The Uniform Law requires that you give costs disclosure in writing to your client as soon as practicable after instructions are given. This disclosure document must:
- disclose the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs;
- include information about the client’s rights:
– to negotiate a costs agreement with the law practice;
– to negotiate the billing method (e.g. by reference to timing or task);
– to receive a bill and to request an itemised bill; and
– to seek the assistance of the Victorian Legal Services Commissioner in the event of a costs dispute.
If there is any significant change to what has been disclosed, you must update the information by disclosing the change to the client. These obligations are consistent with the objectives of the Uniform Law, which include: “to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options”.
If you negotiate a settlement of a litigious matter on behalf of a client, before the settlement is executed you must disclose a reasonable estimate of the amount of legal costs payable by the client if the matter is settled (including any legal costs of another party), and a reasonable estimate of any contributions towards those costs likely to be received from another party.
Client’s consent and understanding
In addition to providing written costs disclosure, the Uniform Law requires you to take all reasonable steps to satisfy yourself that your client has understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs. This is to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options.
Exceptions to costs disclosure
There are limited exceptions to the disclosure requirement, primarily relating to where total legal costs are not likely to exceed $750 or you are dealing with a commercial or Government client (refer s170(2) of the Uniform Law).
Short form costs disclosure
Where the total costs are likely to be between $750 and $3000, you are permitted to use a standard short form of costs disclosure. A standard form has been developed by the Legal Services Council for use in such circumstances: Standard costs disclosure form for clients (44KB DOCX).
A costs estimate should provide consumers with sufficient information to allow them to make informed choices about their legal options and their costs exposure. Legal costs estimates need to be tailored to the particular circumstances of the client’s matter and instructions. Lawyers should avoid merely setting out a range of possible fees in their estimates and provide a genuine estimate of total legal costs for the client’s matter. Express mention of an estimate in the Uniform Law, not a range, confirms this.
The Uniform Law requires that an estimate of the costs be provided to the client, with further disclosure given where there is a significant change in circumstances, including legal costs. In a simple matter, a first estimate, with a later revised estimate following a significant change, will fulfil the requirement of s174. In a more complex matter, practitioners can comply by providing an estimate of legal costs for different stages of a matter. Each stage should have a description of the factors that would influence the estimate for that stage. Essential elements of proper costs disclosure include monitoring and updating the estimate as the work progresses and keeping the client informed including as changes occur. Again, this is designed to ensure clients are making informed choices when receiving legal services.
The Legal Services Council and the Commissioner for Uniform Legal Services Regulation have recently issued guidelines about s.174(1) of the Uniform Law.
Disclosure and retaining another law practice
A law practice first retained by a client must disclose details relating to any other law practice it intends to retain on the client’s behalf as per its own disclosure requirements (see above).
Effect of failure to disclose
If a law practice contravenes the disclosure obligations:
- the costs agreement (if any) is void;
- the client is not required to pay legal costs until they have been assessed or any costs dispute has been determined;
- the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until the costs have been assessed or any costs dispute determined; and
- the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.
For more information about legal costs, please see the following pages: