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The cost of taking legal action is usually the first thing people worry about — sometimes before they’ve even worked out whether they have a claim. That’s completely understandable. You’ve already been let down by someone you trusted. The idea of spending money you may not have, on an outcome you can’t guarantee, can feel like compounding one bad situation with another.
But cost uncertainty shouldn’t be the reason a valid claim goes nowhere. Once you understand how litigation costs actually work in Australia — and how no-win, no-fee funding shifts the financial risk — the picture changes considerably.
The basics
Litigation costs are the legal fees and out-of-pocket expenses involved in running a claim through the courts. They fall into two categories.
Legal fees are the charges your lawyers apply for their time — advising, drafting, negotiating, and appearing on your behalf.
Disbursements are the hard costs incurred along the way: court filing fees, expert witness reports, barrister (counsel) fees, transcript costs, and similar. These are real expenses that exist regardless of who wins.
In New South Wales, costs in civil litigation are governed by the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW). Every other state and territory has equivalent legislation. The framework is broadly consistent across Australia, though specific rules vary.
How costs are awarded
Australian civil litigation operates on a foundational principle: ordinarily, the losing party pays a contribution toward the winning party’s costs. It’s called “costs follow the event,” and it applies as the default position across all Australian courts.
There are two cost levels worth understanding.
Party/party costs are what the court orders one side to pay the other. This isn’t a full reimbursement — in practice it typically covers somewhere between 60 and 70 per cent of the winning party’s actual solicitor costs, plus disbursements.
Indemnity costs are a higher-level order, generally reserved for situations where a party has behaved unreasonably in the litigation — for example, rejecting a reasonable settlement offer and then achieving no better result at trial.
Courts aren’t rigidly bound to the default rule. They have broad discretion to depart from it based on the conduct of the parties, any offers made during the proceedings, and other relevant factors. The High Court confirmed the breadth of this discretion in Oshlack v Richmond River Council (1998) 193 CLR 72 — a decision that continues to influence how Australian courts approach cost orders.
Your cost position
This is the question that matters most, so it deserves a straight answer.
If you win, the court will ordinarily make a cost order in your favour. The defendant — or more commonly, their insurer — contributes to your legal costs. You recover something — usually not everything, but a meaningful portion.
If you lose, the default rule works against you. You may be ordered to pay a contribution toward the other side’s costs. This is the adverse costs risk, and it’s real. It doesn’t disappear simply because the original wrong was real.
Disbursements — expert reports, filing fees, barrister fees — are incurred during the matter regardless of outcome. These are genuine costs that need to be accounted for.
This is precisely why claims need proper assessment before proceedings are filed. Not every grievance that feels like negligence will survive the scrutiny of litigation. Experienced legal advice at the outset is what separates a well-managed claim from an expensive disappointment.
No win, no fee
The no-win, no-fee model exists specifically to address the cost barrier. Here’s how it works in practice.
Under a conditional costs agreement — governed in NSW by s 322 of the Legal Profession Uniform Law, with equivalent provisions in every state — you pay no solicitors’ fees upfront and owe nothing to your lawyers in fees unless your claim succeeds. If the matter doesn’t succeed, you walk away without a legal fee bill.
That removes the fear of paying for an unsuccessful outcome.
What it doesn’t automatically remove is the adverse costs risk — the possibility of a court ordering you to pay the other side’s costs if you lose. That risk is different from your own lawyers’ fees, and it’s important to understand the distinction.
This is why Fair Go Australia assesses adverse costs exposure before any matter proceeds to litigation. Where the risk is material, after-the-event (ATE) insurance is worth discussing. ATE insurance is a policy taken out after the event giving rise to the claim — it covers the adverse costs risk if the matter is unsuccessful. It isn’t always necessary, and it isn’t always appropriate, but it’s a tool worth knowing about.
The short version: no-win, no-fee removes your legal fee exposure. Adverse costs risk is managed separately, transparently, and before you commit to proceedings.
If you win
A successful outcome generally means more than just the compensation itself.
Party/party costs are awarded by the court against the defendant — a contribution toward your actual legal costs, typically 60–70 per cent of solicitor fees, plus disbursements in full or close to it.
Pre-judgment interest on costs may also be available in certain jurisdictions, depending on how the matter resolves and which court it runs in.
It’s worth noting that cost recovery and your compensation award are separate. Recovering costs doesn’t reduce your damages — they’re two distinct things. In practice, costs are often negotiated as part of an overall settlement figure, particularly in matters that resolve before trial.
Is it worth it?
This is a question we take seriously. Australian courts apply a proportionality principle — costs should bear a reasonable relationship to the value and complexity of the claim. If a $25,000 claim is heading toward $90,000 in litigation costs, something has gone wrong.
Fair Go Australia addresses proportionality at the evaluation stage. If a claim is technically viable but unlikely to be cost-effective to litigate in full, we say so honestly. That’s not a comfortable conversation, but it’s the right one.
The good news is that many professional negligence claims resolve well before trial — often after a well-constructed letter of demand, or through mediation in the early stages of proceedings. The costs incurred in those matters are a fraction of what a defended trial would cost. A meaningful settlement, reached efficiently, is often a better outcome than a longer fight for a marginally higher figure.
Larger claims — typically those in the six figures or above — are generally well-suited to full litigation when the merits are sound. The economics work differently at that level, and defendants (or their insurers) tend to engage more seriously.
Professional negligence claims in Australia must generally be commenced within the applicable limitation period — typically three years from the date you discovered, or should reasonably have discovered, the negligence. This varies by state. Missing this deadline can permanently extinguish your right to claim, regardless of how strong the underlying case may be. If you are uncertain whether your limitation period is still open, contact our team now for a free assessment.
Our specialist professional negligence lawyers offer a free case evaluation with no obligation. We’ll assess the merits, outline your options, and be straight with you about what we think.
We respond to all enquiries within 1 business day.
Common questions
Under a no-win, no-fee arrangement, you pay no solicitor fees upfront and nothing in legal fees if the claim doesn’t succeed. Disbursements — expert reports, filing fees, barrister fees — are real costs that exist regardless of outcome, and how these are handled varies by matter. Fair Go Australia discusses all of this at the evaluation stage, before anything is committed to.
The default rule in Australian civil litigation is that the losing party pays a contribution toward the other side’s costs. This adverse costs risk is separate from your own lawyers’ fees and isn’t eliminated by a no-win, no-fee agreement. It’s a real exposure that we assess carefully before recommending that any matter proceed to formal litigation. Where the risk warrants it, after-the-event insurance is an option worth considering.
Generally, yes. A successful outcome will ordinarily include a cost order requiring the defendant to contribute toward your legal costs — typically around 60–70 per cent of your actual solicitor fees, plus disbursements. The full amount is rarely recovered through a cost order alone, but it is a meaningful contribution. In settlement negotiations, costs are often factored into the overall figure.
Disbursements are the out-of-pocket expenses incurred in running a claim — court filing fees, expert witness reports, barristers’ fees, transcript costs. They’re distinct from solicitor fees. Under a no-win, no-fee arrangement, solicitor fees are deferred until success, but disbursements may be handled differently depending on the nature and scale of the matter. This is always discussed openly before a matter proceeds.
ATE insurance is a policy that protects against adverse costs — what you’d owe the other side if your claim is unsuccessful. It’s taken out after the events giving rise to the claim and is priced based on the perceived risk of the matter. It isn’t appropriate or necessary in every case, but in matters where the adverse costs exposure is significant, it provides meaningful protection. Fair Go Australia can advise on whether it’s worth considering as part of your overall strategy.
Use our free Claim Eligibility Checker to get an initial read on your situation in minutes.
Our goal is to help people in the best way possible. this is a basic principle in every case and cause for success. contact us today for a free consultation.
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