Australia: Plain English guide to legal costs

Last Updated: 11 November 2016
Article by Evelyn Garnett

The following information is intended to provide an easily understandable overview of legal costs, types of legal costs, costs orders and regulated costs for clients. Please note other orders may be possible in certain circumstances and some orders may not apply to your circumstances. For more information contact Carroll & O'Dea Lawyers.

Legal costs are costs for professional work done by a law practice and disbursements incurred. Disbursements are expenses and include report fees, witness expenses, copying fees, court filing fees and expert fees.

Solicitor/client costs are costs billed by a solicitor or law practice to a client. These costs are generally calculated in accordance with a Costs Agreement (a written signed agreement between a client and a law practice). Solicitors traditionally calculate their costs based on time spent for work done, at an hourly rate. Some law practices offer legal services at fixed costs, for example a fixed fee for a Divorce or a simple Will.

Solicitors are required to give written advice ('disclosure') of how costs will be calculated, the client's right to negotiate costs and a number of other matters. Solicitors are required to provide disclosure of any substantial charge in their disclosure. No written disclosure is required for costs less than $750 (excluding GST and disbursements). A short form disclosure is acceptable for costs likely to be less than $3,000.

Party/party costs are costs recoverable by one party to a litigation from another party as a result of a Court order or agreement (it may be a term of a settlement that one party pay another party's costs). Generally party/party costs orders in litigation 'follow the event', meaning that the usual order made by the Court is that the unsuccessful party will be ordered to pay the successful party's costs.

Party/party costs are typically less than and cannot exceed solicitor/client costs. The amount can be agreed between the parties or assessed by a Supreme Court Costs Assessor. Additional costs will be incurred and time taken if it is necessary to go to assessment. Some of those costs may be recoverable from the other party but typically there will be some costs of assessment that are not recoverable.

Prior to settlement of a litigious matter, solicitors are required to give a written estimate of solicitor/client costs and party/party costs. This assists clients to properly consider a proposed settlement in terms of what they will receive clear to them, after other deductions such as medical expenses.

It is often convenient to negotiate settlement on an 'inclusive of costs' basis. The benefit of an 'inclusive of costs' settlement is that there is no ongoing costs matter to be agreed with the other party or assessed as the party/party costs are included. Significant further time and costs can be saved as a result.

In some jurisdictions, the rules of Court allow for service of an Offer of Compromise in an attempt to settle the matter. Offers of Compromise must remain open for acceptance for a stated period of time, typically 28 days. More than one Offer of Compromise may be served. If an Offer of Compromise is accepted, the matter is settled on the terms of the Offer of Compromise. If the Offer of Compromise is not accepted, and depending on the outcome of a matter, the Offer of Compromise may be relied upon at the conclusion of the matter in obtaining certain costs orders.

For example, if the plaintiff in District Court proceedings serves an Offer of Compromise before the first day of trial, which is not accepted by the defendant, and obtains a verdict not less favourable to them than the amount of the Offer, unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs (a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis, and (b) assessed on an indemnity basis from the beginning of the day following the day on which the offer was made.

Indemnity costs are 'party/party' costs however rather than calculation 'on the ordinary basis' the calculation is at a higher level, intended to 'indemnify' a party for their costs. Only in certain circumstances are 'indemnity costs' awarded or agreed. Indemnity costs may apply from a certain date such as from the day after service of an Offer of Compromise.

Regulated costs (maximum costs) apply to some matters such as motor vehicle accident matters and work injury damages matters. The relevant regulations set out the costs restrictions. Solicitors frequently contract out of these costs restrictions by entering into a Costs Agreement. It is not possible to "contract out" of regulated costs on a party/party basis.

In motor accident matters, claims are assessed by the State Regulatory Authority (Claims Assessment and Resolution Service) "CARS" unless a certificate of exemption is obtained. If the claim is assessed by CARS but the claimant does not accept the amount of damages and elects to commence Court proceedings for assessment, special rules apply in relation to the costs incurred after the certificate of assessment is issued.

If the claimant obtains Court awarded damages no greater than the amount assessed by CARS, the claimant is to pay the insurer's costs incurred after the certificate of assessment was issued. The maximum amount that a claimant is liable to pay for the insurer's costs is $25,000 (or such other amount as is determined by the Authority by order published in the New South Wales Government Gazette).

The insurer in a motor accident matter is liable to pay the claimant's costs incurred after the certificate of assessment was issued if (i) the amount of court awarded damages in respect of the claim exceeds the amount of damages specified in the certificate of assessment by at least $2,000 or 20% (whichever is the greater), or (ii) the amount of court awarded damages in respect of the claim exceeds the amount of damages specified in the certificate of assessment by at least $200,000.

If a certificate of exemption is issued by CARS, so that no assessment has taken place, costs will follow the event and any entitlement to party/party costs will be calculated on an ordinary basis. The rules of Court regarding Offers of Compromise apply. The costs will not be regulated, however there are maximum fees for medical reports, witness and other expenses which apply in all motor accident matters.

In work injury damages matters, parties are generally required to attend compulsory mediation prior to commencing Court action in relation to the claim. The final offers of each party made at mediation are lodged with the mediator. Special costs rules apply in relation to party/party costs based on the Court awarded damages and the final offers made at mediation.

If the claimant in a work injury damages matter obtains a verdict from the Court that is no less favourable than the terms of the claimant's final offer at mediation, the claimant will be entitled to party/party costs from the insurer. If a claimant is unsuccessful in Court (the Court finds the insurer has no liability for the claim) or is awarded damages of less than the insurer's final offer at mediation, the Court is to order the claimant to pay the insurer's costs on the claim assessed on a party and party basis. These party/party costs are regulated costs.

In other work injury damages cases, the parties to Court proceedings for work injury damages are to bear their own costs (meaning there will be no party/party costs entitlement). In Family Court proceedings, with some exceptions, the general position is that each party is bear their own costs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.