In-House vs Outsourced Costs Lawyers: Which is Right for Your Firm?
Practice Guides — 2026-03-24
A balanced comparison of hiring an in-house costs lawyer versus outsourcing to a specialist practice, covering costs, benefits, and practical considerations.
For many litigation practices, costs work starts out as an afterthought. A fee earner drafts a bill of costs themselves, or a paralegal cobbles one together from the time recording system. The figures are rough, the format is imperfect, and the firm quietly absorbs the shortfall when costs are assessed down.
But as a practice grows, the volume and complexity of costs work grows with it. Detailed assessments become more frequent. Costs budgets need to be prepared and monitored. Opponents start instructing specialist costs lawyers, and suddenly the firm's ad hoc approach is no longer good enough.
At this point, the question becomes: should you hire an in-house costs lawyer, or outsource the work to a specialist costs practice?
It is a question we are asked regularly by managing partners and heads of litigation at commercial firms. The answer depends on your firm's size, the volume and nature of your costs work, and your appetite for fixed overheads. This guide sets out the key considerations to help you make the right decision.
The In-House Model
Hiring an in-house costs lawyer or costs draftsman means bringing a dedicated costs professional onto your payroll. They sit within the firm, attend internal meetings, and handle the day-to-day costs work across the practice.
Typical Costs
Salary expectations for costs professionals vary significantly depending on seniority and location:
- Costs draftsman (junior/mid-level): £40,000 to £55,000
- Experienced costs lawyer: £55,000 to £75,000
- Senior costs lawyer or head of department: £75,000 to £100,000+
On top of salary, you need to factor in employer's National Insurance contributions, pension, professional indemnity cover, practising certificate fees, office space, IT, and management time. A realistic total cost of employment is typically 1.3 to 1.5 times the base salary.
For an experienced costs lawyer on £65,000, the true annual cost to the firm is likely in the region of £85,000 to £95,000.
Benefits of In-House
Day-to-day availability. An in-house costs professional is on hand whenever fee earners need guidance. They can answer quick questions about costs management orders, review funding arrangements, and flag risks in real time.
Institutional knowledge. Over time, an in-house costs lawyer builds deep familiarity with the firm's clients, fee earners, billing practices, and case types. This reduces the need for detailed briefing on each matter.
Control and oversight. The work stays within the firm. You can set priorities, manage workflows, and ensure consistency of approach across the practice.
Drawbacks of In-House
Fixed overhead. Whether the costs lawyer is busy or quiet, the salary and associated costs are the same. Many firms find that costs work is cyclical, with periods of high demand followed by quieter spells. A fixed salary does not flex with workload.
Holiday and sickness cover. When your costs lawyer is away, the work either stops or falls to fee earners who are not equipped to handle it. If you only have one costs professional, there is no cover.
Limited breadth of experience. An in-house costs lawyer only sees your firm's work. They may become highly proficient in your typical case types, but they will not have the breadth of experience that comes from working across multiple practices, courts, and opponents. This can be a disadvantage in contested assessments and SCCO hearings, where familiarity with judicial preferences and opponent tactics matters.
Recruitment difficulty. Good costs lawyers are in high demand. Recruiting one can take months, and retention is not guaranteed. If they leave, you are back to square one, with a recruitment process to run and a gap in capability while you search.
No advocacy capability. Unless you hire a very senior costs lawyer with significant SCCO experience, your in-house professional may not be comfortable with advocacy at detailed assessment hearings. You will still need to instruct external counsel or a specialist costs advocate for contested hearings.
The Outsourced Model
The alternative is to instruct an external costs practice to handle your costs work. This can range from a single bill of costs to a full outsourced costs management service covering budgets, bills, points of dispute, replies, negotiations, and hearing advocacy.
Typical Costs
External costs lawyers typically charge on one of three bases:
- Hourly rates: Ranging from £150 to £350+ per hour depending on seniority and complexity
- Fixed fees per matter: A set price for drafting a bill of costs or preparing a costs budget, agreed in advance
- Retainer arrangements: A monthly or quarterly retainer for ongoing access and priority service, with individual matters billed at a discounted rate
For most firms, the per-matter cost of outsourcing is lower than the equivalent cost of in-house time, because you only pay for work that is actually done.
Benefits of Outsourcing
Specialist expertise. A dedicated costs practice handles costs work all day, every day, across a wide range of practice areas and courts. This depth and breadth of experience translates into better outcomes. An outsourced costs lawyer who has appeared before a particular costs judge dozens of times will know how that judge approaches discretionary issues, what level of detail they expect, and what arguments are likely to succeed.
Flexibility. You can scale your use of external costs support up or down as your caseload demands. There is no fixed overhead during quiet periods, and no capacity constraint during busy ones.
No recruitment or management burden. You do not need to advertise, interview, onboard, train, manage, or replace a costs professional. The external practice handles its own recruitment, CPD, insurance, and regulation.
Access to SCCO advocacy. A specialist costs practice will have lawyers experienced in conducting detailed assessment hearings before costs judges. This is a distinct skill that many in-house costs professionals do not possess, particularly if they have limited hearing experience.
Transparent pricing. Good costs practices provide clear fee estimates before work begins, so you can advise your client on likely costs recovery or exposure with confidence.
Business continuity. An external practice has a team. If one lawyer is unavailable, another can step in. There is no single point of failure.
Drawbacks of Outsourcing
Less immediate availability. An external costs lawyer is not sitting in the office next to your fee earners. Urgent, same-day queries may take slightly longer to resolve than they would with an in-house colleague, although most specialist practices are highly responsive and accustomed to working to tight court deadlines.
Briefing requirement. Each new matter requires some initial briefing. The external costs lawyer needs to understand the case, the funding position, the relevant orders, and the time recording. For firms that outsource regularly to the same practice, this overhead reduces significantly over time as the costs lawyer becomes familiar with your systems, fee earners, and client base.
Perceived loss of control. Some partners feel more comfortable with work being done in-house, even if the external alternative is objectively better. This is largely a cultural preference rather than a practical issue, but it is worth acknowledging.
When In-House Makes Sense
An in-house costs lawyer is most likely to represent good value in the following circumstances:
- High volume of routine costs work. If your firm is producing 50 or more bills of costs per year, or preparing costs budgets on most active cases, there may be enough work to keep an in-house costs professional fully occupied. At that volume, the fixed salary cost is spread across enough matters to make it competitive with external fees.
- Established costs department. If you already have a costs team of two or more people, adding another member may be more efficient than outsourcing. The team provides its own cover and can develop internal processes.
- Need for daily, embedded availability. If your fee earners need constant, ad hoc guidance on costs issues throughout the day, having someone in the office can be genuinely valuable. This is more common in high-volume personal injury and clinical negligence practices than in commercial litigation.
When Outsourcing Makes Sense
Outsourcing your costs work to a specialist practice is typically the better option in these situations:
- Moderate or variable volume. If your costs work is not sufficient to keep a full-time costs professional busy, outsourcing avoids the inefficiency of paying for idle time.
- Complex or high-value matters. For bills of costs over £100,000, costs budgets in multi-track commercial litigation, or contested detailed assessments, specialist expertise often makes a material difference to the outcome. The additional recovery frequently pays for itself many times over.
- No existing costs department. If your firm does not currently have a costs lawyer, outsourcing lets you access specialist capability without the risk and cost of recruiting. You can test the value of professional costs support before committing to an in-house hire.
- SCCO hearing advocacy. Detailed assessment hearings before costs judges require specific advocacy skills and familiarity with SCCO procedure. Unless your in-house costs lawyer has significant hearing experience, you will need external support for contested assessments in any event.
- Overflow and surge capacity. Even firms with in-house costs capability sometimes face periods of peak demand. Outsourcing provides a safety valve, ensuring deadlines are met without overloading your internal team.
- Nationwide coverage. A specialist costs practice will handle work across all courts in England and Wales, whereas an in-house costs lawyer's experience may be concentrated in your local courts.
The Hybrid Model
In practice, many larger firms use a combination of both approaches. Routine, lower-value costs work is handled by an in-house costs draftsman, while complex, high-value, or contested matters are referred to an external specialist.
This hybrid model can offer the best of both worlds: day-to-day availability for straightforward queries and simple bills, combined with specialist expertise for matters where the stakes are higher and the outcome depends on experience and advocacy skill.
For firms considering their first in-house costs hire, starting with an outsourced arrangement is a sensible way to build an understanding of the volume and nature of your costs work before committing to a permanent salary.
What to Look for in an External Costs Lawyer
If you decide to outsource some or all of your costs work, choosing the right practice is important. Here are the key factors to consider:
Regulation and qualifications. Ensure the costs lawyer is regulated by the Costs Lawyer Standards Board (CLSB). This provides assurance of professional standards, insurance cover, and a complaints process. Costs draftsmen who are not CLSB-regulated may offer lower fees, but you lose the protections that regulation provides.
Experience in your practice areas. Costs work varies significantly between practice areas. The considerations in a clinical negligence bill are different from those in a commercial dispute or a construction adjudication. Look for a costs lawyer with demonstrable experience in the types of work your firm handles.
Recognition and reputation. Independent rankings such as The Legal 500 provide an objective benchmark of quality. A costs practice that has been assessed and recommended by a respected legal directory has been vetted by researchers who speak to clients and peers.
Responsiveness. Court deadlines in costs proceedings are strict and often short. Your external costs lawyer needs to be reliably responsive, particularly when urgent applications or last-minute negotiations arise.
Transparent pricing. You should receive clear fee estimates before work begins, with no surprises. The best costs practices will agree fixed fees or capped estimates for defined pieces of work, giving you certainty for your client.
Technology and systems. A modern costs practice should be able to work with your case management and time recording systems, accept instructions efficiently, and provide clear, well-formatted work product.
Communication. Look for a costs lawyer who explains their reasoning, keeps you updated on progress, and is willing to discuss strategy. The relationship works best when the costs lawyer is treated as an extension of your team, not a remote processing service.
Conclusion
There is no single right answer to the question of whether to handle costs work in-house or outsource it. The decision depends on the volume and complexity of your costs work, the size of your practice, and your appetite for fixed overheads.
For firms with a high volume of routine costs work and the resources to recruit and retain a good costs professional, an in-house model can work well. For firms with moderate or variable volumes, or those handling complex, high-value matters where specialist expertise makes a measurable difference, outsourcing to a dedicated costs practice is typically the more cost-effective and lower-risk option.
For firms that do not currently have in-house costs capability, outsourcing is the most practical way to access specialist costs support without the commitment and cost of a permanent hire. It allows you to benefit from expert costs drafting, negotiation, and advocacy from day one, with the flexibility to scale your use of the service as your needs evolve.
Whatever model you choose, the key point is this: costs work is too important to be treated as an afterthought. Professional costs management directly affects your clients' recoveries and your firm's reputation. Getting it right is worth the investment.
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Mackenzie Costs provides flexible, specialist costs support to law firms across England and Wales. Whether you need a one-off bill drafted or ongoing costs management, we can help. Contact us to discuss how we can support your practice.
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