Before starting any legal action you should understand how costs work and how you might expose yourself to costs. Prospective litigants in person need to be aware of many things before embarking on legal action. But above all, they need to understand their exposure to costs. There are many horror stories of disputes over relatively small amounts of money spiraling out of control and parties losing everything.
The general rule in the courts in England and Wales is: ‘costs follow the event’. In other words, the losing party pays the costs of the successful party. If you win your case, the court may award you costs on the ‘standard basis’. This means that the court will only allow costs that are in proportion to the matters being considered and so – for example, if you did have a solicitor – costs would not be recovered if the judge took the view that your solicitor was overcharging. Any doubt as to whether costs are reasonable will be resolved in favour of the party who foots the bill. So, again if you did have a solicitor, it might not necessarily be the same sum as your solicitor would charge you.
The court does have the freedom to make the cost order that it considers appropriate. In particular, the court will consider the conduct of the winning side. For example if (as a litigant in person) the value of your claim has been exaggerated or if no reasonable attempt has been made to settle where appropriate you could be penalised.