Pro-Bono ≠ No Costs Orders: What Litigants and Lawyers Need to Know

Background

If you’ve read Bite Sized Legal Insights before, you will be thoroughly familiar with the indemnity principle (a.k.a. the general rule that costs follow the event). However, I will re-explain the rule here by way of background for new and returning readers.

The indemnity principle covers two core concepts (see: Mainieri v Cirillo [2014] 47 VR 127, [43]):

• First, a legally represented successful party (SP) is generally entitled to an order for costs against the unsuccessful party (UP).  

• Second, the SP can recover no more from the UP than they are liable to pay their own lawyers.

When a law firm agrees to act for a client on a pro-bono basis, it will often enter into a Pro-Bono Costs Agreement (Pro-Bono CA) with its client. A Pro-Bono CA is a conditional costs agreement which, like other conditional or “no win no fee” costs agreements, makes the client’s liability to pay legal costs conditional on the occurrence of one or more specified events.

However, the question of whether a SP with pro-bono legal representation (PBLR) is entitled to recover legal costs from the UP is complicated because it is often unclear if (and when) the SP became subject to any liability to pay their own lawyers. Additionally, the rules applicable in each jurisdiction modify or extend the common law.

Pro-bono costs recovery under the common law

Under the common law, a SP with PBLR may only recover legal costs pursuant to the usual rule that costs follow the event if the SP had a present (or contingent) liability to pay their lawyers under their Pro-Bono CA at the time of taxation; see: Mainieri, [52]; and Mourik v Von Marburg [2016] VSC 601, [30]).

The time at which a client’s liability to pay their own lawyers arises under a Pro-Bono CA depends upon the proper construction of the Pro-Bono CA. The SP may be able to recover legal costs from the UP if:

• The express terms of the Pro-Bono CA make the SP’s liability to pay their lawyers conditional upon the Court making a costs order in their favour. This does not offend the indemnity principle because the SP’s liability crystallizes before the taxation; Mainieri, [52].

• The express terms of the Pro-Bono CA make the SP’s liability to pay their lawyers conditional upon the Court making a costs order in their favour and then subsequently limit the scope of that liability. However, there is some disagreement among intermediate appellate Courts regarding how the terms of a Pro-Bono CA may achieve this (if at all); Royal v El Ali (No 3) [2016] FCA 1573, [44]-[45]; and Williams, William v Williams, William (No 2) [2023] NSWDC 69, [13]-[14]. Cf: King v King [2012] QCA 81, [13]-[16]; and E1 v E2; E Pty Limited v E2 [2023] NSWDC 411, [46]-[55].

The SP cannot recover legal costs if the Pro-Bono CA makes their liability conditional upon their actual recovery of legal costs from the UP, because their liability to pay their own lawyers has not crystallised at the time of the taxation; Von Marburg [30]-[31].

Pro-bono costs recovery under statute

In recognition of the public interest in encouraging lawyers to act on a pro-bono basis, the Court rules applicable in many (not all) Australian jurisdictions extend or modify the circumstances in which the SP receiving PBLR can recover legal costs. However, the approach taken in each jurisdiction differs significantly; Gallegos & Berntsson [2025] FedCFamC1F 125, [34]-[35]. For the sake of brevity, this blog post will cover the Federal Court of Australia (FCA) and Supreme Court of Victoria (SCV) only.

Federal Court of Australia

Under the Federal Court Rules 2011 (Cth), r 4.19 enables the FCA to make a costs order in favour of a SP receiving PBLR if, and only if:

• the SP and their lawyers entered into a Pro-Bono CA; and,

• the Pro-Bono CA expressly provides that the SP is only liable to pay professional fees if a costs order is made in their favour, and to the extent that UP in fact pays those costs.

The FCA may also order the costs are payable directly to the SP’s lawyer, rather than the SP; r 4.19(3).

Supreme Court of Victoria

Part 3A of Order 63 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (CP Rules) was introduced following Von Marburg, and creates a regime for “pro bono costs orders” (PBCO); r 63.34.1(1).

Under r 63.34.2 of the CP Rules, the SCV may make a PBCO which enables the SP to recover legal costs from the UP, as if their lawyer had acted for the SP on the basis they were under an obligation to pay legal costs (rather than on a pro-bono basis). Similarly to the FCA, the SCV can order that these costs are payable to the SP’s lawyer directly.

However, unlike the FCA, the SCV can make a PBCO order regardless of whether the lawyer acted on the basis they were to receive no professional fees (i.e. with no Pro-Bono CA in place); on the basis of a Pro-Bono CA that makes the SP’s liability to pay conditional on a costs order in their favour; or, even on the basis Pro-Bono CA that makes the SP’s liability to pay conditional on the extent of the SP’s actual recovery of legal costs; r 63.34.1(2).

There are equivalent provisions in Order 63A of the County Court Civil Procedure Rules 2018 (Vic), and Order 63 of the Magistrates' Court General Civil Procedure Rules 2020 (Vic).

Key Takeaways

1. Under the common law a SP can only recover costs from the UP if they had a present or contingent liability to pay their lawyers at the time of taxation.

2. Lawyers relying on a Pro-Bono CA should ensure that its terms provide that client’s liability to pay them is conditional on the making of a costs order in their favour (not actual recovery).

3. In the Federal Court lawyers acting on a pro-bono basis can only recover legal costs if they have entered a Pro-Bono CA that complies with r 4.19.

4. In Victoria lawyers acting on a pro-bono basis may seek a PBCO even if they have not entered a Pro-Bono CA or their Pro-Bono CA does not impose any liability on their client to pay legal costs; rr 63.34.1 and 63.34.2.