Case Study – Litigation tactics used in recruitment fee dispute

We acted for a care home client defending a claim brought by a recruitment agency for just over £92,000. The claim comprised three different claims for losses :

• unpaid invoices for work carried out

• transfer fees for agency workers later employed by the client within the contractual exclusion period

• termination fees said to arise from the client’s alleged failure to give three months’ notice.

The first two elements totalled about £12,000; the third was approximately £80,000.

Having reviewed the claim, we advised that the first two heads were unlikely to be successfully defended. The third, however, was fundamentally flawed. Although the claimant sought substantial termination fees, there was no actionable loss, given that the client was not contractually obliged to continue using the agency’s services during either the contract term or any notice period. On that basis, we advised that the defence to the £80,000 claim was very likely to succeed.

Mitigating client risk on costs

The strategic issue was costs. If all three claims were litigated together, the claimant might still recover costs overall even if the £80,000 claim failed, because the client would probably be found liable on the smaller claims.

To avoid that outcome, we suggested the client settled the first two heads of claim, without any admission of liability, while continuing to deny the third. We made clear to the claimant’s solicitors that the remaining claim had no realistic prospect of success and would be defended through to trial if necessary.

Despite those warnings, the claimant issued proceedings three months later in respect of the termination-fee claim alone. The matter proceeded to a one-day trial in the County Court. After hearing closing submissions, and without requiring witness evidence, the judge held that there was no actionable loss and dismissed the claim within an hour.

We applied to the Court for a finding of unreasonable conduct against the claimant on the basis the claimant had pursued a claim that never had any real prospect of success The court awarded our client the fixed recoverable costs of the action together with a 50% uplift for unreasonable behaviour.

Key Takeaways

• Early case analysis is critical: Identifying that the £80,000 claim lacked any actionable loss allowed for a focused and ultimately successful defence strategy.

• Strategic settlement can control costs risk - settling weaker elements of a claim commercially (without admission) can prevent adverse costs consequences while isolating the real issue in dispute.

• Unreasonable conduct has real cost consequences - under the Civil Procedure Rules, pursuing a claim with no reasonable explanation can justify a significant uplift, in this case, 50% on fixed recoverable costs.

• Clear pre-litigation warnings matter - repeatedly putting the claimant on notice of the claim’s deficiencies supported the finding of unreasonable behaviour.