Winning a legal battle can feel like a huge weight off your shoulders. You’ve invested time, money and energy into defending your business or pursuing a claim, and the judge has ruled in your favour. It’s natural to assume that victory in court also means victory for your bank balance.
But in reality, that’s rarely the end of the story. After the verdict, another crucial process begins — the dispute over legal costs. For many businesses, this “second battle” can be just as important as the first. Handle it well and you could recover a large proportion of your legal spend. Get it wrong and you may find yourself out of pocket despite technically winning your case.
The Hidden Truth About Legal Costs
Most business owners know that the English legal system generally works on a “loser pays” basis. The idea is straightforward: the unsuccessful party covers the successful party’s legal costs. However, what many don’t realise is that this principle is subject to significant limits and exceptions.
Courts apply rules of reasonableness and proportionality when deciding how much can be recovered. In practice, this often means that even a winning party may only recover a percentage of their actual legal spend. Certain types of costs may be disallowed entirely, or reduced if the court considers them excessive or unnecessary.
The process doesn’t stop at submitting an invoice either. Costs are subject to assessment, where bills are scrutinised line by line. Opponents can — and frequently do — raise formal objections, seeking to slash the total amount claimed. Without expert handling, recovery rates can fall far short of expectations, leaving businesses with a significant shortfall.
Why Specialist Help Matters
This is where costs lawyers step in. Costs law is a highly specialised field, distinct from general litigation. It requires not only technical knowledge of the rules but also strategic skill in drafting budgets, preparing detailed bills of costs, and responding effectively to challenges.
This is why having a skilled Costs Lawyer, such as Athene Legal, can make all the difference. Their team works with businesses and law firms to ensure that costs are properly prepared, defended, and ultimately recovered. From negotiating settlements to attending detailed assessment hearings, their expertise can mean the difference between securing a strong financial outcome and walking away with far less than you expected.
For business owners, this isn’t just a legal technicality — it’s about protecting your bottom line. By involving a costs lawyer early, you maximise your chances of recovering the money you’ve spent, while minimising the risk of paying more than you should to the other side.
Common Pitfalls in Costs Recovery
Even when the judgment is in your favour, there are plenty of ways businesses can lose ground in the costs process. Some of the most common pitfalls include:
- Underestimating complexity – costs assessments are highly technical. Without proper preparation, businesses risk missing recoverable items or failing to justify expenses.
- Poorly drafted costs budgets – if your budget isn’t accurate or realistic, the court may limit recovery to the budgeted figures, even if you’ve legitimately spent more.
- Aggressive challenges from the other side – opponents often raise detailed objections, seeking to reduce the amount payable. Without a clear response, these objections can stick.
- Solicitor–client disputes – sometimes, the issue isn’t with the other side at all, but with your own legal team’s fees. If bills aren’t transparent or agreed, disputes can arise between solicitors and clients themselves.
All of these scenarios highlight the importance of taking the costs stage seriously. Winning the judgment is one thing — winning the financial outcome is another.
The Business Impact
For many businesses, unrecovered legal costs are more than just a nuisance; they can hit hard on the balance sheet. A company may have succeeded in court, but if only 60–70% of its legal spend is recoverable, the “victory” can feel hollow.
Small and medium-sized enterprises (SMEs) are particularly vulnerable. Cash flow is often tighter, and a costs shortfall can erode profits or even put future operations at risk. Larger organisations may weather the blow more easily, but prolonged disputes over costs can still disrupt budgets, damage client relationships, and create uncertainty.
There’s also the reputational aspect. Ongoing wrangles over costs can delay final settlement, drag disputes back into the spotlight, and leave businesses with a sense of unfinished business. In today’s fast-moving commercial world, the last thing any business owner needs is a legal hangover after a case is supposedly “done and dusted.”
How Businesses Can Protect Themselves
Fortunately, there are steps business owners can take to put themselves in the strongest position from the outset:
- Plan ahead – ask your solicitors about costs strategy at the very start of a case.
- Get the budget right – ensure costs budgets are realistic and proportionate to the issues at stake.
- Engage a costs lawyer early – the sooner a specialist is involved, the easier it is to maximise recovery and reduce exposure.
- Keep clear records – time spent, disbursements and supporting documents all strengthen the case for recovery.
- Treat costs as a strategy, not an afterthought – just like case strategy, costs strategy should be built into your approach from day one.
By following these steps, businesses can approach litigation with their eyes open, knowing not just how to win the case but how to protect their financial position as well.
Turning Legal Success into Financial Success
The key message for business owners is simple: winning in court doesn’t automatically mean winning financially. The battle over costs is its own arena, with its own rules, strategies and risks.
Those who ignore it risk walking away from litigation with a victory on paper but a loss in practice. Those who plan ahead, seek the right advice and bring in costs specialists stand a much better chance of emerging both legally and financially successful.
In other words, when it comes to litigation, the final whistle doesn’t blow at judgment — it blows when the costs are settled.
