Of course you can - if it becomes clear that your case is not a good one, it makes far more sense to discontinue than to plough on to trial when the costs consequences will be even worse if you lose becasue the costs will have risen exponentially by then - going to trial can be a very expensive business, even if you're the winner - it's one of the reasons only 1% of cases in this country go all the way to a full trial.

And I honestly can't see any costs consequences for the TLERA - it is not a party to the legal proceedings and so no costs order can be made against it, nor is it liable for the objectors' legal costs as it won't be TG Baines' client. It may well be supporting the objectors but that doesn't it make it liable for costs.

Digressing slightly - the whole point of a CFA (what you call no win no fee) is that you won't get one unless the solicitor thinks you have pretty good prospects of success.