Understanding legal costs: a plain-English guide for clients

Your solicitor's client care letter sets out how you will be charged. That might be an hourly rate, a fixed fee, or a no win, no fee arrangement such as a conditional fee agreement. It should also explain VAT, disbursements and when bills will be sent. Disbursements are third-party costs such as court fees, expert reports and barristers' fees.

Firms regulated by the SRA must publish price information for certain services and give clients the best possible information about the likely overall cost. An estimate is not a fixed price, but if costs look likely to exceed it, you should be told and given the reasons.

If you win a court case, the court may order the other side to pay some of your costs. That order rarely covers everything. Costs are usually assessed on the standard basis, which only allows costs that are reasonable and proportionate to the case. Some claims have fixed recoverable costs, and small claims allow very limited recovery.

The difference between what you owe your solicitor and what the other side pays is often called the shortfall. Your retainer should explain whether you will be asked to pay it, and whether any part will come from your damages.

Losing can mean paying the other side's costs as well as your own, unless protection such as qualified one-way costs shifting or insurance applies. Settlement offers also have costs consequences. Rejecting an offer that you later fail to beat at trial can change who pays costs from that point. Ask your solicitor to explain the costs risk whenever an offer is made or received.

If a bill seems higher than expected, start by asking for a breakdown and an explanation. Most firms have a complaints procedure, and the Legal Ombudsman may be able to help with service complaints. You can also ask the court to assess the bill under the Solicitors Act 1974. Time limits apply, so do not wait.

On assessment, the court considers whether the costs were reasonable. Under CPR 46.9, costs you approved are presumed reasonable, while unusual costs are presumed unreasonable unless your solicitor warned you that they might not be recovered from the other side. That is why keeping your client care letter and costs updates is useful.

Costs Lawyers specialise in legal costs. Ours are regulated by the Costs Lawyers Standards Board and can review a solicitor's bill, explain whether it looks reasonable, and represent you if it goes to assessment. We also help solicitors prepare clear estimates and bills, which reduces disputes before they start.