Recovery of Costs
Introduction
There is some uncertainty regarding the circumstances in which a court may make a costs order in favour of a successful party represented on a pro bono basis.
To overcome this uncertainty it has now become common practice among law firms to enter into a form of conditional costs agreement with their pro bono clients. Under this arrangement, generally the parties agree that the legal practitioner will be paid only where the pro bono client obtains a costs order and those costs are paid by the other party.
Current law in Australia
The effect of the indemnity principle is that if a party is under no legal obligation to pay lawyers’ fees, no amount can be recovered from the unsuccessful party [1]. This is a key concern in the context of pro bono representation since the successful party does not need to be compensated where no loss has been incurred.
The judgement in Wentworth suggests that the indemnity principle will prevent a pro bono litigant from recovering costs, unless the litigant has, at the time recovery is sought, a legal obligation to pay his/her own solicitor’s costs. It was determined that the costs agreement in that case was adequate in creating this legal obligation. Issues
All courts have a broad discretion to make costs orders. It is possible for a court to find that a costs order is not suitable, even where a pro bono client is successful.
The principle in Wentworth has not been applied explicitly in further cases, and coming from a State Court it cannot be said with total certainty that conditional costs agreements in pro bono matters will result in costs being awarded upon being successful. Nevertheless conditional costs agreements have become widely used with pro bono clients in litigious matters.
Please see the Pro Bono Manual for links to sample cost agreements and clauses. Current Law Reform
There has recently been a push for legislative reform in this area in order to provide greater certainty and fewer impediments for legal professionals to act in pro bono cases. Below are links to various submissions made in this area:
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