The Distinction between Legal Fees and Court Costs

In Malaysia, if I sue someone, can I get back my legal costs?

You need to first understand terminology and distinguish between professional legal fees (‘Legal Fees’) and court awarded costs (‘Court Costs’).

Legal Fees are what you pay your lawyer to carry out the work for you.

Court Costs are what the court usually awards you when you succeed with your claim or defence. Court Costs are supposed to reimburse you for expenses incurred in having to claim or defend your case in court. The idea is that since you were successful in your claim or defence and incurred expense in doing so, the losing party should pay those expenses. It is not for every expense incurred related to the claim or defence.

This is inevitable because Court Costs only cover expenses incurred related for court related matters only. You may have spent a great deal in investigating and preparing for the court proceedings, but not all the expenses incurred for preliminary work done can be claimed.

Generally, you do not get to recover the legal fees you paid when you successfully sue someone in Court. Instead, what you receive is Court Costs. So Court Costs almost always never equals the Legal Fees you paid your lawyer.

Is there a way I can recover the Legal Fees I paid?

There are 2 instances when the Court will allow your Legal Fees to be paid as Court Costs.

The 1st instance is when the Court itself orders for Court Costs to be paid on an indemnity basis. Court Costs on an indemnity basis means all costs and expenses incurred you incurred is claimable against the losing party except if those amounts are unreasonable or unreasonably incurred. The Court makes such an order only in exceptional circumstances.

There is no definition of what amounts to exceptional circumstances. The Courts prefer deciding it on a case by case basis. The rule of thumb appears to be where a litigant behaves unreasonably to a high degree in his conduct of the case.

The 2nd instance is only possible in a contractual situation. If there is a clause in the contract, which is the subject or basis of dispute, that provides for the right to claim costs in an indemnity basis then the Court may allow for it. It allows it in that circumstance because that was a term that was negotiated and agreed upon by the parties. Having said that, the Court may still not allow it because ultimately Court Costs are determined by the Court.

How are Legal Fees and Court Costs determined?

Legal Fees are straightforward.

You negotiate and agree it with your lawyer. Or you simply agree with the fee proposal by your lawyer. Then so long as you pay your lawyer’s Legal Fees as and when you are supposed to, he will carry on working for your case.

Court Costs depends on where your case is filed.

If it is in the Subordinate Courts (i.e. Magistrates and Sessions Courts) then the Court Costs are fixed according to the cost schedule found in Order 59 Rule 23 of the Rules of Court 2012. Here is an excerpt of that cost schedule:
Cost Schedule Excerpt

So if you successfully sue someone after a trial and obtain a judgment sum against them of RM 2,300, then you are entitled to suing costs of RM 75 and advocacy costs of RM 250.

Suing costs is the expense given to you for hiring a lawyer to carry out your instructions, issue the Writ of Summons and Statement of Claim, and for attending to all matters directed by the Court in preparation of the case until Judgment is obtained.

Advocacy costs is the expense given to you if your lawyer conducted a trial. You are not entitled to it if judgment was obtained without a trial.

If it is in the High Court and above, then Court Costs are assessed and determined by the Judge.

In deciding the Court Costs, the Court shall have regard in particular to the following factors:

  1. The complexity, difficulty and novelty of the issues in the case;
  2. The skill, specialized knowledge and responsibility required to conduct the case;
  3. The amount of time and labour spent on the case by the lawyer;
  4. The amount and importance documents prepared or considered;
  5. The place and circumstances of the transaction;
  6. The importance of the case to the client;
  7. The amount or value at stake in the case; and
  8. Whether the lawyer was efficient and economical in his conduct of the case.

Can I claim for the other costs and expenses incurred like my filing fees, affirmation fees, advertisement costs, photocopying costs, etc.?

Yes, these are allowed for. It is important that you keep all your expense receipts. You will have to show this at the end of the case when totaling up the Costs.

When are Legal Fees and Court Costs payable?

Legal Fees need to be paid when your lawyers asks for further payment.

Court Costs are generally paid by the losing party at the conclusion of the case. The Court can order the Court Costs to be paid before that. But it only orders that in exceptional cases.


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Posts by Fahri Azzat

Fahri Azzat practices the dark arts of the law. Although he enjoys writing and reading, he doesn't enjoy writing his own little biographies of himself. Like this one. He wished somebody else would do it for him. He has little taste in writing about himself in third person. He feels weird doing it. But the part he finds most tedious is having to pad up the lack of his accomplishments, or share some interesting facts about his rather uneventful life, as if there were some who found that oh-so-interesting; as if he were some famous person, like Michael Jackson. When he writes these biographies, the thought, 'Wei, Jangan Perasaan- ah!' lights up in his head. So he usually just lists what he got involved with, positions he held and blah, blah. But this time. Right here. Right this very moment. Uhuh. This one. This one right here. He's finally telling it like it is.

Posted on 2 January 2017. You can follow any responses to this entry through the RSS 2.0.

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6 Responses to The Distinction between Legal Fees and Court Costs

  1. Mostly people are interested to hire the professional for handling the cases that are concern with law and order. It is only because they are having better experience than any other.

  2. Mervin ma maran

    What will the method of payment for agreed price to the spa lawyer

  3. tefo a joseph

    I am a foreigner living in malaysia.my husband is also a foreigner.i used to study there then got married in malaysia.my husband has scammed me since day 1.i recently found out that our marriage is fake,he made fake documents for my 3children which don't show that I am their mother,he keeps me locked inside the house,he is abusive and it's been long that he has not renewed my visa.my embassy agreed to help where they can.i need help

  4. First, we should know the main differences between the court cost and legal cost, then there has a topic of asking for getting back what you spend. If you let some money to a person so that he can work for you and then you ask it back after half while then there may be no chance of getting that back.