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Your client has rights when it comes to their legal costs. For most matters, you must give your client a ‘costs disclosure statement’ in writing as soon as possible after your client engages you. In it you must explain:
- what you estimate the total legal costs will be for their matter, including disbursements;
- how you will calculate their legal costs (e.g. billed by time or task) and that they can negotiate this with you;
- that they are entitled to receive a bill;
- that they can request that you give them an itemised bill; and
- that they can contact us if they want to dispute your bill.
(For relevant legislation see Legal Profession Uniform Law schedule 1 section 174).
With a complex matter, you don’t have to provide one estimate for the whole matter. You can provide a costs estimate for each of the different stages of the matter instead.
Exceptions to costs disclosure
The only times you don't have to provide a costs disclosure statement to your client are:
- where the total legal costs (excluding GST & disbursements) are not likely to be more than $750; or
- if you are dealing with a commercial or government client.
Short form costs disclosure for smaller matters
If your client’s legal matter is likely to be between $750 and $3,000, you can use the standard short-form costs disclosure template. This will save you time and effort, and meet your disclosure requirements. If your estimate will exceed $3,000, you must provide a full costs disclosure statement.
Informed consent is the goal
You need to be sure your client understands how you plan to handle their matter and what their legal costs will be. This will help them make an informed choice about their options and the associated costs. You must also give your client an updated disclosure statement in writing if there are any significant changes to your last estimate.
Litigation settlement disclosures
If you have negotiated a settlement for your client, you must give your client an estimate of the costs they will have to pay before you finalise the settlement. This must include any legal costs payable for another party.
What happens if you fail to disclose costs?
If you don’t properly disclose your costs to your client, or you fail to give them any disclosure at all, your costs agreement (if any) will be void. You won't be able to try to recover the costs until they are assessed, or we have determined any costs dispute . You may also face disciplinary action for breaching your obligations to your clients.
Dos and don'ts
- Give your client a genuine estimate of what you believe their total legal costs will be.
- Check that your client understands what you intend to do for them, and how this will affect their costs.
- Provide an update if there are major changes to your last estimate, and check they understand what the new costs will be.
- Use the short form costs disclosure if the matter will cost between $750 and $3,000.
- Give your client a range of possible fees (these are no longer allowed).
- Rely on an old or outdated costs disclosure if the matter has changed significantly.