Amounts paid to a law practice for the provision of legal services.
One of the overriding principles of the Legal Profession Uniform Law is to “promote the administration of justice and an efficient and effective Australian legal profession” by “empowering clients of law practices to make informed choices about the services they access and the costs involved”.
The Legal Profession Uniform Law has applied in NSW and Victoria since July 2015 and more recently – since July 2022 – in Western Australia. Under the Uniform Law, if any of the 17.5 million people in these three states enter into a retainer with one of the more than 5,000 law firms providing legal services in those states, the intention is that they be empowered to make informed choices with the knowledge of the costs involved.
What are legal costs?
Where can a client find out about these costs?
Whenever a person wants to buy an item or a service, a key question is: how much will it cost? Sometimes this is an easy question to answer. On other occasions – such as with certain legal services – it is more difficult.
A client can obtain information regarding fixed fees or hourly rates charged. A client may be aware that legal costs must be “fair and reasonable”.
But what are legal costs?
The Uniform Law defines ‘legal costs’ as:
amounts that a person has been or may be charged by, or is, or may become liable to pay to, a law practice for the provision of legal services – including disbursements but not including interest.
Similar definitions are provided in the legislation applicable in Queensland, South Australia, Tasmania, the ACT and the Northern Territory.
What are legal services?
The Uniform Law defines ‘legal services’ as work done, or business transacted, in the ordinary course of legal practice.
Essentially, ‘legal services’ is any work done by a lawyer on behalf of a client.
What is included in legal costs?
Legal costs include:
- Amounts paid to solicitors for their work – commonly called “professional fees”.
- Amounts paid by solicitors on behalf of a client – these are called “disbursements” and include fees paid to others including courts, service fees, report fees for example. A law practice may charge internal expenses for photocopying, printing, telephone, postage and similar.
- Amounts paid by solicitors to other lawyers – most commonly, barristers and agents.
Some work done by a lawyer is not chargeable to a client. Work such as preparing costs disclosure, preparing solicitor/client invoices or bills, and work performed after a retainer is concluded are examples of work that is not chargeable to a client. Rather than work performed for the benefit of the client, this type of work is work done for the business of the law practice.
Lawyers must provide clients with an estimate of the legal costs they will have to pay for the services provided. The estimate should include all components of the legal costs: professional fees, disbursements and counsel fees.
If lawyers do not provide clients with all required information, or do not provide a reasonable estimate of the legal costs the client is likely to pay, the lawyer’s entitlement to payment may be restricted.
How can Blue Ribbon Legal assist you?
At Blue Ribbon Legal, we are able to help both lawyers and clients with all aspects of legal costs, including the liability to pay and the fair and reasonable amount.
If you have a query regarding legal costs, we provide guidance at every step – before, during and after the lawyer/client relationship. So please get in touch with the experts in legal costs.