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What are Costs and what does that mean for your litigation?

Costs are legal expenses that accumulate during a lawsuit. Costs include hourly fees for lawyer’s work and disbursements. Disbursements are out-of-pocket expenses the law firm must incur in order to advance your case. After a trial, proceeding, or a step in a proceeding, the judge may order that one party pay all or a portion of the other party’s costs.

In the majority of cases, the judge orders that the unsuccessful party pay a portion of the successful party’s legal costs, however, this is not automatic. The court has discretion on whether to award costs and will consider a number of factors in making this determination. Factors include the complexity of the issues in the proceeding, the conduct of either party that unnecessarily delayed or lengthened proceedings and whether a plaintiff is found to be contributorily negligent. The court also has discretion over the amount of costs to be paid and will attempt to find an amount that is fair and reasonable in the circumstances.

Cost consequences regarding settlement

The most significant concern with costs in a personal injury action is regarding settlement. In an effort to encourage parties to act reasonably and work towards settling their dispute in good faith, there are cost consequences that can attach to settlement offers. If a plaintiff makes an offer to settle before the start of a proceeding that is rejected by the defendant, and then the Judge makes a ruling that is more favourable than, or as favourable as, the terms of the settlement offer, the plaintiff is entitled to costs.

For example, the plaintiff makes an offer to settle a lawsuit for $500,000 that is not accepted by the defendant. At trial, the judge finds the defendant liable for the amount of $550,000. The Defendant would then have to pay the judgment and the plaintiff’s legal costs because they did not accept the reasonable settlement offer.

There are also cost consequences where the defendant makes a reasonable offer to settle that is rejected by the plaintiff. For example, if the defendant makes an offer to settle for $600,000 that is not accepted by the plaintiff and the judge finds the defendant liable for the amount of $550,000, the plaintiff would have to pay the defendant’s legal costs even though the judgment was in their favour.

What does this mean for your litigation?

Generally, the court orders that the loser pays the winner’s costs after a decision is made. It is important to be aware of the factors that the court considers when making a ruling on costs, as they underscore the need to be reasonable and act in good faith throughout the course of litigation. The cost consequences that can attach to settlement offers mean that it is important to carefully consider all reasonable settlement offers, as it can be a significant expense if you are ordered to pay the costs of the defendant after a judgment. It is crucial that you thoroughly discuss all offers and cost consequences with your experienced personal injury lawyer!

Do you or someone you know need legal representation? We are here to help. Please contact Louis DelSignore today.

This post was written by Lawyer Louis DelSignore and Articling Student Jonathan Bradford.