Can I recover my costs if I win my case?
If you win your case, who pays the legal costs? There is a principle in law that the losing party should pay the winning party’s legal costs, but in practice that rarely happens. Court orders are usually made after the final hearing, and most cases settle well before that. This means legal costs are usually part of the negotiated settlement and are often given away completely.
In this video, our Director, Alex Martin, runs through solicitor/client and party/party costs, what the courts are likely to order and how to have the right strategy in place to focus on maximising the overall, best net settlement outcome you can obtain for your business.
If you would like to discuss a specific concern, please contact one of our experienced litigation lawyers at Taurus Legal Management on (03) 9481 2000 or info@tauruslawyers.com.au.
Transcription:
One of the questions I get asked the most is “can I recover my costs if I win my case?” That’s a great question and I’m going to answer it in this video.
Hi, I’m Alex Martin. I’m a commercial litigation specialist and these are my No-Bull Legal Tips for Business Owners.
Okay, so can I recover my costs? So first of all, you’ve got to win your case. And if you win your case, you’ve got to convince the court that it’s just and that it’s fair that you get a cost order in your favor. Now, in most courts, if you win your case, you will be entitled to a cost order in your favor, but you need to get to the end. It’s very rare for cost orders to be made in the interim, as the case goes. It can happen, and they’re normally small cost orders, but to get the bulk of your costs, you really need to wait till the end of the litigation, till the end of the hearing, and then the judge will decide on costs. And if you’re successful, you have a good chance of getting a cost order.
But the issue is that most cases never get to the end of the hearing. 98% of litigation in Australia is settled before the final hearing, so it’s unlikely that you’ll ever have a judge considering a cost order at all. What’s much more likely is you’ll settle a case in a mediation or in a negotiation. And in that context, you might get an agreement from the other side to pay your costs. That can all be part of the horse trading of a negotiation. But often, legal costs are given away as part of the negotiation. So it’s reasonably rare to have a settlement agreement that has a substantial portion of legal costs paid by either side.
If you do get a cost order or if you do an agreement in relation to costs, that’ll normally be a lot less than your actual costs. So that’s the other thing to note, that your actual costs are one thing, and what the court orders costs is another thing. So the court have a scale which calculate how much you’re entitled for particular activities, and that doesn’t necessarily relate to how much you’ve been charged by your lawyer to run the matter.
The other important point is that if you have the right agreement in place, you’ll be entitled to your costs as a contractual right. So if your terms and conditions say, if you breach these terms, then you have to pay my legal costs on an indemnity basis. If they have a term in there along those lines, then you’ll actually be entitled to your costs as a contractual right and you’ll be able to sue for the claim plus the costs, and you’ll be in a much better position, a much stronger position, to get your costs and to get your full costs, not just some court scale amount.
So in summary, you are entitled to your legal costs if you win your case, in most circumstances but that’s really at the end of the matter, and you’re unlikely to get to the end of the matter, so you’re likely to have to fund your legal case yourself. In some circumstances you can get litigation funding, but that’s a whole other video. I think you really should be in a position where you’re expecting to pay your own legal costs, and if you recover some from the other side, then that’s a bonus.