Costs, Funding and Professional Ethics
Costs, funding and ethics
This domain tests costs awards, settlement offers, funding arrangements and ethical duties in civil litigation. Expect questions on party-and-party costs, substantial indemnity, contingency fees, conflicts, confidentiality and candour.
Core rules
- Costs generally follow the event: the unsuccessful party pays a portion of the successful party's costs. Partial indemnity is the default; substantial indemnity may be awarded for reprehensible conduct or to enforce an offer to settle.
- Offers to settle can attract costs consequences. A party who beats its own offer may receive increased costs; a party who rejects a reasonable offer may face elevated costs.
- Funding includes hourly fees, fixed fees and contingency fees where permitted. Contingency agreements must comply with disclosure and fairness rules.
- Lawyers owe duties of confidentiality, loyalty, avoidance of conflicts and candour to the court. A lawyer must not mislead the court or knowingly assist a client's improper conduct.
Worked example
A plaintiff offers to settle for $50,000. The defendant rejects the offer and the court awards $80,000. The plaintiff may receive substantial indemnity costs from the date of the offer because the offer was reasonable and the defendant failed to beat it. The court retains discretion to adjust the award.
Traps
- Not pleading or filing a settlement offer properly.
- Disclosing confidential information without consent or legal authority.
- Acting despite a conflict of interest.
- Misstating evidence or law to the court.