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“Ethics and equity and the principles of justice do not change with the calendar.”
David Herbert Lawrence
Integrity is the cornerstone of any legal practice so it’s vital to get your Costs Agreement right from the outset. Blackstone Legal Costing has the knowledge and experience to develop situation specific Costs Agreements that:
- are valid under the Legal Profession Act 2004 and Legal Profession Amendment Act 2007,
- identify all entitlements to assure maximum recovery for professional costs, and
- minimise legal costs disputes.
Costs Agreements are an important part of life for Victorian solicitors and call for great care in their preparation. Blackstone Legal Costing has developed a list of Dos and Don’ts to assist with client dealings in this specialist area. Download Costs Agreements Dos and Don’ts here free.
Impacting factors that should be considered when drawing Costs Agreements include:
Disclosure Statements
A Disclosure Statement is a written statement to a client relating to costs. Statements should be made in accordance with statutory obligations under the Legal Profession Act 2004 to disclose information. There is an ongoing duty compelling practitioners to inform clients promptly of substantial changes to items covered in the disclosure. This might include:
- increase in costs,
- increase in disbursements, or
- offers of settlement made.
The effects of a failure to disclose are set out in the Legal Profession Act 2004.
Costs Agreements
A Costs Agreement is made between a legal practice and its clients. It details arrangements for the payment of legal costs and is enforceable in the same way as a contract. Whilst strict requirements that agreements be signed by both parties no longer apply, Costs Agreements must be in writing or evidenced in writing. This may take the form of a written offer that is deemed accepted by the client, either in writing or by other conduct.
While it is usual for the Costs Agreement to specify an hourly rate, it is also advisable to specify the type of work to be undertaken. Normal costing principles make no allowance for some administrative tasks that solicitors may wish to charge out. These items must be identified in the agreement. It may also be prudent to advise the client these fees are not normally chargeable.
Examples of matters to be covered in a Cost Agreement include:
- Identity of Client
- Work to be undertaken by the legal practice
- Identification of personnel carrying out the work
- Sliding hourly rates for personnel carrying out the work
- Payment of disbursements
- Interim bills
- Dispute avenues available
An initial information letter should refer to the client’s right to negotiate a Costs Agreement. The Costs Agreement itself must not form part of retainer letter. Discussing costing methods with the client does not constitute a Costs Agreement. A Retainer Agreement is not interchangeable with a Costs Agreements. Costs Agreements cannot seek to preclude the review of costs.
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Conditional Costs Agreements provide for payment of some or all legal costs to be conditional on the successful outcome of the relevant matter. Conditional Costs Agreements do not apply in Criminal or Family Law matters.
Setting Aside
Costs Agreements may be set-aside in the circumstances where the Agreement:
- fails to comply with the disclosure provisions, or
- is deemed to be unfair, unjust or unreasonable.
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