of £150.00 (plus VAT) would mean each unit is charged at £15.00 (plus VAT)
Disbursements is an umbrella term for any charge which the lawyer has incurred via a third party that is then passed onto the client. The lawyer (or firm) will usually pay this in advance and then seek reimbursement from you. If the disbursement is particularly expensive, upfront payment might be required.
The most common types of disbursements are detailed below and depending on the type of disbursement, it might be recoverable from the other side. Not all disbursement attract VAT. Your lawyer will be able to advise on the specifics for each matter.
Court fees – these can be wide and varied and include anything from initial costs of submitting proceedings, hearing fees, application fees, and enforcement fees
Third party services – this includes for example, process server fees, High Court Enforcement Officer fees, and tracing services
Counsel/barrister fees – usually one of the biggest disbursements you can expect to see are fees for counsel. This can either be for an opinion or representation at a hearing