Reading time: 6 minutes

If you are in a dispute with another business and have not had any success negotiating a solution, you may be considering starting legal proceedings and going to court or a tribunal. When you are making this decision, it is important to be aware of your potential legal fees and expenses. In most situations, this decision will be a commercial choice as opposed to a legal one. This article will explain what you need to know about costs when going to court. 

What Are My Legal Costs?

These are the costs of your legal matter. These will typically be the fees and expenses you pay to your lawyer or barrister. They can also include administrative fees to run the proceedings, including: 

  • court filing fees; or 
  • transcript fees.

These fees do not include the money or damages you are disputing.

Costs Agreement

Your legal fees will be set out in your costs agreement or costs disclosure document. This document is the contract between you and your lawyer and will set out how they will charge your fees. It is common practice for lawyers to bill litigation fees at an hourly rate. Additionally, it is important to understand that any estimate in your costs agreement may change quite quickly depending on how your matter evolves.

Your costs agreement will also set out fees for disbursements paid by your lawyer. This can include:

  • photocopying fees;
  • travel expenses; 
  • court filing fees; 
  • fees for expert reports; and 
  • counsel or barrister fees.

The costs of any particular proceeding will largely depend on the money amount of your claim, as this will determine which court can hear your case. Proceedings in the lower courts can range from approximately $30,000 – $100,000 or more. Supreme Court proceedings can cost significantly more. It is important you pay attention to your costs agreement which sets out these kinds of fees and estimates, and the advice of your lawyer.

If you are not prepared to spend this money on your dispute, it may be worth considering other forms of dispute resolution.

What Are Costs Orders?

A costs order is an order of the court that sets out the basis for any payment of costs in relation to your proceedings. They are typically made at the end of the proceedings. This means you will need to pay your legal costs upfront. It is often said that costs will follow the event. However, cost applications can be made throughout the litigation, after certain events. For example, this could be following an interlocutory application or notice of motion. Generally, the losing party will pay towards the costs of the successful party. However, this will be at the court’s discretion.

When Will a Court Make Cost Orders?

Whether or not a costs order can be made will depend on the jurisdiction of the proceedings. There are some courts and tribunals that are ‘no-cost’ jurisdictions meaning that you will not be entitled to claim costs even if you are successful. Some courts and tribunals are also designed as dispute resolution mechanisms for individuals to use unaided without the assistance of lawyers.

Under the Civil Procedure Act 2005 (NSW), the court has the discretion to: 

  • choose who will pay legal costs, and to whom; and
  • determine how much of the proceeding’s costs will be covered. 

This means the judge or magistrate hearing your matter will decide whether costs are awarded and whether you or the other side will pay each other’s costs. Generally speaking, cost orders are made in favour of the winning party. However, this is not a guarantee and will depend on the circumstances.

What Are the Different Types of Costs and Costs Orders?

Types of Costs

Coverage

Party-Party Costs

These are the fees payable by the losing side of the legal proceedings to cover the legal expenses of the litigation. Usually, these cost orders are made according to the court’s cost scale. These will typically cover 50% – 75% of a party’s legal fees.

Indemnity Costs

These costs are ordered by the court to be paid by a party on the basis that the costs cover the true loss or damage incurred for the cost of legal proceedings.


This means an indemnity costs order will cover the vast majority or all of the other party’s costs of the proceedings. These types of orders will generally cover between 85% – 100% of a party’s legal fees (provided they are reasonable).

Solicitor-Client Costs

These are the fees you pay to your lawyer for legal assistance.

Generally, party-party costs are less than solicitor-client costs. This is usually because litigating parties authorise additional items or pay for these services at a higher rate than the court will order.

Given the court’s discretionary powers, they may choose not to award any costs or award indemnity costs, in certain circumstances.

Before You Make Your Decision to Go to Court

It is important at the outset of your dispute to consider what it is worth to you and your business. Legal advice and court proceedings are expensive, and there is no guarantee that you will be able to make a claim for your legal fees or the cost of the litigation. It is often a commercial decision to weigh up whether your dispute is worth pursuing. If negotiations fail and you decide that it makes financial sense to take further action with your dispute, the next step will be to get legal advice on the merits of your case and prospects of success. This will then determine whether litigation is the best way forward for your dispute.

Key Takeaways

Your costs agreement will set out the legal fees and estimates of the costs of a proceeding. Remember that the court has a discretionary power to not award costs or to award indemnity costs in particular circumstances. If you require assistance with your dispute, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.

Frequently Asked Questions

Is the winning party guaranteed that they will not have to pay the other side’s costs?

Judges and magistrates have the discretion to decide whether costs are awarded and whether you or the other side will pay each other’s costs. Cost orders are usually made in favour of the winning party. However, this is not a guarantee.

What are indemnity costs?

These costs are ordered by the court to be paid by a party on the basis that the costs cover the true loss or damage incurred for the cost of legal proceedings. This means an indemnity costs order will cover the vast majority, if not all, of the other party’s costs of the proceedings.

Webinars

Australia’s Global Talent Visa: How to Attract Top Talent

Thursday 7 October | 11:00 - 11:45am

Online
Understand how to navigate Australia’s complex migration system to attract top overseas talent with our free webinar.
Register Now

5 Essential Contracts for your Online Business

Thursday 14 October | 11:00 - 11:45am

Online
Learn which key contracts will best protect your online business with our free webinar.
Register Now

Key Considerations When Buying a Business

Thursday 11 November | 11:00 - 11:45am

Online
Learn which questions to ask when buying a business to avoid legal and operational pitfalls, so you can hit the ground running. Join our free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer