The high cost of enforcing your right to commission

A survey of London solicitors by ITIC shows the high cost of litigation. A simple claim for commission in the English Courts will cost over GBP 175,000.

ITIC gave a panel of London solicitors – all who had previously been instructed on cases involving ITIC’s members – a claim scenario involving a broker who had been cut out of commission. The solicitors were asked to estimate the costs that the broker would have to pay to take the matter to court.

The average estimate of the costs was GBP 177,163.

The claim story given to the solicitors was based on actual cases financed by ITIC under its debt collection cover.

The scenario considered by the solicitors involved a sale and purchase broker. The broker claimed that he had introduced the principals and done the original groundwork towards the deal. The broker claimed they had then been cut out at the last minute and replaced with another broker who had simply “tied up the loose ends”. The sellers denied they had any commitment to the brokers.

A dispute of that nature is likely to involve no more than a couple of witnesses and an expert giving evidence on each side.

If at GBP 177,163 the cost of winning was expensive then losing would be even more so. Under the English legal system a losing party is responsible for the opponent’s costs. The solicitors estimated that the likely additional liability if the broker lost would amount to GBP 139,687.

This would bring the total costs liability faced by the broker to GBP 316,850.

The survey does demonstrate the value of ITIC’s debt collection cover which pays not only for the broker’s own costs but also for the potential liability to the opponent. ITIC has been providing this cover for many years (it can trace its origins back to the 1920s when the Club was formed specifically to collect unpaid commissions). Thankfully few cases proceed all the way to a trial and many will settle at an early stage, often without the need for formal legal proceedings. It is important however that brokers have a sufficient level of cover to fund the matter going to litigation.

If you wish to discuss your current level of cover or to purchase debt collection cover for the first time please contact your Account Executive or Charlotte Kirk.