Fee Transparency – Debt Recovery

Debt recovery work

Work on debt recovery claims is carried out by Ruth Brown, a senior solicitor admitted in 1994, with occasional assistance from Mr Colin Byford.

Work is charged on an hourly rate basis at £261.00 per hour plus VAT.  Each case is different so it is not possible to give a fixed total cost, but typical costs for each stage are set out below.

All our fees mentioned are exclusive of any VAT which will be added at the current rate, which is presently 20%.

1. Initial interview.  This is charged at a fixed fee of £120.00 (£144.00 including VAT).  In this interview we will discuss the issues in your case, advise you on the process including the Pre-Action Protocol for Debt Claims and whether it applies in your case, consider funding and financial implications and agree the next step.  An important consideration in debt cases is whether the debtor has the means to pay any sums awarded against him.  Obtaining a County Court Judgment does not guarantee payment, and our advice will include considering the likelihood of payment.

Protocol letter or letter before action

2. If you are required to follow the pre-action protocol and have not already done so before you instruct us, the first step will be to send a protocol letter and supporting information to the debtor. Under the protocol you have to allow the debtor 30 days in which to respond before you can start Court proceedings.  If you are not required to do send a protocol letter, the next step may be for us to prepare a letter before action to the debtor, giving them a fixed period of time, say 14 days, in which to settle the debt before Court proceedings are started.  In both cases we would also send a full letter of advice to you.  A simple letter before action and letter of advice may take 30 minutes’ work but a more complicated letter or protocol letter could be closer to 1 hour’s work (£130.50-£261.00 plus VAT).

3. The next stage depends on the debtor’s response. If they respond to the letter it may be possible to resolve the dispute without the need for Court proceedings.  The cost of this will depend on how much negotiation there is before final agreement is reached, and it is difficult to estimate a cost for this as each case will involve different amounts of work.   If the matter resolves quickly, it may be a couple of hours’ work or less (up to £522.00 plus VAT).   Realistically, if the matter has not resolved after that much negotiation, it will probably be necessary to issue Court proceedings.

Issuing Court proceedings

4. If the matter cannot be resolved through negotiation, or if the debtor ignores the letter of claim or indicates that he disputes the debt, the next step for a creditor, known as the Claimant, will be to issue Court proceedings to recover the sum owed. This is now done online through a portal and it involves completing a Claim Form N1 and Particulars of Claim.  In the case of a simple debt where we have all your information to hand this can take 30-60 minutes (£130.50 to £261.00 plus VAT) but if we have to go back to you with questions, or if the background to the case is complicated you could be looking at 1 hour 30 minutes (£391.50 plus VAT) or more.

5. A Court fee is payable when a claim is issued, and the amount of this fee depends on the value of the claim. For claims below £10,000 there is a fixed fee, ranging from £35 for claims up to £300 to £455 for claims between £5,000 and £10,000.  For claims of more than £10,000 the fee is 5% of the sum claimed.  If you are on benefits or a low income you may be eligible for a full or partial remission of the Court fee and we will advise you about this if appropriate.

The Debtor’s response

6. The debtor, known as the Defendant, then has to complete an Acknowledgement of Service form within 14 days of receiving the Claim Form. If he disputes the debt, he has to file a Defence within 14 days thereafter.    If he fails to do either of these you can obtain judgment in default for the total amount of your claim plus the Court fee and a small amount of costs.

7. If Defendant admits the debt he may ask for time to pay, or to pay by instalments. If this cannot be resolved by negotiation the Defendant can ask the Court to decide.

8. If the Defendant ignores the Claim Form and you obtain Judgment in default, the next paragraphs will not apply. If he files a Defence we would then meet with you to discuss what he has said, and we may need to file a formal Reply to the Defence at that stage to set out how much of what they say is accepted and what is disputed.  Depending what is said in the Defence we may review the value of the claim, the chances of success and, if appropriate, consider and advise on offers of settlement.  This could be between 1 and 3 hours’ work (£261.00 – £783.00 plus VAT), depending on how much there is to consider.

The directions stage – preparing for trial

9. The Court will then give directions for preparing the case for trial. In a  lower value case the Court may do this without  a hearing, but in higher value cases the Court may list a hearing and require us to carry out preparatory steps, including completing a questionnaire and drafting proposed directions.  This is typically 1-2 hours’ work (£261.00 – £522.00 plus VAT).

10. Typical directions include sending copies of all relevant documents to the other side and preparing witness statements. The amount of documentation in debt cases can vary considerably but disclosing documents and reading documents received from the other side can be between 30 minutes and 3 hours (£130.50 – £783.00 plus VAT), depending on the volume of documentation.

11. The time needed for witness statements depends on how many witnesses you have, the length of each statement and how much detail is included. In some debt cases the need for witness evidence is minimal, whereas if there are a lot of points in dispute others will need detailed witness statements to support your position.  Even with just one witness you are probably looking at a minimum of 1 hour’s work for this (£261.00 plus VAT), and with several witnesses, it could be 5 or 6 hours’ work in total (£1,305.00 – £1,566.00 plus VAT).

12. In some cases other directions may be given, such as for a report by an expert witness, but this is not usual in straightforward debt cases. In claims of over £25,000 we have to prepare a costs budget, or more detailed calculations of losses, and we would need to estimate the costs of these on a case by case basis.

Timings

13. The total time taken to deal with the directions stage will depend on how complex the case is and what needs to be done, but even in a straightforward case the directions timetable is likely to cover a period of 2-3 months. Added to that, there are now substantial delays in the Court system and it can take a couple of months for the Court to set the directions timetable.  Sometimes both sides can agree to a preparation timetable without waiting for the Court, but you need to be aware that if the debt is disputed, the case will not be resolved quickly.  If the case is not resolved after the directions stage it will go to a final hearing, and if a hearing is needed, the hearing date is likely to be several months ahead.

The trial

14. In a disputed debt case the Court will list a final hearing, called a trial and a hearing fee is payable a month before the trial date. This ranges from £27 for claims under £300.00 to £1175.00 for claims of over £25,000.  As with the Court fee, remission is available for hearing fees for clients on low incomes.

15. We do not do advocacy at trials ourselves. For the trial we will arrange for a barrister to attend and represent you.  The barrister’s fee will depend on how long the trial is and how experienced they are, but for example, for a 1 day trial with a barrister of say 5-7 years’ experience, you could be looking at £2,000.00 – £2,500.00 plus VAT.  We will consult you before incurring the cost of a barrister, and we usually require clients to make payment on account of barristers’ fees before they are instructed.

16. As well as the barrister’s fee, there are our costs of preparing the case for trial, which includes preparing bundles of case papers, sending papers to the barrister and dealing with practical arrangements such as notifying witnesses if they need to attend. The trial preparation work can be quite time-consuming, especially in a case with a lot of documents, so you could be looking at 6 hours work (£1,566.00 plus VAT) or more.  In lower value cases we may not attend Court for the trial in order to keep costs down, but if we are required to attend the hearing that will be an additional cost which depends on the length of the hearing time.

17. The trial is the most expensive part of a case, so we will look at settlement options where possible. A case can be settled at any time up to the trial, and the costs saving of settling early is an important factor.  During the case, if you are interested in exploring settlement we will correspond with the other party and make offers, and advise you on any offers which are made by the other side.  It is difficult to say how much work could be involved in this, because settlement is not an extra item as such, but correspondence about offers could add a couple of hours’ work to the total (£522.00 plus VAT).

18. In more complex cases we may suggest that we consult a barrister during the preparation of the case, either for written advice or in a conference. In some cases we may advise instructing a barrister to prepare the Claim Form and Particulars of Claim.  The first time the barrister works on the case they will have to read all of the papers but once they have done that, they may do additional items for less, but for a conference or written advice you are typically looking at £1,500.00 – £2,000.00 plus VAT and for drafting work maybe £600.00 -£1,000.00 plus VAT.  

Costs rules

19. An important consideration is what happens with regard to costs. If your claim is for £10,000 or less, that is treated as a Small Claim and the usual rule is that each side has to bear their own legal costs, apart from Court fees and experts’ fees, whether they win or lose the case.  This means that even if you are successful at obtaining judgment for your debt, you will have to pay your legal costs out of that money.  We bear this in mind throughout the case when advising you.

20. For claims of over £10,000, if you win, the Defendant is usually ordered to pay some but not all of your costs. For claims between £10,000 and £100,000 the Court rules now specify a fixed amount that the Defendant pays towards your costs which is related to the value and complexity of the claim. The amount of the fixed costs may not be enough to cover the full amount of your costs and in that case, our terms of business provide that you may have to pay any shortfall.   If you have a claim of this size we will advise you more fully about the costs risks as the case proceeds.

Enforcing the judgment

21. Once you have obtained judgment for your debt, if the debtor does not pay, you may have to take enforcement action in order to obtain payment. The Court Order will specify a date by which the Defendant has to pay the debt, usually within 14 days of the judgment, and once that period has lapsed you can take enforcement action if it is not paid. This could include applying for an attachment of earnings order, where money is taken out of the debtor’s wages each month, a charging order, where the debt is secured on the debtor’s property, or we may advise you to instruct a High Court Sheriff to enforce the debt by seizing the debtor’s goods.  We will discuss the price of each of these options with you should the need arise.

22. Our usual terms of business are a private client retainer, where you are liable to pay our fees regardless of the outcome of the case, but in cases of hardship where we consider you have a strong case and good prospects of recovering your debt, we may agree to act on a deferred payment basis, so that you pay us when you receive your damages, or we may be willing to do some initial work on a no win no fee basis to explore the possibility of settlement, but this is at our discretion and Mr Byford’s decision on funding is final.

January 2024