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Unlike much of today’s popular media suggests, legal victories rarely give rise to multi-million dollar settlements. Going to court is a complicated, time-consuming and expensive process. You may be under the impression that if you win a case, you will be able to recover all of your out of pocket expenses in addition to the judgment amount. Unfortunately, this is not the case. Typically, you will be able to recover only some of your legal costs (solicitor’s fees) from the other side. This means that before taking an issue to court, you should weigh up your chance of both:

  • winning the case; and
  • being able to recover your legal expenses.

If the amount you plan to claim is small, engaging in a long a tedious legal battle may not be wise.

In New South Wales, the courts can make legal fees payable on either an:

  • ordinary basis; or
  • indemnity basis.

This article will explain what those two terms mean.

What Are Legal Costs Awarded on an Ordinary Basis?

If you are able to recover your legal fees from the other side on an ordinary basis, you can claim some of your legal practitioner’s costs. These professional work costs might include costs relating to:

  • drafting correspondence;
  • making telephone calls;
  • liaising with counsel;
  • writing submissions; and
  • preparing court documents.

While you may be able to recover professional work costs, you will not be able to recover out of pocket expenses that do not relate to professional work. For example, you will not be able to recover travel expenses. Also, the professional costs must have been properly and reasonably incurred by the legal practitioner. The court will determine this from the facts of your particular case.

What Are Legal Costs Awarded on an Indemnity Basis?

If you are entitled to recover your legal fees from the other side on an indemnity basis, you can claim all of your legal practitioner’s professional work costs. These costs are in addition to expenses incurred by the solicitor on your instructions.

Indemnity costs are a more generous award. Generally, a court will only award them in exceptional circumstances. Whether your case amounts to exceptional circumstances will depend on the circumstances. Although there is no set definition, the courts are more likely to award legal costs on an indemnity basis if one party:

  • abuses court processes;
  • brings a case to trial that has no real chance of success;
  • behaves unreasonably or unacceptably throughout the trial;
  • takes part in fraud or other illegal activities; or
  • repeatedly refuses to accept a generous settlement offer.

As these situations suggest, this type of legal cost award exists to discourage parties from bringing frivolous claims to court or behaving unacceptably.

Key Takeaways

If you are successful in court, you may be able to recover some of your legal costs. However, you are unlikely to be able to recover all of your out of pocket expenses. Typically, the court will award you costs on either an ordinary or an indemnity basis. Before you take a matter to court, you should think carefully about whether a victory in court would be worth the long, expensive process. If you would like to know more about legal costs, your prospects of success at trial or the process of bringing a matter to court, contact LegalVision’s litigation lawyers on 1300 544 755 or fill out the form on this page.


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