Bid for costs of employed solicitors

In Birketu Pty Ltd v Atanaskovic [2025] HCA 2 (5 February 2025) (Birketu), the High Court dismissed an appeal from the Court of Appeal of the New South Wales Supreme Court.

The High Court in Birketu was required to resolve the position as to the right to recover legal costs of employed solicitors.

This decision represents an important clarification of the law and overruled the Victorian Court of Appeal decision in United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA (United Petroleum) (at [8]).

The High Court considered the question of recovery of costs in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29 (Bell Lawyers).

There are two exceptions:

• the “Chorley exception”, where a self-represented solicitor can recover fees for work undertaken on their own behalf
• the “in-house lawyer rule” or “in-house solicitor rule”, where a litigant can recover fees for legal work undertaken by an employed lawyer on their behalf (at [18]).

A self-represented litigant has no right to recover legal costs of litigation (at [18]). This is also the position for a principal of a firm who represents the firm in litigation.

Mr Atanaskovic and Mr Jepps are the only two partners in the law firm Atanaskovic Hartnell (AH), an unincorporated legal practice (at [3]). AH successfully sued former clients Birketu Pty Ltd and WIN Corporation Pty Ltd for recovery of fees and costs. In doing so, AH claimed the amount of about $500,000 in fees for work done by an employed solicitor (at [5]).

At first instance in the NSW Supreme Court, Brereton JA applied United Petroleum finding for the appellants, which was subsequently overturned by the Court of Appeal.

The High Court held:

“To adopt the approach preferred by the Victorian Court of Appeal in United Petroleum and by Brereton JA and Ward P in the present case, and thereby to deny the entitlement of a litigant solicitor or unincorporated law firm to recover costs of work done by their employed solicitors, would be to depart from the application of the general common law principle” (at [27]).