Australia: AI Shifts Cost Burden in Employment Litigation
Self-represented litigants in Australia are using generative AI to file apparently sophisticated employment claims at no cost, creating a new cost asymmetry for employers who must pay to defend them.
Generative AI is creating a significant cost imbalance in Australian employment litigation. Self-represented litigants are leveraging the technology to draft apparently sophisticated pleadings and submissions at little to no personal expense. While these documents may appear well-structured, they often lack sound legal judgment, leading to over-pleading and the pursuit of marginal arguments. For employers, this trend significantly increases the cost of defending claims in the Fair Work Act’s “no-costs” jurisdiction, as each AI-generated point must be assessed and addressed. This asymmetry can pressure companies into settling weak claims simply to avoid high legal fees.
Australian courts and tribunals are now responding. The Fair Work Commission recently issued guidance on AI use and, in one notable case, took the rare step of ordering a claimant who 'relied heavily on artificial intelligence' to pay the employer's costs for unreasonably pursuing a flawed case. The Federal Court has also issued its own practice note, signaling increased scrutiny over AI's role in litigation. Counsel for employers should now meticulously document unreasonable conduct by AI-assisted litigants to build a record for potential costs applications.