It is commonly believed that the costs of estate disputes come out of the estate, but this is not always the case.
Legal costs are complex, to say the least, but one thing for sure is that there are no guarantees that costs will be paid out of the estate.
Often estate disputes are settled by compromise, and compromise may include an amount that takes into account the costs that the parties have incurred. Generally, there is compromise about the value of the amount that is intended to indemnify a party for their costs.
After a trial, judges have broad discretionary powers to award costs, including orders for no costs, or that costs be capped. Sometimes it is difficult to find the balance between the need to prepare the best case, particularly where other parties do not comply with the rules of litigation and cause unnecessary costs to be incurred, and to be conservative with costs.
When parties are represented by in-experienced advisors, they may be encouraged to litigate without concern regarding costs on the basis of the idea that litigants in estate matters will get paid from the estate. This is simply not the case.
Previous cases demonstrate that courts are not willing to reward aggressive, reckless, or profligate litigants, and order costs that relate to the value of the estate, and any benefit that might be awarded to a successful litigant. There is also the dreadfully unfortunate outcome that the costs of the dispute become disproportionate to the the value of the estate, such that the effect of legal costs is to diminish the estate to such an extent that no party benefits.
We tend towards caution when advising clients about costs, not because we do not consider our clients’ case to be valid, but because of uncertainty in relation to outcome and legal costs.
As Quintus said in the movie Gladiator, “People should know when they are conquered”.
We say, “Proceed cautiously, you may not get your costs, and you may have to pay some or all of the other party’s costs.”