Debt Recovery

Irrespective of the monetary value associated with a claim, prior to commencing legal proceedings, it is incumbent upon the party bringing the claim to adhere to court rules mandating the dispatch of a formal "letter of claim." This communication must comprehensively elucidate the particulars of the claim and afford the debtor a prescribed period, typically around 30 days, to respond. It is worth noting that a substantial proportion of cases are resolved at this pre-action stage, prior to the initiation of formal litigation.

In order to craft a letter of claim with precision, a thorough analysis of the case is imperative. This entails a meticulous examination of documentary evidence and consideration of potential witnesses. The gathering of such information is essential to construct a robust and well-founded claim.

Regarding the matter of costs, we are prepared to provide a precise estimation upon receipt of the requisite documentation and subsequent initial consultations with you. Additionally, we are open to the prospect of negotiating fixed fees for the preparation of the letter of claim, and these arrangements will be discussed on a case-by-case basis.

Our fee schedule for different phases of legal proceedings is delineated as follows: Letter of Claim:

1. The standard minimum charge for a letter of claim starts at £500, with an additional 20% VAT, based on an estimated four hours of work. However, it is essential to acknowledge that this figure may vary depending on the complexity of your case and the volume of evidence involved. In more intricate cases, the initial stage costs could escalate to exceed £10,000, again subject to the 20% VAT charge.

2. Trial and Legal Costs: Should your case progress to trial, the anticipated legal expenses range significantly. Typically, they span from £15,000 to well over £100,000, plus 20% VAT. It's worth noting that these figures exclude expenses such as court issue fees and other disbursements, which are elaborated upon below. Based on our experience, debt claims amounting to £100,000 that proceed to trial generally result in costs around £50,000, with a 20% VAT component.

3. Scope of Fees: Our comprehensive fees encompass several crucial elements, including but not limited to: Drafting and filing the claim form and particulars of claim. Evaluation of the defense presented. Preparation of a costs budget if mandated. Guidance on disclosure responsibilities and adherence to court-ordered disclosure procedures. Collaboration with witnesses and the formulation of witness statements. Thorough preparations for and attendance at all court hearings, including the trial itself. Ongoing advisory services concerning the case's merits and strategic considerations.

4. Timeframe: The duration of time required to resolve a claim is contingent upon various factors, including: The complexity of the claim. The existence of written agreements and the overall evidence. The geographical location of the debtor. The strength of the debtor's potential defense. The number of witnesses involved.

Generally, claims can take anywhere from 1 to 18 months from the receipt of your instructions to the receipt of payment from the opposing party. However, if enforcement actions become necessary, the resolution timeline may be extended.

Please note that the fee ranges specified above do not encompass additional services, such as enforcing judgments, addressing counterclaims, Part 20 claims, or third-party claims. Moreover, these fees do not cover the engagement of experts or the associated costs, the handling of interim applications, or third-party disbursements like process server fees.

Key Stages:

Claims are commenced by issuing a claim form, which contains the names of the parties, details of the claim and its value. A court fee must be paid depending on the value of the claim as set out in the ‘Court costs and structure’ drop down. Once the claim form has been issued, the claimant must serve it on the defendant within four months if the defendant is within the jurisdiction or within six months if the defendant is outside the jurisdiction.

The claimant must also prepare particulars of claim, which set out the case and the facts relied on. The claim form can be served within the jurisdiction by various methods, including post and personal service.

Once the defendant has been served with the particulars of claim, it has 14 days to file an acknowledgement of service or a defence. If the defendant files an acknowledgment of service form, it has 28 days from the date of service of the particulars of claim to file a defence. If the defendant does not file an acknowledgment of service form, it must serve a defence within 14 days of receipt of the particulars of claim.

If the defendant does not file an acknowledgment of service form or a defence within the prescribed time-frames, in most cases the claimant can apply for judgment in default. The claimant can serve a reply in response to the defence within 28 days of receipt of a directions questionnaire from the court. If the defence contains a counterclaim, the claimant must serve a defence to counterclaim, which is often served with a reply, within 14 days of service of the defence and counterclaim.

The timetable for the subsequent stages of the litigation process, known as “directions”, will be determined at a hearing known as a case management conference. Directions for multi-track cases (usually those worth over £25,000) will usually include most or all of the following: Disclosure of documents – usually around 1-2 months after the pleadings (particulars of claim, defence, counterclaim, reply etc.) are closed Exchange of witness statements – usually around 1 month after disclosure Exchange of experts’ reports – around 1 month after witness evidence A pre-trial review hearing – 1-2 months before trial Trial – within 9-18 months after the claim is issued.

The directions for fast track cases will be a shorted version of the multitrack directions and trials are usually listed within around 6-9 months from when the claim is issued. The directions for small claims track cases usually involve listing a trial around 4 months after the claim is issued with the evidence exchanged around a month before trial.

The court generally plays an active role in managing the proceedings and the directions given at the case management conference (even if the directions are agreed between the parties).

Commencing legal claims entails a systematic procedure:

1. Issuing the Claim Form: Claims are initiated by submitting a claim form that includes the names of the parties involved, a description of the claim, and its monetary value. A requisite court fee must be paid, the amount of which depends on the claim's value, as outlined in the 'Court costs and structure' section. Following the issuance of the claim form, the claimant must serve it on the defendant within four months if the defendant is within the jurisdiction or within six months if the defendant is located outside the jurisdiction.

2. Particulars of Claim: The claimant is also responsible for preparing particulars of claim, which outline the case's details and the facts upon which it relies. Within the jurisdiction, various methods, including postal and personal service, can be used to serve the claim form.

3. Response Timeframes: After being served with the particulars of claim, the defendant has 14 days to either file an acknowledgement of service or a defence. If an acknowledgment of service form is filed, the defendant has an additional 28 days, starting from the date of service of the particulars of claim, to file a defence. If the defendant opts not to file an acknowledgment of service form, a defence must be served within 14 days of receiving the particulars of claim.

4. Default Judgment: Failure by the defendant to file an acknowledgment of service form or a defence within the stipulated timeframes typically allows the claimant to apply for judgment in default. The claimant may also serve a reply in response to the defence within 28 days of receiving a directions questionnaire from the court. If the defence includes a counterclaim, the claimant is obligated to serve a defence to the counterclaim, often included with the reply, within 14 days of receiving the defence and counterclaim.

5. Case Management Conference: The subsequent stages of litigation, referred to as "directions," are determined at a case management conference hearing. For multi-track cases, usually those exceeding £25,000 in value, directions generally encompass the following: Disclosure of documents, usually around 1-2 months after the pleadings (particulars of claim, defence, counterclaim, reply, etc.) are completed. Exchange of witness statements, typically about 1 month after disclosure. Exchange of experts' reports, usually around 1 month after witness evidence. A pre-trial review hearing, scheduled 1-2 months before the trial. The trial itself, scheduled within 9-18 months after the claim is initiated.

6. Fast Track and Small Claims Track: For fast track cases, the directions are generally a condensed version of multi-track directions, and trials are typically listed within approximately 6-9 months from the claim's initiation. In small claims track cases, trials are often listed around 4 months after the claim is initiated, with evidence exchanged approximately one month prior to the trial.

It is important to note that the court actively manages the proceedings and may issue directions during the case management conference, even if these directions are mutually agreed upon by the parties involved.

Court costs and structure:

In the event that the commencement of a legal claim in court becomes requisite, a fee is levied, and this fee is contingent upon the claim's monetary value. Presented below is a table provided by Her Majesty's Courts and Tribunals Service, outlining the applicable court fees when initiating a claim in court. It is often feasible to utilize one of the court's online portals, specifically Money Claim Online (MCOL) or County Court Business Centre (CCBC), for the submission of claims.

The court issue fee for using these portals is discounted as set out below. Starting proceedings to recover a sum of money which:

The determination of the court track for a given claim hinges on the claimed value, resulting in the following categorizations:

1. Small Claims Track: This track is designated for the streamlined handling of lower-value claims, those with a financial worth under £10,000.

2. Fast Track: The fast track is the standard choice for claims valued between £10,000 and £25,000. It applies when the trial is anticipated to conclude within a single day, and the introduction of oral expert testimony is limited to one expert per party within a specific field.

3. Multi-Track: The Civil Procedure Rules define the multi-track as the suitable track for cases that do not align with the small claims or fast track categories. Specifically, it encompasses cases with a value exceeding £25,000, trials expected to extend beyond one day, or instances necessitating the presentation of oral expert evidence from more than two fields, or from a single expert in a specialized field.

Multi-track claims may be heard either in the High Court or the County Court. Typically, claims valued below £50,000 are suitable for the County Court, while those exceeding £50,000 are typically directed to the High Court.

In terms of costs, a prevailing party generally recovers approximately two-thirds of their costs. However, it's essential to note that courts possess substantial discretion when it comes to cost allocation, and specific guidance is recommended on a case-by-case basis.

Counsel’s fees:

When commencing legal proceedings in court, it is essential to anticipate the necessity of at least one hearing before a judge, and in some cases, multiple hearings may be required. Legal representation by an advocate is a requisite, and we will take the responsibility of instructing a barrister on your behalf. Barristers often play a pivotal role, not only in representing your interests but also in aiding with the formulation and preparation of your claim and other essential documents. We will negotiate and agree barrister’s fees on your behalf.

The cost associated with engaging a barrister is contingent upon several variables, including the barrister's level of expertise, the duration of the hearing, and the extent of work and preparation involved. As a general guideline, barrister's fees typically constitute approximately one-third of the overall legal expenses incurred by a claimant during the course of legal proceedings.

To provide a specific illustration, in the context of a debt claim valued at £100,000 that proceeds to trial, it is estimated that counsel's fees would fall within the range of approximately £15,000 to £30,000, with an additional 20% VAT, and this precise amount will be influenced by the seniority and experience of the chosen barrister.

Other Disbursements:

It is sometimes necessary to incur other third party costs during debt recovery litigation. Such costs could include:

1. Land Registry Search Fees: Charges associated with conducting inquiries within the Land Registry database to ascertain property ownership or any existing encumbrances.

2. Process Server Fees: Expenses incurred for the engagement of a process server, responsible for delivering legal documents, including court papers, to the pertinent parties involved in the case.

Disputed Debt Recovery (Claims over £10,000):

In the event that the debt recovery process encounters disputes or calls for enforcement measures (in cases where a judgment has been obtained but the outstanding amount remains unpaid), we will engage in detailed consultations with you to discuss potential fee adjustments and reach a mutually agreeable course of action.

In scenarios where a case is contested, we will furnish you with an evaluation of the defense's merits and provide a comprehensive breakdown of the anticipated costs associated with continuing the legal proceedings. It is important to note that all billable work will be calculated based on an hourly rate structure, in line with established hourly rates.

Hearing Fees:

Where a matter is disputed and the matter is listed for a hearing, there will also be a hearing fee. Small Claim Track where the amount claimed is:

• Claims up to £300 £25

• Claims between £300.01 and £500 £55

• Claims between £500.01 and £1,000 £80

• Claims between £1,000.01 and £1,500 £115

• Claims between £1,500.01 and £3,000 £170

• Claims more than £3,000 £335

• Fast track claims (claims over £10,000) £545

• Multi track claim (claims over £25,000) £1,090

Time Scales:

Debt recovery timelines do not adhere to a set standard. However, for the purpose of providing a general indication, a customary debt recovery demand letter typically outlines a response timeframe of 7 days when dealing with corporate debtors and 30 days when addressing individual debtors.

Exclusions:

Our fees are fixed and inclusive of the elements specified earlier. Nevertheless, certain factors may typically result in an augmentation of these costs. In such cases, we will ensure prompt communication and provide you with a transparent estimate of these supplementary expenses. Factors that might contribute to an increase in costs comprise:

• Any work conducted between the conclusion of a demand letter and the initiation of court proceedings, such as telephone follow-ups and updates to you.

• Enforcement proceedings, including the engagement of a Bailiff.

• When the matter surpasses £10,000 in value, thereby exceeding the limits of the small claims track.