A costs agreement is a contract between a lawyer and another person (usually a client).
The lawyer agrees to provide legal services to the client, and the client agrees to pay for those services.
A costs agreement must be written, or evidenced in writing (for example, an email setting out discussions between the lawyer and client).
A solicitor may enter into an agreement with a barrister on behalf of a client. The responsibility for paying the barrister may rest with either the solicitor or the client directly.
What is a costs agreement?
The costs agreement typically covers various aspects related to the provision of legal services, including:
- Scope of work – while most costs agreements cover all work associated with a given matter, the scope may be limited to specific parts of the work or up to a certain stage of proceedings.
- Fees – how the professional fees payable to the lawyer will be calculated. This may be hourly rate, fixed fee, scale or stage-based fees.
- Disbursements – additional expenses that may be charged to a client, including amounts payable to another person (such as the court, or an expert) or the lawyer’s internal charges (such as photocopying).
- Billing – when and how often the lawyer will issue an invoice for the work.
- Termination – the circumstances in which either the client or lawyer can end the contract, and the repercussions of doing so.
Different types of costs agreements
There are various types of costs agreements:
- Standard costs agreement
- Conditional costs agreement (known as “no win, no fee”)
- Conditional costs agreement with uplift
Contingency fee agreements – where the lawyer’s fees are calculated as a percentage of the amount awarded or the value of property recovered – are prohibited in Australia.
A costs agreement should be provided by the lawyer as soon as possible after the client provides instructions.
The lawyer must also provide information about the client’s rights, which includes the right to negotiate a costs agreement and an estimate of the total costs for the work covered by the costs agreement.
For small matters – such as drafting wills – where the total fees are less than $750, disclosure of information about the client’s rights is not required.
For conditional costs agreements and agreements with uplift fees, the lawyer must provide additional information to the client. This includes the circumstances in which fees and disbursements will be payable by the client. These types of costs agreements must be signed by the client. The client must be informed that they have a right to obtain independent legal advice before entering into the contract.
How can Blue Ribbon Legal assist you?
At Blue Ribbon Legal, we are able to help both lawyers and clients with costs agreements to ensure the agreement provides the information required, and clients understand their rights and obligations under the contract.
If you are thinking of entering into a costs agreement, we are available to provide advice and guidance. We review costs agreements for compliance issues in every state and territory in Australia. So please get in touch with the experts in legal costs.