What must the lawyer tell the client about costs?
The Legal Practitioners Act 1981 (SA) sets out some things that a lawyer must disclose to the client at the outset of their engagement [Sch 3 clause 10]. These include:
- whether the lawyer will be using the appropriate scale of costs and, if not, that another lawyer may do the work at the scale rate
- the client's right to negotiate the costs agreement, receive a bill and request an itemised bill
- the intervals at which the client will be billed
- the rate of interest (if any) the lawyer will apply to any overdue bills
- a range of estimates of the total legal costs and an explanation of the things that may affect the estimates
- if the matter is going to court,
- the range of costs that may be recovered if the client is successful and
- the range of costs the client may be ordered to pay if unsuccessful
- the client's right to a progress report about the costs to date/since the last bill or their matter in general (although the latter is not free of charge)
- the details of who the client may contact to discuss their legal costs
- the details of what the client may do in the event of a dispute about the legal costs (and relevant time limits),
- raise the matter with the lawyer
- apply for an adjudication of costs under the agreement
- apply to set aside the costs agreement and adjudication
- in case of alleged overcharging, make a complaint to the Legal Profession Conduct Commissioner
A lawyer may comply with some of these disclosure requirements by providing the client with a prescribed form [Legal Practitioners Regulations 2014 (SA) Schedule1]. This form refers to the Law Society of South Australia's factsheet, Legal Costs - your right to know.
On what basis are lawyers paid?
Lawyers are entitled to receive reasonable fees for work properly performed on behalf of their clients. The Legal Practitioners Act 1981 (SA) provides that a lawyer and a client may negotiate an agreement concerning costs to be charged by the lawyer [Sch 3 clause 10(c)(i)]. The agreement may be for payment based on:
- a fixed fee, irrespective of the volume of work done;
- the time spent on the matter;
- the appropriate scale of costs (rate of fees approved by the court that hears the matter). Some court scales set amounts for each item of work (such as preparing a letter, or attendance in conference). Other scales fix a lump sum for the complete task — such as an undefended application for divorce.
- in limited circumstances, a conditional costs agreement, where some or all of the legal costs are conditional on the successful outcome of the matter [Sch 3 clause 25]. A conditional costs agreement must be in writing and may contain an uplift fee so that the client pays more if the matter is successful. However, if unsuccessful, the client will still be required to pay the legal costs of the other party.
A costs agreement must be in writing, or evidenced in writing [Sch 3 clause 24]. It may consist of a written offer to enter into the agreement, which can be accepted either in writing of by other conduct, such as by the client providing further instructions to the lawyer. The conduct that amounts to acceptance should be set out in the offer.
Who pays the costs in a court case?
There are two main kinds of legal costs in a court matter.
Solicitor/client costs — the costs of the lawyer's services and associated work in preparing and conducting the case together with the lawyer's direct 'out of pocket' expenses (called disbursements). These disbursements may include: barristers' fees, court fees, government fees, fees for medical or other reports, and fees for expert witnesses.
Party/party costs — the costs that a court may require to be paid by the losing party to the successful party. The lawyers for both sides will normally try to reach agreement about how much should be paid. If they cannot agree the Registrar of the Court will make a decision. Even if they win the case, party/party costs will not cover the entire legal bill because the court will only approve those costs considered essential to take the matter to court and at the rate payable by the court scale.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.