Worked Estimates and Checklists
How to estimate legal costs: a stage-by-stage budget for an Australian dispute
Build your own legal costs budget stage by stage, with hours, rates, disbursements, GST, recoverable costs and a worst case, using a worked civil dispute example.
To estimate legal costs, break the matter into stages, estimate the hours and the rate of whoever does each stage, add disbursements and GST, and then work out three totals: the cost if it settles early, the cost if it goes all the way, and the worst case if you lose and pay the other side's costs. Then compare each total with what is at stake. Your lawyer's written estimate should already be built this way; this guide shows how to read it, test it and fill gaps.
This is the overview for Worked Estimates and Checklists. All dollar figures are illustrative, not market rates.
Step 1: map the stages
A typical defended civil claim in a state court runs through these stages. Not every matter uses every one.
| Stage | What happens | Chance it is needed (your guess) |
|---|---|---|
| 1. Initial advice | Review documents, advise on merits and options | Always |
| 2. Pre-action letters | Letter of demand, response, negotiation | Usually |
| 3. Starting proceedings | Statement of claim, filing, service | If no settlement |
| 4. Pleadings and defence | Defence, reply, any cross-claim | If defended |
| 5. Evidence and disclosure | Documents, affidavits, subpoenas, experts | If defended |
| 6. Mediation | Court-ordered or private mediation | Common |
| 7. Hearing preparation and hearing | Briefing counsel, hearing days | If not settled |
| 8. Costs and enforcement | Costs assessment, enforcing judgment | After judgment |
Many civil matters settle at stage 2 or stage 6. Budget for that, but price the full path too.
Step 2: estimate hours and rates per stage
Ask your lawyer who will do each stage. For a quick check, use the hourly fee estimator: hours x rate + disbursements, at a low and high rate.
Worked example (illustrative): a homeowner sues a contractor for $85,000 of defective work in a state District or County Court. Rates including GST: solicitor $440 an hour.
| Stage | Hours | Professional fees | Disbursements | Stage total |
|---|---|---|---|---|
| 1. Advice | 4 | $1,760 | $0 | $1,760 |
| 2. Letters and negotiation | 6 | $2,640 | $0 | $2,640 |
| 3. Starting proceedings | 8 | $3,520 | $1,600 (filing, service) | $5,120 |
| 4. Pleadings | 10 | $4,400 | $0 | $4,400 |
| 5. Evidence and expert | 25 | $11,000 | $7,700 (building expert) | $18,700 |
| 6. Mediation | 8 | $3,520 | $2,750 (mediator share, counsel) | $6,270 |
| 7. Hearing (3 days) | 30 | $13,200 | $19,800 (counsel), $1,500 (court fees) | $34,500 |
Step 3: add up three paths
- Settles after letters (stages 1 to 2): $1,760 + $2,640 = $4,400
- Settles at mediation (stages 1 to 6): $4,400 + $5,120 + $4,400 + $18,700 + $6,270 = $38,890
- Goes to hearing (stages 1 to 7): $38,890 + $34,500 = $73,390
The hearing path costs almost as much as the claim. That does not mean the claim is not worth bringing, because a costs order can shift part of the cost, but it shows why settlement value matters.
Step 4: factor in costs orders
If you win at hearing, assume you recover part of your costs, not all. Illustrative: 65% of $73,390 is about $47,700, leaving a gap of about $25,690. Net result of winning the full $85,000: $85,000 - $25,690 = $59,310, before interest and assuming the contractor can pay.
If you lose, you pay your own $73,390 plus perhaps 65% of the contractor's similar costs, say $47,700: about $121,090. Test the gap with the costs recovery gap calculator and read adverse costs and security for costs.
Step 5: weigh the paths
A rough expected-value check (illustrative): if your lawyer thinks you have about a 70% chance of winning at hearing, the expected net result of going to hearing is 0.7 x $59,310 + 0.3 x (-$121,090) = $41,517 - $36,327 = about $5,190. A mediated settlement of, say, $55,000 after your $38,890 of costs leaves $16,110, which is better than that expected value and carries no risk. Numbers like these explain why most cases settle. The cost-benefit guide goes further.
Step 6: compare with your lawyer's disclosure
Hold your budget against the lawyer's written disclosure:
- Does it cover every stage you mapped?
- Are counsel and expert fees included and separated?
- Does it give the costs you might recover and might have to pay?
- Is the GST treatment clear?
- Will they update it at defined points, such as after the defence is filed?
If you are choosing between firms, use comparing lawyer quotes. If the case may be suitable for a tribunal or small claims court, check small claims and tribunals. If you are being offered a settlement, see offers of compromise, and for no win no fee claims, the settlement take-home example. Before your first meeting, use the first consultation checklist.
Frequently asked questions
How accurate are legal cost estimates?
Early estimates are ranges because the other side's conduct is unknown. They should narrow as the matter progresses. A good estimate states its assumptions so you can see when one has changed.
Should I budget for interest on unpaid bills?
Only if you might pay late. Check the costs agreement for the rate and start date; see itemised bills and interest.
What is the most common reason costs blow out?
A matter that was expected to settle does not, and moves into evidence and hearing preparation, which are the most expensive stages.
Sources
- Office of the Legal Services Commissioner (NSW) — what a costs estimate must include
- Victorian Legal Services Board + Commissioner — questions to ask about legal costs
- Legal Services Commission (Queensland) — detailed disclosure, including recoverable and adverse costs
- Supreme Court of Victoria — court fees and the Costs Court
