How Law Firms Should Explain a Costs Order Against Their Own Client After an Unsuccessful Case

13 October 2026·6 min read

Quick answer: The best time to explain a costs order is before it ever happens — as part of an honest conversation at the start of a matter about what losing could cost. When an unsuccessful outcome does lead to a costs order against your client, the follow-up conversation should be calm, plain-English, and clearly separate from the emotional blow of losing the case itself. Clients forgive an honest "this is what happens next" far more easily than they forgive feeling blindsided. 📈

Please note: general information, not legal advice — check current official guidance before relying on it.

Losing a case is hard enough for a client to sit with. Finding out they now also owe money towards the other side's legal costs, on top of their own, is the moment a lot of firms quietly dread — and the moment a lot of client relationships actually end, not because the legal work was wrong, but because the conversation around it was handled badly. Most clients don't walk away angry about losing. They walk away angry about feeling like nobody warned them this was even possible 💖. Firms that are upfront about costs risk from day one, and calm and clear when an order actually lands, keep clients — and keep the referrals that come from clients who, even in defeat, felt properly looked after.

What most firms get wrong

Many firms avoid the costs risk conversation altogether at the outset, worried that raising the possibility of losing — and paying for it — will scare a client out of running a case worth running. That avoidance is understandable but it's a trap: the conversation doesn't go away, it just gets deferred to the worst possible moment, after the result is already in and the client is least equipped to hear new bad news calmly. The opposite mistake is just as damaging — being so legalistic and hedge-everything in the post-loss conversation that the client can't actually tell what happened or what they now owe. Neither extreme serves the client. What works is plain, early expectation-setting, and a clear, human explanation when the moment arrives.

Copy-paste structure: the two conversations

Part one — at the start of the matter (in writing): "Before we proceed, I want to be upfront about something many clients don't think about until later: in [this type of matter], if the case is unsuccessful, there's a possibility you could be ordered to contribute to the other side's legal costs, in addition to your own. This isn't something we can predict with certainty at this stage, but I'd rather you know it's a possibility from day one than hear about it for the first time later."

Part two — after an unsuccessful outcome: "I know this isn't the result either of us wanted, and I want to talk you through what happens next. As part of the judgment, a costs order has been made requiring you to contribute to [party]'s legal costs. This is separate from our own fees and separate from the outcome of the case itself — it's a standard part of how the court deals with costs when a matter doesn't succeed. Let's go through what this means for you and what your options are from here."

Close: "I'm available to talk this through properly, by phone or in person — whatever's easier for you right now."

Commercial litigation firm: A manufacturing client loses a contract dispute and is ordered to contribute to the other side's costs. The firm's debrief call separates the three things clearly — the business outcome, the firm's own invoice, and the costs order — rather than letting the client conflate all three into one overwhelming bill in their mind.

Family law firm: A parenting matter doesn't go the client's way and a partial costs order follows. Because the firm raised costs risk honestly at the first meeting, the follow-up conversation is far less of a shock — the client remembers being told this was possible, and the firm can reference that earlier conversation rather than starting from zero.

Suburban general practice: A two-partner firm runs a modest boundary dispute for a long-standing client who loses and is ordered to pay a contribution to costs. Because the relationship is personal and long-term, the principal has the conversation face-to-face rather than by letter — a decision that costs more time but protects years of referred family and friends.

How to structure the conversation itself

Deliver this by phone or in person before it ever arrives as a letter — a costs order explained cold, in writing, with no prior conversation, reads as the firm hiding behind paperwork. Separate the emotional content from the financial content explicitly: acknowledge the disappointment of the result first, then move into the practical "here's what this means" section once the client has had a moment to absorb the outcome. Avoid minimising language ("it's not a big deal") and avoid over-apologising in a way that implies the firm did something wrong — a costs order following an unsuccessful case is a standard feature of how litigation works, not a failure of representation, and the conversation should reflect that without sounding defensive about it.

💡 Say it before you need to. A costs risk conversation at the start of a matter, documented in writing, is the single biggest thing that makes the post-loss conversation survivable for the relationship — it turns "why didn't you tell me this could happen" into "I remember you mentioning this."

Mistakes to avoid

Saving the costs risk conversation for the file note instead of the client
Delivering a costs order explanation in a letter with no prior phone call
Blurring the firm's own fees together with the costs order in the client's mind
Sounding defensive, as though a costs order reflects poorly on the legal work
Leaving the client unclear on what practical options exist from here, even in general terms

Frequently asked questions

Will a client always have to pay the other side's costs if they lose?

Not always, and it varies significantly by matter type, jurisdiction and the specifics of how the case was run — that's a question for the solicitor on the file to address directly with the client, not something to predict in marketing copy or a general blog post.

Should the costs risk conversation happen verbally, in writing, or both?

Both, ideally — verbally so it feels like a genuine conversation rather than a disclaimer, and in writing so there's a record the client can refer back to later if the topic resurfaces.

What if the client reacts angrily and threatens a complaint?

Let them be heard without immediately becoming defensive — most anger in this moment is really about feeling unprepared, and a calm, non-defensive explanation of what happened and why often de-escalates faster than a rebuttal of the complaint itself.

Is it ever appropriate to absorb part of a costs order to preserve the relationship?

That's a commercial and ethical decision for the firm to make on its own judgement in each case — there's no one-size-fits-all answer, and it's worth discussing internally rather than deciding on the spot in an emotional conversation.

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Written by

Kate, founder of Chronically Online

I help Gold Coast and Brisbane businesses grow with branding, websites and marketing that actually works.

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