What Costs Can a Commercial Dispute Involve?
You may be pursuing an unpaid invoice, dealing with a contract dispute or responding to a claim against your business. Before deciding what to do next, it is important to understand both the costs involved in your own matter and the potential exposure to another party’s legal costs.
Commercial litigation can involve legal fees for advice, preparation and representation, together with expenses such as court filing fees, barristers’ fees and expert reports. The work required will depend on the issues in dispute, the evidence available and how the matter progresses.
One contract dispute may turn on a relatively small set of documents and a limited number of factual issues.
Another may involve disputed conversations, several witnesses and expert evidence.
Even where the amounts claimed are similar, the work required to investigate, prepare and conduct the matters may be quite different.
This page outlines general principles relevant to commercial litigation in South Australian state courts. Costs rules vary between courts and types of proceedings, and different provisions may apply to minor civil actions, federal proceedings and tribunal matters.
What Is an Adverse Costs Order?
An adverse costs order requires a party to pay costs to another party. An unsuccessful party may be ordered to contribute to the successful party’s legal costs in addition to meeting their own legal expenses.
The Court retains discretion in relation to costs. An adverse costs order does not, by itself, mean that a claim was improperly brought or defended.
For example, a business may bring a claim for an unpaid invoice but fail to establish that payment is legally due. If the claim is dismissed, the business may face an order to contribute to the other party’s legal costs as well as meeting its own expenses.
How Conduct Can Affect Costs
Costs can be affected by more than the final outcome of the proceeding. Unsupported claims or defences, unnecessary procedural steps, avoidable delay and non-compliance with court orders may be relevant to costs.
Parties are expected to take reasonable steps to narrow the issues in dispute and keep the time and costs involved proportionate to the matter.
Legal advice can assist in assessing whether the available documents and evidence continue to support the position being taken, and whether the approach to the dispute should be reconsidered as the matter develops.
How Rejecting a Settlement Offer Can Affect Costs
Settlement offers can have consequences beyond the amount being offered. Depending on the type of offer, the applicable rules and the eventual outcome of the proceeding, rejecting an offer may affect the costs orders ultimately made by the Court.
For example, a claimant may reject an offer and later obtain a judgment that is less favourable than the terms of that offer. In those circumstances, the applicable rules may affect responsibility for costs incurred after the offer. The Court retains discretion in relation to costs.
A settlement offer should not be assessed only by looking at the amount offered.
Its terms, any response deadline, the likely cost of continuing the matter, the outcome being sought and the potential costs consequences may all be relevant.
Before accepting or rejecting an offer, legal advice can assist you to understand its terms and potential consequences. The treatment of legal costs should also be addressed when a settlement is documented.
Will Winning Cover All Your Legal Fees?
A successful party may recover a contribution towards its legal costs. The amount recoverable may be less than the amount actually paid or payable to its lawyers.
The legal costs you incur and the amount recoverable from another party are not necessarily the same.
The other party’s ability to pay and the practical steps required to enforce a judgment may affect the value of pursuing the matter.
Understanding Your Legal Fees and Costs Agreement
A costs discussion should help you understand how you will be charged, what work the estimate or range covers and which expenses may be additional. You can also ask what factors could change the estimated costs and how you will be kept informed.
Subject to applicable exceptions, South Australian costs disclosure requirements include information about the basis on which legal costs will be calculated and an estimate of total legal costs, or a range where an estimate is not reasonably practicable. In litigious matters, disclosure also addresses potential costs recovery and exposure to another party’s costs. Substantial changes to matters already disclosed must also be communicated.
At Grope Hamilton Lawyers, our approach emphasises transparency and fees that reflect the work involved and the experience required. The arrangements applying to your matter are addressed through the costs agreement.
For more information about our billing approach, see Our Fees .
What to Discuss Before Starting or Defending a Claim
Whether you are considering commencing a claim or responding to proceedings that have been issued against you, a discussion with your lawyer should address:
- The legal and factual basis of the claim or defence.
- The outcome you are seeking and its practical value.
- The likely work required and the potential exposure to costs.
- Opportunities for negotiation, mediation or other forms of resolution.
- Any contracts, correspondence, court documents and settlement offers that require attention.
Bringing the relevant documents to your initial discussion can assist your lawyer to understand the dispute, identify issues requiring attention and explain the available options.