The costs of going to court are staggering, yet many people still consider this as their only option when trying to resolve a dispute.
Going to court to resolve conflict is increasingly considered as the worst way to get things sorted, with most courts in Australia now mandating that mediation or alternate dispute resolution is a step or a series of steps that must be undertaken before reaching the door of the court. Despite alternate dispute resolution not working in some circumstances, people in conflict can even find that when they get to court following unsuccessful mediation, the court will order that they keep trying.
Why is Going to Court Expensive?
Court costs are overwhelmingly high, but what invariably is higher are all the legal costs associated with getting there. Once you get to Court, the fees of your lawyer and a Barrister will be in the vicinity of $6,000 – $12,000 per day. It’s likely that it has already cost you possibly ten times that amount to get to this point. Notwithstanding this, if you lose, it may be the case that you will be ordered to pay the winner’s legal fees as well as your own.
In the context of winning and losing, no one goes into litigation with the thought of losing, yet the thousands of cases that go before courts each year and subsequently written up in volumes of case law result in a win and a loss. What is just as alarming is the fact that many who actually win, lose as well. The financial impact weighs less significantly than the emotional impact of being involved in litigation.
What are the Actual Costs of Going to Court?
As mentioned, litigation is made up of hugely laborious steps before even reaching court. These steps are a mixture of preparation, drafting court documents, meetings, expert opinions, including barristers, negotiation, mediation, then court costs. When discussed globally like this, it may not sound to be a lot of money, but when you calculate hourly rates of lawyers and associated professionals whose average hourly rate is between $350 – $700 an hour, the costs escalate very quickly and before you know it, tens of thousands of dollars.
How Do Lawyers Charge?
As mentioned, a lawyer’s fee will be in the vicinity of $350 – $700 an hour, not to mention additional costs including all the personnel who work on your legal matter within the law firm.
Depending on the type of legal matter, it’s likely that when you first engage a lawyer to act for you they will require you to deposit a substantial amount of money into their trust account to enable them to start work. The charges they intend to invoice you for will be subject to a costs agreement that you must see and agree to before any work is instigated. They also must provide you with an estimate of how much your legal matter will cost to litigate.
What About No Win No Fee?
Depending on the area of law that you require help with, there may be law firms who will act for you on a No Win No Fee basis. This is particularly so in relation to personal injury law matters. Simply put, if your matter is successful you will pay the legal fees, if it is not, you will not pay your lawyer’s legal fees.
However, what you need to know is that if unsuccessful you may not have to pay your lawyer’s fees, but the successful party’s lawyers may seek their costs from you.
Accordingly, you do need to consider this and ensure that if your legal matter is eligible for a No Win No Fee contingency arrangement that the law firm you’re working with is very skilled in the relevant litigation.
Costs Ordered by the Court
If your matter does not fall inside a No Win No Fee arrangement, if your legal matter is successful it usually follows that the Court may order costs against the unsuccessful party and they become bound to pay aspects of your legal costs.
In relation to these costs, there are a number of ways that the Court may consider the allocation of these costs. For example:
Party costs are the most common form of costs ordered by a court. What this typically means is that the unsuccessful party will be ordered to pay the “agreed or assessed” legal costs. This basically means that you and the other party:
- reach an agreement on those costs to be paid; or
- agree to an independent assessment being undertaken to determine what each party’s ‘reasonable’ costs are due to the litigation.
It’s usually the case that these costs are between 70-85% of the real costs.
The Intangible Costs of Going to Court
In considering the costs associated with going to court, we mostly consider the financial impact. However, the psychological cost of going to court can be massive.
By way of example, in the UK, a leading Will dispute litigation practice found that over 80% of people they represented in such matters showed significant symptoms of mental health issues related to the often lengthy litigation. Notwithstanding this, particularly in family law litigation, there are many innocent people involved, most notably children.
Is There a Better Way?
The best way to avoid going to court is by not going to court. Legal Industry Academic, Dr George Beaton from the University of Melbourne says hiring a lawyer is a “grudge purchase” for consumers.
“With most purchases in life a consumer gets a degree of certainty, but lawyers usually can’t say for sure what the final figure will be, because they don’t know how long the case will run or the final outcome.”
Dr Beaton suggested that by far, mediation is a better approach.
In our experience, at Mediations Australia, we obviously agree. Litigation is set up by conducting a number of adversarial steps along the way that fragment and worsen relationships culminating in a bitter fight to the end. This typically results in no one walking away content with the outcome, but rather significantly poorer for the experience and psychologically damaged.
How Does Mediation Help?
Mediation derives from an acknowledgement that disputes are a part of life and the sooner you resolve them, the better for everyone.
Disputes get worse the longer they’re left, by choosing mediation early in the dispute, resolution can typically be achieved.
Notwithstanding this, the costs of mediation are a fraction of litigation costs. The same dispute may cost $300,000 to litigate and less than $5,000 to mediate, potentially including legally-binding agreements being drawn up.
How Do I Make the Decision?
A very small percentage of disputes simply won’t resolve in mediation. This primarily is because both parties are intractable in their positions. In other words, they won’t give an inch. These are the types of matters that Dr Beaton referred to as “grudge” matters. Common sense goes out the window and their fierce determination to win at all costs takes over. At times, there may be one innocent party to all this, while the other one is intent on wrecking them financially and emotionally.
The other types of matters that end up in litigation are invariably those that are very complex and potentially have many parties to the litigation.
But that said, increasingly arbitration is being used to settle these types of matters. For example, many complex commercial and construction disputes are arbitrated in Australia.
You can read more about how Mediations Australia can assist in family law arbitration and other types of arbitration.
What to Do Next
Regardless of the type of dispute you’re involved, it’s advisable at soon as possible to seek advice. At Mediations Australia, our mediators are all qualified lawyers. They’re perfectly suited to ascertain the nature of your dispute and will give you some potential options that will best achieve a resolution that you’re happy with.
At Mediations Australia, we offer an initial, no-obligation consultation with one of our Mediators.