Lawsuits in the Superior Court of Justice are expensive for both the plaintiff and the defendant. There are two kinds of costs involved: the legal fees arising from services provided by a lawyer and the out of pocket expenses of a lawsuit, such as government charges in the court system, the preparation of document briefs, and the payment of expert witnesses. The out of pocket expenses in a lawsuit are often substantial and should be recognized as such by the litigants and their lawyers. If the plaintiff wins, the plaintiff is entitled to have a portion of his or her legal costs paid by the defendant. If the plaintiff loses because the lawsuit is dismissed, the defendant is entitled to a similar award of costs.
An award of costs is determined by a “cost grid” scheme based on two sliding scales: a partial indemnity scale and a substantial indemnity scale. An example is the hourly rate of a lawyer in a lawsuit who has been in practice between 10 and 20 years. The costs grid permits the court to fix the hourly rate on a sliding scale up to $300 per hour under the partial indemnity scale, and up to $400 under the substantial indemnity scale.
The court has discretion in fixing both the hourly rate of a lawyer and the out of pocket expenses in a lawsuit. Factors which the court may take into account include the amount claimed and the amount recovered in the lawsuit, the complexity of the lawsuit, and the conduct of a party who tended to shorten or lengthen the lawsuit. For example, if the trial is unduly long due to the fault of the winning litigant, the court may substantially reduce the counsel fee of the litigant’s lawyer for each day of trial to express the court’s disapproval.
Always keep in mind that the winner of a lawsuit, whether plaintiff or defendant, never recovers one hundred percent of the legal fees and disbursements paid out. If the court grants costs on a partial indemnity scale, the winning litigant will recover only part of the costs incurred in the lawsuit. If the court grants costs on a substantial indemnity scale, the winning litigant will recover most, but not all, of the costs incurred in the lawsuit.