Legal Costs in Hong Kong Litigation: Kinds of Legal Costs Involved
As a litigation solicitor in Hong Kong, when taking a new litigation case, I need to explain to the client in details what kind of expenses are to be expected as well as the calculation method. In the following passage, I will introduce to you the expenses that will be incurred in Hong Kong litigation for your reference.
Court Fees
Different from the litigants in Mainland China who need to pay a huge amount of litigation fees to the Court, the Hong Kong Courts only charge a small fee. For example, most cases are instituted by way of Writ of Summons, the Plaintiff only needs to pay HK$1,045.00 fixed fee to the Court regardless of the claim amount. Under the Hong Kong legal background, the litigation costs that we talk about usually means the “lawyer fees” incurred from the litigation.
Solicitor and Barrister’s Fees
Each party will need pay its own lawyer for the its legal service of representing the client in the Hong Kong civil litigation proceedings. In Hong Kong, there are two streams of lawyers, i.e., solicitor and barrister. In almost all the litigation cases, the client will need engage a solicior to represent him. In contentious case, most probably, the client will also need, through his solicitors, to further engage a barrister to assist in the case. The client will need pay fees charged by his solictors and barristers, which are the main part of the “legal costs” involved in a Hong Kong litigation case.
Expert Fees and Other fees
In some litigation cases, the parties will also need to engage experts in some areas, most frenquently, expert in the law of a foreign jurisdiciton or forensic expert, to provide expert opnion as evidence to support the litigation. Such expert will charge for its service either by hourly rate and by a fixed fee. In addition to expert fee, other fees may include translation fee, notarization fee, etc.
Legal Costs in Hong Kong Litigation: Who to Pay and How Much to Pay?
In Hong Kong litigation, the general principle is Costs Follow the Event i.e., the losing party not only needs to bear his own legal costs but also needs to bear costs incurred by the winning party. The Court, during the proceedings and at the end of each trial (such as in the First-Instance Judgment, Appeal Judgment), not only needs to rule on the issues of the case, and it also needs to rule on which party to bear the legal costs.
However, even if a party wins the case at the end, it does not necessarily mean that he can claim back the full amount of the actual legal costs he spent from the other side:-
- If the other side does not have property for the enforcement of the Judgment, then it may not be possible to claim back the legal costs;
- The usual costs order as resulted from “costs follows the events” is a party on party costs, which means that the winng party can recover from the losing party the costs that are reasonably nessisary be to incurred for conducting its case. In pracitce, by the court’s assessment, the legal costs can be recovered by the winning party from the losing party will usually only amounts to a portion of the legal fees actually incurred by the winning party, and in most cases the costs awarded is around 60% – 70% instead of the full amount incurred. That means, even if the case is won, the legal costs that can be recovered usually is 60% – 70% of the legal costs actually paid.
Punitive Costs Order in Hong Kong Litigation
Under certain circumstances, the Court can make an Order to request a party or the party’s lawyer to bear the punitive costs. For example:
- Indemnity Costs – if a party adopts a clearly unmeritorious way to conduct his litigation or in any other way abuse the court procedure, and the other side incurs legal costs as a result of that, then the Court may make an indeminity costs order, requesting the abusing party to bear all the legal costs incurred by the other side unless it is unreasonably incurred. Usually, by the court’s assessment, the amount that losing party need pay to the winning party may reach 90% to 100% of the costs, instead of the usual 60% – 70%.
- Wasted Costs – if because of the solicitor representing the party or the firm’s own mistake, delay or unreasonable behaviours leading to costs being incurred, the Court may make this kind of wasted costs order requesting the law firm or lawyer representing such party to bear the costs. That means the legal costs so incurred is borne by the law firm representing the party and the Order forbids the law firm from reimbursing it from its client.
I remember when I first worked as a litigation solicitor, a client had a case involving huge amount of money and would like us to institute proceedings on behalf of him, we read the case files and believed the cause of action was not strong. Upon client’s approval, we sought a second opinion from a barrister and was informed of the same opinion. The client insisted on instruction us to institute the proceedings because he wanted to pressurize the other side through litigation. Although he was very generous in paying costs, we cannot institute proceedings as instructed by him bearing in mind that the Court may give a wasted costs order for the law firm itself to bear the legal costs.
How Legal Costs are Charged by Lawyers in Hong Kong Litigation
Hong Kong litigation lawyers usually charge at hourly rate. Most lawyers charge at a hourly rate from HK$2,500.00 – 5,000.00 per hour. Some lawyers charge even higher or lower depending on the specific background and experience.
Clients often ask for the total legal costs for a whole litigation. However, the Hong Kong lawyers ususally are unable to provide an accurate estimation of total legal costs to the client. This is because, unlike the reletively concise litigation procedures in Mainland China (Case opening, submitting evidence, trial), how the the civil litigation procedure in Hong Kong will drag along depends on the case itself and the litigation strategy of both parties. If the case itself is relatively complicated, and there are many disputes on facts, or if the other side stonewalls in each stage (he may be wealthy and willing to pay the legal costs when losing), then the proceedings will most likely be prolonged and more legal cost will be incurred. On the other hand, if the case is simple and disputes on facts are reletively narrow and the other side is cooperative in procedure matters, the legal costs will be reletively less. Also, the trial time Hong Kong, unlike that in the Mainland China which is usually half day or one day even for complicated cases, may be short or long, depending on how many witnesses are to be called and cross-examed, from several hours to several days or even months. These uncertain factors lead to the uncertainty of legal costs to be incurred. Therefore, it is difficult to give an exact figure of total legal costs.
Nevertheless, when we have a view on the client’s case, we will try to give a rough estimation on costs to client, or a rought estimate of costs on party of the legal proceedings which are reletively certain although such estimation may not be accurate. The more common way is that we will provide a costs estimation by stages, for example
- We peruse and conduct legal research on all case materials, and then assess on the merit of the client’s case, the cause of action and the evidence sufficiency for the case to be litigated in Hong Kong, and then we provide legal opinion to the client on whether to take out the litigation. For this task, we usually may provide a rather certain quote to the client. For example, it may take 2 – 3 hours for simple cases, 10-20 hours for complicated cases, and if needed, we can hire a Counsel for further opinions.
- After that, if based on the legal opinions we give, the client decides to litigate, we can assist the client to draft court documents, mainly the Statement of Claim and other documents. For this task, we may give a rather certain quotation. For example, drafting Statement of Claim and Writ of Summons in normal cases usually need to take 10-15 hours while more time may be needed for complicated cases.
- When the case is filed to the Court and served to the other party, and if the other party does not to respond (i.e. not filing Acknowledgment of Service or not filing defense), then we can apply for default judgment from the Court directly. It usually takes 5-10 hours of work to obtain the judgment.
- If after the the case is filed to Court, the other party files the Acknowledgment of Service and Defence, and actively defends the case, then the legal costs for the legal procedures thereafter, including drafting the pleading documents, exchanging list of documents, discovery, all kinds of interlocutory procedures, case management procedures, trial, etc., will all depends on the actual time spent and it is hard to give an exact quotation.
How Legal Costs are Paid by Client in Hong Kong Litigation
As said above, Hong Kong lawyers usually charge on hourly rate. Therefore, before the client formally hiring a Hong Kong law firm for representing the case and paying the deposit of legal costs, the Hong Kong lawyers usually will not spend much time to studying the case and providing advice to client.
After the client decides to engage the Hong Kong lawyer to handle a case, the Hong Kong law firm will usually sign an engagement letter with the client. The client will also need to pay a deposit for the legal costs and imbursement to the Hong Kong law firm. Usually the initial deposit of legal costs may equal to 10 – 30 hours of work to done. After receiving the deposit from the client, the Hong Kong law firm will start working on the case.
The Hong Kong law firms will send the bill to the client periodically (such as monthly). The bill will provide details of the work done during that period and the corresponding time spent for the work and other disbursements (such as photocopying charges, court fees, etc.). Generally speaking, for each work done, the client may be provided the related documents or at least known the nature of the works, for example, drafting court documents, conference with the client, attend court hearings, etc. Therefore, the client usually will have a general idea of the works done and the time incurred.
When the deposit paid by the client is nearly used up, Hong Kong law firm will usually inform the client to pay further deposit. This cycle will continue until the case is closed.
Security for Costs in Hong Kong Litigartion
I have introduced this concept in another article, if the Plaintiff is a resident outside Hong Kong such as a Mainland Chinese or a company set up in Mainland China, then when instituting a proceeding in Hong Kong, the Defendant has the right to ask the Plaintiff to pay security of legal costs to the Court, this is to secure, in the event that the Plaintiff loses the case, the legal costs incurred by the Defendant can be recovered by the Defendant from the Plaintiff. For the details, please read the article Security for Costs in Hong Kong Civil Litigation.
Assessment on Legal Costs in Hong Kong Litigation
Someone may wonder in case the losing side needs to pay the winning side’s legal costs how the amount of legal costs of the winning side can be assessed? If the winning side deliberately incurs a huge sum of legal costs, then isn’t it very miserable for the losing side?
The winning party’s legal costs is usually be determined by the following methods. If both parties can agree on a specific sum, then there is no need for assessment and will be confirmed based on the agreed sum. If both parties cannot agree on a sum, then the costs-winning party needs to make an application to the Court for assessment, and the amount of legal costs will be assessed by the Court, which is called taxation of legal costs. For taxation, the costs-winning party needs to submit to the Court all the documents done for the case, such as the court documents drafted, the correspondence, conference records, legal research notes, etc. The Court will rule on the reasonable time and costs needed for each task and multiply it with the hourly rate of the handling person based on the years of experience the solicitor involved, in order to reach a reasonable sum of legal costs that the winning-costs party can receive.
Please note this article is for the introduction of the general information and knowledge on costs matter in civil litigation in Hong Kong. It does not mean to provide any legal advice to specific case, nor does it intend to create any solicor-clien relatiionship. Should the reader has any question regarding civil litigation case in Hong Kong court, please do not hesitate to contact the litigation lawyers team of our law firm for a consultaion.