Some very approximate costs

One of the great challenges in pricing litigation is that so much depends on how the other party or parties behave. Nevertheless, it is often quite expensive.

Here are some very rough approximate costs –

Starting litigation $5000+ (preparing of the Notice of Application, and a supporting affidavit from our client, getting the Application issued by the Court and served on the opposing party). Costs are usually significantly higher. This step is crucial, as it sets the tone and direction for all subsequent steps and both the likelihood of success and the timeframe to achieve it.
Even the simplest court appearance will cost $1000 (time spent scheduling, preparing, appearing, and following up).
A relatively routine not complex or contested Court appearance, like getting a timetable order on the first return of an Application: $3000+. This is a bare minimium cost, as this step usually includes discussions with opposing counsel, scheduling the hearing with the Court, preparing and filing all of the required materials including the confirmation form, attendance at Court, and securing the Order.
Each day of cross-examinations on an affidavit or examinations for discovery costs a minimum of $2500 and usually more (preparation beforehand usually takes as long or longer than the examination itself).
A contested motion or court appearance costs at least $5,000 and usually much more (>$15,000 is not uncommon) for preparation of the materials (which often include notice of motion, affidavit, factum, book of authorities), and all related scheduling and efforts to settle.
A day of mediation costs at least $7,500 for preparation of the mediation brief and conduct of the mediation. Additional costs include the mediator’s fees and the costs of preparing Minutes of Settlement if the matter resolves, and securing any related Court orders to implement them and/or terminate the litigation.
At our firm, hourly rates for our lawyers range from $375-$575, and for law clerks from $100 – $275 per hour.

In summary, costs for litigation that even if it resolves relatively quickly (for instance at mediation) can easily exceeed $25,000.

Note: we are not a fan of hourly billing. We think it incents lawyers to be inefficient. We prefer to be incented for being knowledgeable and efficient. That is why we prefer flat fees and contigency fee agreements.

Why is litigation expensive?

Litigation is expensive largely because of the amount of effort and attention to detail that is required. Litigation is not like your ordinary argument or business deal. Litigation requires a level of rigour unlike almost any other normal activity.

In litigation, the stakes are high for the parties and the Courts demand a high level of ‘proof’. The Courts do not rely on bald statements, or conjecture or guesses or estimates. In civil matters, the Courts require ‘proof on a balance of probabilities’ (50%) on actual evidence before the Court. In estate litigation, this often means written affidavit evidence with documents attached as Exhibits, all of which is subject to cross-examination.

This evidentiary burden is high because the Courts have enormous power to impose decisions on parties, so before they do so, they want to have all the facts before them and they genuinely want to try to make the right decision. Judges simply hate making rash, ill-formed decisions that could be wrong, unfair, or embarrassing.

As a result, in litigation the parties must spend enormous amounts of energy collecting and presenting the facts, and sometimes, in attacking the version of the facts presented by the other parties.

Also, related to the desire of the Courts to ensure that everyone has a full opportunity to be heard and dealt with fairly, the Courts impose significant procedural obligations at every step. some of these are referenced above in the sample costs. They include detailed process for scheduling hearings, confirming hearings, serving materials on opposing parties, facts and arguments submitted to the Court, and formatting of materials filed online.

Who pays?

Initially, each party must pay their own costs.

Ontario follows the ‘loser pays’ rule. At the conclusion of litigation, the Court usually makes a ‘costs award’.

A costs award is an order by the Court that one party (usually ‘the losing party’) must pay the other party (usually ‘the successful party’) ‘a portion of the successful party’s legal costs’.

This portion usually ranges between 30% and 70% of the winner’s actual costs (it is not full indemnity). Thus, the successful party must pay a portion of their own costs, and the losing party must pay 100% of their own costs and a portion of the winner’s costs.

Estate litigation in Ontario follows this rule with respect to costs. It is not the case that most legal fees for estate disputes will automatically be borne by the estate.

In estate litigation, sometimes a portion of a party’s legal fees are borne by the estate.

For instance, if the estate trustee acts reasonably and incurs reasonable legal expenses defending the estate (not defending themselves) their legal fees will be reimbursed from the estate.
Conversely, an estate trustee is not always entitled to have their legal fees paid by the estate. In particular, when an estate trustee fights to defend their own personal interest (such as their inheritance from the estate) then their legal fees are not a cost of the estate.
In estate litigation, if a party (for instance a beneficiary) is compelled to commence proceedings in order to ensure that the estate is administered at all or properly – for instance, to force the estate trustee to perform their obligations properly – then that party has a strong argument that some (and perhaps all) of their legal fees should be reimbursed by either the estate trustee or the estate.

Your Risks

If your claim fails (or your defence is rejected) you may be liable for costs to the other side.

If you start a claim, you cannot just arbitrarily abandon or discontinue it without some potential liability to the defendant for costs.

The risk of being liable to the other side for ‘costs’ cannot be entirely eliminated but it can be controlled and we are vigilant to ensure that our clients do not incur unnecessary liability. In estate litigation, the over-arching requirement is that you “should be reasonable”:

Do not take unreasonable positions;
Do not make unreasonable accusations;
Do not take unnecessary steps or force unnecessary actions on the other side;
Make reasonable offers to settle;
Accept reasonable offers from the other side.

Partial Indemnity, Substantial Indemnity and Full Indemnity

If Party A is to receive ‘partial indemnity’ of their costs from Party B, Party A will likely recover approximately 20-40% of the actual amount they incurred in legal fees from Party B. In other words, Party A will have to pay 60-80% of Party A’s legal fees, and Party B will pay the remainder. Partial indemnity costs are the norm.

If Party A is to receive ‘substantial indemnity’ of their costs from Party B, Party A will likely recover approximately 50-80% of the actual amount they incurred in legal fees from Party B. In other words, Party A will have to pay 20-50% of Party A’s legal fees, and Party B will pay the remainder. Substantial indemnity costs are common where Rule 49 settlement offers are involved (see below) and to sanction ‘inappropriate behaviour’.

If Party A is to receive ‘full indemnity’ of their costs from Party B, Party A should recover 100% of the actual amount they incurred in legal fees from Party B. In other words, Party A will have to pay 0% of Party A’s legal fees, and Party B will have to pay all of them. ‘Full indemnity costs’ are not common outside the world of prior contractual agreements (for instance, in banking and loan agreements, mortgages, guarantees and the like).

Offers to settle

Settlement offers can dramatically affect “who pays who what costs”.

In Ontario, Rule 49 of the Rules of Civil Procedure establishes some very important tweaks to the basic rule that the “loser pays winner a portion of winner’s costs”.

To encourage settlement, Rule 49 changes the general rule for costs to:

A who party who achieves a better result at trial than they offered to settle for is usually entitled to recover from the other side partial indemnity costs to the date of their offer to settle, and substantial indemnity costs from that point forward.

Thus, a defendant, even if they ‘lose’ at trial, can recover ‘costs’ from the plaintiff.

Here is an example:

A sues B for $100.

B offers to settle by paying A $75. A rejects the offer.

A obtains judgement at trial against B for $50.

Note that “A has won their case against B”, but for less than they hoped.

A would receive $50 from B, but B would be entitled to recover back from A ‘partial indemnity costs to the date the offer was made, and substantial indemnity costs from the date of the offer to the end of trial’. So if B’s costs were $10 to the date of offer, and $20 from offer to trial, B might recover back from A $15 (30% of $10 + 60% of $20 = $15). Clearly, A would have been much better off to accept B’s offer, as A would have received $75, rather than netting $35 before paying their own lawyers, and this after enduring all the cost and stress of a trial.

We believe very strongly in using well thought out offers to settle to put pressure on the other side to settle. A good Rule 49 offer puts the receiving party under significant, enduring pressure, as they are now gambling that they will ‘beat your offer at trial’ by a wide margin to end up better off. A good Rule 49 offer should not be a ‘low ball’. It should be a very realistic assessment of the amount at risk.

Controlling costs

To some degree the costs of litigation are out of your hands – they are, in part, dictated by the process and how the other side behaves.

However, you can dramatically affect your litigation costs by:

Remaining focused on key issues and not getting distracted with petty squabbles;
Taking and maintaining reasonable positions and not allowing yourself to be sucked into opposing everything that the other side puts forward;
Providing your counsel with full, well organized factual records as early as possible. The most expensive part of litigation that you can control is ‘collecting your version of the facts’.
Seeking early settlement, including through mediation and via reasonable offers to settle.