Clarion is here to help, but clearing up problems caused by another party can cost you a lot of time. However, you may be able to claim some of this time back from your opponent.
Clients often ask us if they can claim back their employees’ time in litigation and in two particular scenarios:
- time has been spent remedying problems in the business caused by your opponent; or
- time has been spent assisting solicitors with the claim.
1. Time spent remedying problems caused by your opponent
So, the damage has been done, losses have been incurred and you are responding to a crisis caused by another party by, for example, repairing your IT system, purchasing replacement machinery or recalling products. Taking such measures to remedy and mitigate the damage and loss caused to your business can be expensive, but what about the employee time wasted throughout the clean-up process? This can escalate into a substantial cost as well.
If you decide to make a claim against the guilty party, you may be able to recover your employees’ wasted time in the form of damages, if you can establish the following elements:
- employees have been ‘significantly diverted’ from their usual activities;
- the diversion was due to the other side’s negligence or breach of contract;
- the diversion caused ‘significant disruption’ to the business; and
- the diversion caused a loss of revenue.
(Aerospace Publishing Ltd v Thames Water Utilities Ltd ; Bridge UK.Com Ltd v Abbey Pynford Plc ).
The company should keep a full record of the activities performed by each employee as evidence. To maximise the chances of making a successful claim, you should agree a document management strategy with your solicitor from the outset.
2. Time spent assisting solicitors
For any claim above the Small Claims limit (currently over £10,000), you will normally claim your solicitors’ costs from your opponent, but can you recover the time spent by your employees engaging with your solicitor in the litigation process?
2.1 What you can’t claim:
You are unlikely to be able to claim back the time you or your employees spend on tasks such as:
- instructing solicitors;
- gathering evidence from files and computers;
- digging out contracts;
- considering strategy;
- reviewing the work of your legal team; or
- meeting with the other side.
This is because these are part of what the Court considers to be the expected costs of pursuing or defending a claim.
It is also unlikely that you will be able to recover the time you spend completing legal tasks yourself, such as drafting witness statements, as this is normally the work of a solicitor. This is the same for the time spent on the litigation process by in-house lawyers.
2.2 What you can claim:
You may be able to claim back the costs of your internal staff if they complete specialist work that is necessary for the litigation and if they are the most appropriate experts to instruct in that specialist field.
For example, this could occur in the following scenarios:
- national accountants preparing financial modelling;
- scientists testing a product under a patent; or
- a forensic IT security company collecting electronic evidence.
(Re Nossen's Letter Patent ; Sisu Fund Ltd v Tucker ; Admiral Management Services Ltd v Para-Protect Europe Ltd and others ).
This cannot be a profit-making exercise though; the costs claimed cannot be more than a reasonable sum for the actual and direct costs of the work undertaken.
You may be able to claim back the time your employees have spent in remedying and mitigating the damage and loss caused by the other side as damages, as long as you keep staff activity records.
In the litigation process, you can normally only claim the time spent by your in-house experts preparing work that is necessary to bring or defend the claim.
If you would like to find out whether you can claim your employees’ time as a litigation cost or discuss your dispute generally, please contact Simon Young at firstname.lastname@example.org or call 0113 222 3206.
Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.