Commercial Undisputed Debts
Unpaid debts can cause substantial problems for businesses, particularly in circumstances where the debt is not disputed, but the other party will simply not pay. These can be debts for a relatively small amount up to debts for hundreds of thousands of pounds. We have extensive experience in assisting companies to recover the amount due to them.
Where the debt is undisputed – although it is often the case that both parties disagree that it is undisputed – we can provide a cost effective way of recovering the outstanding amount. Our fees would vary depending on the complexity and value of the claim and, in the first instance, would include drafting a letter before claim after analysing the merits of your claim.
Recovering the Debt
The indicative fees and procedures set out below are only applicable to undisputed debts up to £100,000. If you have an outstanding debt for over that amount, we would need to discuss a bespoke fee structure and the timescales, costs and other disbursements that may be applicable to recover that debt.
For debts up to £100,000 in our experience an indicative range of our legal fees for the first stage of writing to the other party could be from £250 plus VAT to £1,500 plus VAT. These fees would be relevant to cases where there is no dispute and would not necessitate any additional enforcement action, if that was required. If the other party disputes your claim at any point, we will discuss what additional work would be required and discuss the best way to proceed and the likely additional costs.
The basis for calculating our fees
The fees above are calculated on a time basis according to the hourly rate charged by the fee earners who work on your matter. Hourly rates are set according to our fee earners’ roles and experience. These currently range from £100 plus VAT for a trainee solicitor to £310 plus VAT for a partner.
Unless the claim is for over £10,000, the general rule is that expenses incurred by you with us are not recoverable from the other party. You will therefore be liable to pay your own costs.
In the event that the initial letter that we send for you does not result in payment of the outstanding debt, we can assist you with issuing a claim to recover the outstanding amount.
When considering proceeding with a claim, you should also consider that for some claims the VAT element of our fees cannot be recovered from the other side and that any enforcement action, such as instructing a bailiff, would be at additional cost.
We can assist you with drafting and issuing a claim and at that stage we will discuss the court’s procedural requirements and timescales with you. Once the claim has been issues by the court and sent to the other party, if the claim is not disputed or defended it is possible to obtain judgment against the other side without the need for a court hearing.
If no Defence to the claim or Acknowledgment of Service is received, you would be able to apply for what is known as Judgement in default. When a Judgement in default is obtained, we would write to the other side to request payment and if payment is not received within 14 days, we would advise you on the next steps and likely costs of enforcement.
Cases like this can take between 4-24 weeks from receipt of instructions to receipt of payment from the other side, depending on whether or not it is necessary to issue a claim. This is on the basis that the other side pays promptly on receipt of Judgement in default. If enforcement action is needed, the matter will take longer to resolve.
There would be a Court fee payable when the claim is issued, which is currently calculated as 5% of the total claim, so in a claim for £100,000 the fee would be up to £5,000; VAT would not payable on court fees. In the event that you are successful in the clam, the court fee would be recoverable from the other party.
Conditional fee/Damages based agreement
We do not offer these fee arrangements for these types of cases.
In most circumstances, if the claim is for more than £10,000, the court will make a costs order in favour of the successful party, payable by the unsuccessful party. The general rule is that 70%-80% of the total costs would be recoverable in this way. Accordingly, there would also be a shortfall in the recovery of legal costs form the other side.
In some case we may be able to agree a fixed price. This will be for a fixed piece of work and may be subject to additional charges where we undertake extra work which we have agreed with you beforehand, but which is outside the initial fixed price scope. We may need to make certain cost assumptions at the commencement of the work in providing our estimates, which as the work progresses we need to revisit as further documentation and facts emerge about the matter. We will always discuss and agree with you before undertaking any additional substantial work outside of our agreed estimates.