Costs in Litigation

It’s no secret that litigation can be an expensive prospect. So, it’s no surprise that litigation expenses will often inform decisions relating to how to proceed, whether to settle, or even whether someone should file a claim at all. But one factor that I find often gets left out of the calculus of litigation is the potential of cost orders.

A costs order is an order by a Judge or Associate Judge requiring one party to pay some or all of the other party’s legal costs. Legal costs include lawyer’s professional fees as well as any other relevant expenses a party incurs during the case. While cost orders are technically separate considerations from the main case, they usually correlate with their outcomes and are typically awarded to the successful party.

Cost orders should almost always factor into the decision-making process in litigation. For example, I’ve seen litigants file a lawsuit under the belief that they only have to worry about their own legal fees and that they can withdraw from the proceedings at any time without consequences if they decide that those fees become too high. That is not the case. Defendants can seek costs for the legal costs they have to pay to defend against a claim, even if a case never goes to trial.

Conversely, I’ve also seen too many people defending a vexatious or baseless claim accept an unfair settlement offer under the calculation that the amounts involved aren’t worth the legal costs needed to fight them. Again, these kinds of calculations fail to consider that you can recoup part or all of your costs by seeking a cost order at trial.

At the end of the day, litigation is multifaceted because people are multifaceted. For some, it may not be about the money as it is the principle of the issue. But should it be a factor in considering how you want to be heard before the court? Always.

Max H. Shin, Associate Lawyer