One of the major challenges of our legal system is that there is almost always a cost associated with achieving recognition of your legal rights. Usually, much of that cost can not be recovered once your claim has been resolved.
You may have followed the recent story about a woman who was ordered to pay a significant sum to a man she accused of serious sexual harassment at work. The payment was ordered because the woman was unsuccessful in a civil legal claim against her harasser.
This case serves as a timely reminder that the likely cost position should always be considered in your decision making process. Predictable costs outcomes include:
- You win the claim, and the Court or Authority order the other side to pay you costs. That order is unlikely to cover the full legal cost of bringing the claim (generally speaking, it is intended to represent roughly two-thirds of your actual cost – in the Authority it is usualyl set at $4,500 per day). Depending on what is at stake, you might end up financially worse off, despite a positive result.
- You lose the claim. If you are an employer you may be required to make certain payments to the employee. Whether you are an employee or an employer, you will probably be required to also make a payment in respect of the other side’s costs. If you are an employee who has a ‘no-win no-fee’ arrangement with your representative, this will not protect you from an order that you pay costs to the other party.
- Whatever the outcome, there is a pre-hearing settlement offer (a “Calderbank offer”) which affects the costs position. In such cases, you might win the case, and have money awarded in your favour, but you may be required to pay more than you win to the other side because you failed to settle the claim at an earlier stage – in one recent Employment Relations Authority decision an employee won and was awarded $10,000 in compensation, but required to pay more than $12,000 to the employer in a later costs decision.
The hard truth is that litigation has both a principled and an economic implication, and it is important that both elements are considered when you decide how you will proceed. If you are involved in litigation, you should seek information from your representative both as to what that person will charge you, but also what your overall costs position could be.
#costs #calderbank #litigation #hearing
