AU_19414_Publication__Recovering costs for work performed by in-house lawyers

Recovering costs for work performed by in-house lawyers

Authors: Jack Pembroke-Birss and James Fleming

Australia Publication November 2019

The High Court of Australia in Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007; [2019] HCA 29 has confirmed that work performed by in-house lawyers representing their employer in litigation can be recovered by a successful party.

The general rule for costs recovery is that successful litigants are entitled to recovery of the costs of professional legal services actually incurred in litigation. However, a self-represented litigant may not obtain recompense for the value of their time spent in litigation. An exception to the general rule, known as the Chorley exception, permitted a self-represented litigant who is a solicitor to recover their professional costs of acting in the litigation. In Bell, the High Court decided that the Chorley exception no longer applies in Australia.

Importantly, the High Court did not disturb the well-established understanding that governments and corporations can recover the costs of work performed by in-house lawyers who appear in proceedings to represent their employer (in circumstances where an ordinary party would be entitled to such recovery).

The ‘cost’ of an employed solicitor is usually incurred as an overhead in the form of the in-house lawyer’s remuneration. Accordingly, the costs recoverable by an employer have been assessed on the basis of the cost to the employer of the in-house lawyer providing the professional legal services in connection with the litigation.

But unless the in-house lawyer records their time spent in connection with the litigation, it may be difficult to quantify the costs incurred by the employer.

To increase the likelihood of recovering those costs, a record should be kept that shows:

  • the in-house lawyer who worked on the matter;
  • each task performed by the in-house lawyer in connection with the litigation;
  • the time spent on each task; and
  • a description of the work performed that does not reveal the substance of any legal advice or refers to any privileged material.

In addition, any work performed in connection with the litigation that is not in the nature of professional legal services should be kept in a separate record or file.

Adopting this practice will assist a costs assessor or a court when determining the costs recoverable by the government or corporation for the in-house lawyer’s professional legal services. If the litigation is in a federal court or tribunal, such as the High Court or Federal Court, the in-house lawyer should be on the High Court Register of Practitioners to avoid complications during the costs assessment process.

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