Legal costs: Kevin Yee dispels common myths about having your lawyer fees covered in lawsuits.
We often talk about court cases as being won or lost. It’s understandable. The court hears two sides argue against each other and then makes a decision. In criminal cases, an accused might be found guilty or not guilty—it’s pretty clear-cut.
Even civil cases lend themselves to this win-loss narrative. Last week, Led Zeppelin won when a Los Angeles jury decided that they didn’t steal “Stairway to Heaven” from another band.
First, let me clarify the language: it’s far too simplistic to think that going to trial means having the court declare a winner and a loser. Generally, the courts hearing civil suits are deciding whether a defendant is at fault. If so, then the courts would decide what damages or remedies the plaintiff is entitled to. Introducing a win-loss narrative is more about how a lawyer or the media might make sense of a court’s complex decision. Doing so can be very subjective.
For example, in a personal-injury lawsuit the court may find that a defendant driver was at fault for hitting the plaintiff’s vehicle. You could say the plaintiff won the lawsuit. For the sake of argument though, what if that court awarded the plaintiff minimal damages because the court felt the plaintiff’s injuries were minor? Is this still a win? Or is it more of a pyrrhic victory?
On the other hand, what if the court awarded a below-average award but the plaintiff had even lower expectations? You’d be hard-pressed to convince that person they didn’t win.
Setting aside the subjectivity in looking at a court’s decision, the court can still identify which party has succeeded. For example, if the court is satisfied that a defendant was legally at fault, the court can view the plaintiff as the successful party. Alternatively, a party might tell the court how they made an out-of-court settlement offer that was rejected—only to obtain an even better result at trial. The court might also view that party as successful.
The court’s opinion on whether a party is successful has real consequences. It can result in a decision to award costs. The B.C. Supreme Court can make awards for costs that are separate from any award for damages. An award of costs is meant to help with the lawyer fees and expenses.
What exactly is this award of costs? It’s often assumed that if you win your case then all of your legal fees are paid for by the losing side. Unfortunately, this is not the case in B.C. On its face, this is surprising. After all, maybe the successful party feels vindicated when they didn’t even want to litigate in the first place.
In general, an award of costs in B.C. is not calculated as the mere reimbursement for legal fees paid. Instead, an award of costs is assessed with a set of guidelines and rules. Without getting into the nitty-gritty details, the court’s general approach is to consider the amount of legal work reasonably expected in the circumstances and to then assign a number of units. These units have a set value. It’s a matter of multiplying the total number of units to a price that’s set in the court rules.
Notice that this unit price is not tied at all to how much a lawyer actually charged in a particular case. And notice that the number of units assigned is very loosely tied to the amount of work that lawyer actually did. In reality, an award of costs in B.C. will probably not get close to how much a party actually paid their lawyer. Often, an award of costs reflects only a fraction of the actual legal fees paid.
This might seem unfair. Why shouldn’t a winning party’s legal fees be paid in full? The reluctance in fully reimbursing a party of their legal expenses may be to avoid making awards overly harsh on the losing side. Taken to the extreme, the risk of being saddled with a huge award of costs would concern the little guy a lot more than a large company. Keeping these down would help level the playing field.
The courts might also strive for consistency in awards from one case to another. If two cases have similar facts then, arguably, the awards for costs should be similar too—regardless of what the lawyer charged in one case. This is especially important if one lawyer spent a lot of unnecessary work or charged at a much higher (or lower) rate than average.
The reality with costs in B.C. can surprise people considering a lawsuit. And legal fees are often a major consideration in whether or not to litigate. Although this shouldn’t discourage people from starting lawsuits, the expenses with litigating shouldn’t be overlooked.
This should also be factored in when considering out-of-court settlements or considering trial. It’s something to discuss in detail, with your lawyer, in order to make informed decisions about your case.
Note: In B.C. small claims court, costs are generally not awarded. This article focuses on civil cases at the B.C. Supreme Court level.
A word of caution: you should not act or rely on the information provided in this column. It is not legal advice. To ensure your interests are protected, retain or formally seek advice from a lawyer.