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Understanding Legal Costs

One of the most important aspects of your legal matter is the costs.

Lawyers talk about a few difference types of costs like party/party costs, solicitor/client costs, and court scale. With this blog we will explain each one and give a brief outline of how they work.

You have come to the end of your legal dispute and now the issue of costs is being decided. Naturally, you are concerned who is going to pay for what and why. We will begin with a brief explanation about the three types of costs we have mentioned above.

Solicitor/client costs – are the costs a lawyer charges their client for the work they do.

Party/party costs – are the costs a court may make the losing party pay the winning party.

Court scale – are the costs outlined by the Supreme Court (Civil) Rules 2006 Schedule 2 or the Magistrates Court Scale of Costs which is updated annually.

Generally, people think if they win the legal dispute the court will order the other side to pay their legal costs. However, even when you are successful, you are probably going to have to pay some of your legal costs. This is because there is usually a difference between the solicitor/client costs and the party/party costs. Let’s say your lawyer charged you $2,000 to do the legal work for your matter, the court may only order the other side to pay 50% of that amount. It is only rarely the court will order the losing side pay almost all the solicitor/client costs of the winning side as this usually requires the losing side to have run their case highly inappropriately. For example, they:

  • abused the legal process;
  • engaged in fraud or misconduct; or
  • offers of compromise were not accepted (a letter to settle a matter from one side to the other in the hope of settling a matter before a trail and the court ordered a settlement amount higher than the offer made in the letter).

Offers of compromise are often called Caulderbank letters or they can also been official forms filed in a court outlining a settlement offer.

Court scale is a general term for the Supreme Court Scale of Costs; this scale is set by the Court as a legal costs guide. You can have a look click on Supreme Court (Civil) Rules 2006 and go Schedule 2. The schedule outlines the current court scale.

If you are involved in a legal matter and the other side have made an offer of compromise, it is important to get expert legal advice before dismissing or ignoring the offer. This is because of the implication it may have on the legal costs of your matter.

The Law Society of South Australia provides a fact sheet about legal costs and if you are involved in any legal matter, you should read it. You can access the fact sheet Legal Costs: Your Right to Know

This blog is posted in South Australia.

By Dionne Franklin

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