It is not always true that the losing party has to pay legal fees for themselves and the other side.
A losing party will of course be responsible for their own legal fees. They will also most likely be ordered to pay a portion of the legal fees for the winner. These legal fees are called “Costs”. The idea behind this is to discourage thoughtless and redundant litigation. A plaintiff should think twice about suing, if losing means, not only do they have to pay their own lawyer, but they’d also have to pay part of the other side’s lawyer too!
Costs are also used by the court to encourage parties remain civil to each other during the course of the lawsuit. For example, if one party behaves in an intolerable manner during the litigation, the judge can order that the loser pay a greater amount of costs.
Costs are also used to encourage settlement. When parties make offers to settle, this factor will be considered by the judge when deciding the amount of costs to award. However, there are formal rules regarding how and when such offers are made. Note also, that costs are at a judge’s discretion. It is possible for courts not to order any costs.
Like most things in litigation, the law on costs is quite detailed. It is recommended that you review the applicable law and rules, or speak to a legal professional for a more thorough understanding of this concept.
We created a video to explain various costs in Litigation: https://youtu.be/TFBcOu7kpLM
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