Q. Are lawyers able to enter into contingency /damages sharing agreements with clients?

No, contingency fee agreements are unlawful. However, it is lawful for lawyers to enter a fair and reasonable conditional fee arrangement for an increase in fees to reflect the nature of the risk undertaken by counsel in accepting a case without the assurance of receiving payment.

Q. Recoverability of client costs and/or success fees?

The Court may order that costs (including attorney’s fees, court fees, expert witness fees, travelling expenses for witnesses, and any other expense reasonably incurred by an attorney during the course of the litigation not included in the attorney’s fees) are recoverable from an unsuccessful party. However, there are various restrictions on recoverability and it is rare that a client’s full costs would be recoverable. For instance, foreign attorneys’ fees are generally not recoverable. The Arbitration Law 2012 provides that every arbitration agreement shall be deemed to include a provision that costs awards shall be in the discretion of the arbitral tribunal (unless the contrary is stated).

Q. Can a Defendant obtain an order for security for costs?

Yes. Where a plaintiff may be unable or unwilling to satisfy a costs order a defendant can apply to court for an order that the plaintiff provide security for costs. Generally such an order requires the plaintiff to deposit an amount with the Court. The Court has previously found that an ATE insurance policy obtained after security for costs was ordered did not constitute acceptable security (in that case it was relevant that the policy was with a UK insurer with no assets in the Cayman Islands). However, if ATE insurance is obtained prior to any security for costs orders the Court will take it into account.

Q. How active is the Court costs management? Are cost budgets required?

There are no requirements to file costs budgets in advance. However, after costs orders are made, if parties do not agree on costs, the Taxing Officer (a court official) may be called upon to review a detailed bill of costs from the party claiming costs and to assess the reasonableness of the claim. The Taxing Officer may consider written submissions and may also request further information. The Taxing Officer will then issue a costs certificate setting the amount to be paid. Either party may apply to Court to review the Taxing Officer’s decision. A Judge then may request further evidence/submissions. A party may still appeal the Judge’s decision to the Court of Appeal. However, leave to appeal will only be granted in limited circumstances

This article was first published by Brown Rudnick.

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