By David Harris-Lowe – Partner, Family Law
You may hear about lawyers talk to you about legal costs when a court action is started. This refers to two things – the amount you pay your lawyer for legal representation and also whether one litigant has to pay the other legal costs for the cost of the law suit. In family law cases, this is governed by Rule 24 of the Family Law Rules. The idea is simple, whichever party is successful can expect to have some or all of his or her legal costs paid for by the unsuccessful party. This usually amounts to somewhere between 50% and 80% of the successful party’s legal costs that will be paid for.
A key factor in determining success and the amount of costs payable is whether a party has made an offer to settle and whether the party obtained a result that was more favourable than the offer to settle. The goal is to encourage litigants to resolve their cases quickly and without legal costs because they know if they don’t accept reasonable offers they might have to pay legal costs.
Take for example a situation where Terry owes Jordan some money. Terry says it’s $8,000 and Jordan says it’s $10,000. Terry offers to pay $9,500 because Terry doesn’t want a trial. Jordan wants it all and doesn’t accept the offer. They have a trial that lasts a day and Terry pays $5,000 to the lawyer. After the trial the judge decides that Terry owes Jordan $8,500. Terry obtained a result that is more favourable than the offer of $9,500. This means that Jordan owes Terry legal costs. Depending on when the offer was made, Terry should recover around $3,000 in legal costs. So, Terry pays Jordan $8,500 minus the $3,000. Jordan receives $5,500 and pays the lawyer $5,000, leaving $500.00. Jordan, shouldn’t have been so aggressive.
The decision about when to make an Offer to Settle, now much it should be and how costs rules work in a legal case is extremely important to your case. It is important to get legal advice from a lawyer who understands these rules and can discuss the risks with you so you can determine what the risks are and what risks you want to take.