Unlocking The Cash Through A Costs Mediation Supported By Third Party Litigation Funding

“Locked-Down” by Covid-19 does not necessarily mean “Locked-Up” so far as resolving the costs of a legal action are concerned. Whilst winners are still entitled to have their costs quantified by a costs judge, the practicalities of that with the closure of the Civil Courts for most types of business, have meant an end to the face-to face- detailed assessment hearings at which those costs are assessed. True though it is that the Courts have proved adaptable in administrating justice during the coronavirus crisis in a way that would have been unthinkable only three months ago, (Zoom hearing, hearing by Microsoft Teams, judgment to be handed down remotely under the Covid-19 Protocol etc), the stark reality is that there will be no return to business- as-usual for many months, possibly much longer. In these circumstances, it may be thought inevitable that cash strapped firms of solicitors and their clients will face a long wait for their costs to be resolved and paid.

Not necessarily! To unlock the cash, look no further than to a costs mediation carried out remotely by an accredited costs mediator and supported, if needs be, by a Third Party Funder. By such means, parties whether paying or receiving, can resolve their costs disputes months earlier than would be the case if the matter went to court. Consider, too, the other benefits. It is for the parties to appoint the mediator, they decide when, where and how long the mediation will last, they deploy only the documents they want to rely on, they choose whether or not they wish to be bound by any compromise suggested, and, crucially, they have full control over much the process will cost. Compare
that with the court, where there is no choice of judge, hearing date or
certainty of outcome, and at the end of it all, there is the ever present threat of an appeal. With a dispute that settles at mediation, that’s it- finality.

Mediation has other benefits. Bank Base Rate is now 0.1% but interest on costs is unchanged at the judgments’ rate of 8%. Thus, being owed costs represents the best deposit account around, so it is to the advantage of anyone paying costs, whether they be Individuals, Insurers or NHS Trusts, to know where they stand costs-wise and pay off what they owe in order to stop interest running.

There are mutual benefits too. Resolving the costs at a mediation means there is no risk of coming a cropper at a detailed assessment by failing to beat an offer made under Civil Procedure Rule 36, and, if you are a paying party, also suffering the prospect of having to stump up an additional 10% of the assessed costs under Part 36.17(4). And, of course, with mediation, there is no unpredictable “Wild West” proportionality test under CPR 44.3(5) to worry about. Settle at mediation, and that, quite simply, is the end of the case.

Any problems? What happens if the receiving party has no accessible funds available to pay for the mediation as their cash is tied up in the costs owed by the losing party ?

Problem solved. Help is at hand through Third Party Litigation Funding such as that available through Affiniti Finance as part of a general legal funding package, to cover outgoings such as the mediator’s fee and own solicitor’s charges. Out of this will be financed the mediation and any attendant expenses which will be satisfied on receipt of the costs when these are finally resolved and paid. No need to wait for the Courts to reopen to do this: mediations can be arranged remotely and securely through the Internet platforms which have now become household names such as Zoom and Microsoft Teams.

The outcome? For a modest outlay, cash can be released to receiving parties and their legal advisers months earlier than otherwise would be the case. For those paying costs, the book can be closed and for both sides, any litigation risk which always exists when going to court however watertight the case may seem, can thereby be eliminated. Settle your differences at mediation may not mean that there is a winner or a loser in the conventional sense, but both sides will have achieved an outcome which each can live with. In these troubled Covid-19 days, that has a lot to commend it.

Colin Campbell
Deputy Costs Judge
Accredited mediator at Costs Alternative Dispute Resolution (CADR)

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