Bill of Costs: Everything You Need to Know
A bill of costs describes the legal costs of the case. The successful party gives the losing party the bill of costs so that their legal bills will be covered.3 min read
A bill of costs describes the legal costs of the case. The successful party gives the losing party the bill of costs so that their legal bills will be covered.
What is a Bill of Costs?
In most court cases, legal costs are not paid for until the case has been concluded. Once a court case has finished, the party that won the case will present a memorandum to the losing party that describes the winning party's court costs. This memorandum is known as a bill of costs. Many times, the losing party in the case, after receiving the bill of costs, will negotiate a lump-sum settlement with the winning party.
The benefit of negotiating a lump sum is that it ensures future costs will be covered and limits the possibility for additional litigation related to the costs. If the losing party decides to contest the bill of costs, however, they would need to file a Notice of Dispute.
The lawyer for the successful party is rarely motivated to negotiate a settlement, as a court battle related to a bill of costs means they will be able to earn additional hourly wages. If the attorneys of each party are not able to agree to a settlement, it often ends up costing the clients additional fees.
When a bill of costs is issued, it must have an itemized list of court costs. If necessary, the bill of costs will need to reference tables provided by the court to help with cost calculation. Should the losing party decide to dispute the bill of cost, they can have the bill examined by a judge.
A standard bill of costs form contains three parts:
- Work Done Not for Taxation.
- Work Done for Taxation.
A general rule states that solicitors are not allowed to substitute a bill of costs in order to receive a larger amount, unless the client has consented or there is a court order. The exception to this rule is that solicitors can substitute a normal invoice with a bill of costs if the bill of costs would result in higher fees. For example, a contract may exist between the two parties that specifically allows the solicitor to substitute a bill of costs.
In the United States, a bill of costs must be verified before it can be taxed. The person claiming a disbursement using a bill of costs will need to include an affidavit that verifies that the information in the bill is correct and that the fees and services listed in the bill were necessary and performed as described.
Electronic Bill of Cost
In England and Wales, a bill of costs must now be submitted electronically. This requirement has existed since April 6, 2018.
These rules are applicable to multi-track claims with certain exceptions:
- Scale or fixed costs apply to the proceedings.
- Cases involving an in-person litigant who is also the receiving party.
- Cases where the court has ordered something other than the electronic form.
The purpose of using an electronic bill of costs instead of a physical form is that it will hopefully allow the bill to be processed more quickly. The format of the electronic form is a spreadsheet, and you can find this form online.
A great deal of information will need to be included in the bill of costs spreadsheet:
- A narrative and chronology of the court case.
- The rates charged by the legal team.
- Information about any funding.
- A cost summary that is compared with the most recent approved budget.
In the spreadsheet, there also needs to be a summary of the activities and tasks engaged in by the legal team. The cost summary will need to be updated through each phase of the court case. If you decide not to use the available template, you can make your own electronic bill of costs by using a spreadsheet and including the required information.
The electronic bill of costs must be simultaneously sent to the opposing party and a dedicated court email address. A hard copy must also be filed. If the bill of costs includes legal work that was performed before the new rules took effect, the work done prior to April 5, 2018, can be submitted on a paper form, and work done after this date can be submitted on an electronic form.
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