Before you litigate: costs, timeframes, and realistic outcomes

The instinct to fight, and the discipline to assess

When you have been wronged, litigation can feel like the natural response. Yet issuing proceedings is one of the most consequential decisions you can make in a commercial or personal dispute, and it deserves a clear-eyed assessment before you commit. The question is rarely whether you are right. It is whether pursuing that rightness through the courts is the best use of your time, money, and energy.

A sound assessment weighs three things honestly: what it will cost, how long it will take, and what you can realistically recover at the end. When those factors are examined together, many disputes resolve on terms that a full trial would never have improved upon.

The economics: you rarely recover all your costs

One of the most common misconceptions is that a winning party is made whole. In practice, even a successful litigant usually recovers only a portion of what they actually spent. This is the distinction between solicitor and client costs, being the full amount you pay your own lawyers, and party and party costs, being the amount a court will order the losing side to contribute.

Party and party costs are assessed on a scale and typically represent somewhere in the order of 60 to 70 per cent of your actual legal spend, though this varies with the matter and the court. The shortfall is yours to bear. If you lose, the position reverses: you may be ordered to pay a substantial share of the other side's costs on top of your own. Litigation is therefore a two-sided financial risk, not a one-way bet.

The timeline: measured in years, not months

Civil litigation moves deliberately. Between filing and a final hearing, a matter progresses through pleadings, discovery of documents, interlocutory steps, mediation, and the setting down of a trial date. Depending on the court, the complexity of the issues, and the volume of evidence, the period from commencement to hearing commonly runs from around 12 months to two years or more. Appeals extend that further.

During this time the dispute occupies management attention, generates ongoing cost, and carries a degree of uncertainty that many people underestimate at the outset. The commercial and personal cost of that distraction is real, even though it never appears on a bill.

Your obligations to the court, and the principle of proportionality

In Victoria, parties and their lawyers are bound by the overarching obligations in the Civil Procedure Act 2010. These require you, among other things, to act honestly, to only make claims and defences that have a proper basis, to narrow the issues in dispute, and to use reasonable endeavours to resolve the matter, including by appropriate dispute resolution.

Central to the Act is the principle of proportionality: the steps taken in a proceeding, and the costs incurred, should be proportionate to the amount in dispute, the complexity of the issues, and what is genuinely at stake. A court can and will take a party's conduct into account, including in costs orders. In short, the framework itself discourages fighting every point for its own sake.

Before you file: the questions worth answering first

Pre-litigation steps and alternative dispute resolution are not merely procedural hurdles. A well-prepared mediation resolves a large proportion of disputes at a fraction of the cost of trial, and often on more creative terms than a court could order. Before committing to proceedings, it is worth working through the following honestly with your adviser:

• What is the realistic recovery? Not your best-case figure, but the amount you are genuinely likely to be awarded after the issues are tested.
• Can the other side actually pay? A judgment against a party with no assets or no capacity to satisfy it may be worth little. Assess the counterparty's ability to pay before you spend chasing it.
• What is the net position after costs? Subtract your irrecoverable legal spend, and the risk of an adverse costs order, from any likely recovery.
• Have you genuinely explored settlement? Whether early negotiation or mediation could deliver an acceptable outcome sooner and more cheaply.
• What is the cost of the distraction? The management time, stress, and opportunity cost the dispute will absorb over its life.

Fighting on principle versus fighting commercially

There are disputes where a point of principle, reputation, or a precedent that will govern future dealings justifies the cost of seeing a matter through. That is a legitimate choice, provided it is made deliberately and with the economics understood. What is rarely wise is drifting into a principled fight without ever having weighed what it will cost to win it.

The most valuable step you can take is to obtain considered advice early, before positions harden and costs mount. A frank assessment of the merits, the likely recovery, and the counterparty's capacity to pay will tell you whether litigation is the right path or whether a negotiated resolution serves you better. Litigation remains an important and sometimes necessary remedy. It is simply one best entered with your eyes open.

This article is general information only and does not constitute legal advice. Cohen Lawyers recommends that you obtain specific legal advice in relation to your circumstances before taking any action. If you are considering litigation or facing a dispute, contact our office on 1300 610 669.