Publications > Your right to negotiate a Costs Agreement with your lawyer in Queensland

 

Part 3.4 Division 5 of The Legal Profession Act 2007 (Qld) (Act) provides for the making of Costs Agreements between law practices and their clients in Queensland.  A Costs Agreement is defined in section 300 of the Act as an agreement about the payment of legal costs.  The provisions relating to Costs Agreements are primarily contained in sections 322 to section 349 of the Act. You don't have to accept an offer to enter into a Costs Agreement with a law firm. You have the right to negotiate the terms.

There are usually three components of legal costs.

	Professional fees;
	Disbursements (or outlays); and
	Incidentals or petty's.

 

Professional fees represent the fees charged for the Solicitors professional time and usually represent the majority of the bill.  Disbursements are those costs that a law firm incurs in the conduct of a clients matter such as court filing fees, ASIC application fees and the like.  Incidentals among other things include photocopying and telephone call costs for example.

 

Disclosures that must be made by your Solicitor

Section 308(1) of the Act provides that a law firm must disclose to clients the following information:

 

	the basis on which legal costs will be calculated, including whether a scale of costs applies to any of the legal costs;
	the client’s right to:
	negotiate a Costs Agreement with the law practice; and
	receive a bill from the law practice; and
	request an itemised bill after receipt of a lump sum bill; and
	be notified under section 315 of any substantial change to the matters disclosed under this section; and
	an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs; and
	details of the intervals at which the client will be billed; and
	the rate of interest, if any, that the law practice charges on overdue legal costs, whether that rate is a stated rate of interest or is a benchmark rate of interest.

 

Litigious matters

If the matter involves litigation, section 308(1)(f) provides that the following additional disclosures are  to be made to the client:

 

	the range of costs that may be recovered if the client is successful in the litigation; and
	the range of costs the client may be ordered to pay if the client is unsuccessful; and
	the client’s right to progress reports; and
	details of the person whom the client may contact to discuss the legal costs; and
	the avenues that are open under this Act to the client in the event of a dispute in relation to legal costs- costs assessment under division 7;
	the setting aside of a Costs Agreement under section 328; and
	any time limits that apply to the taking of any action in relation to a dispute over legal costs; and
	the jurisdiction that governs the agreement

 

Uplift fees

If the fees charged will increase in certain circumstances, then additional disclosures relating to the manner in which the fees are calculated and charged must be disclosed.

 

Substantial changes

Section 315 provides that your Solicitor must disclose any substantial change to anything included in a disclosure already made as is reasonably practicable after the law practice becomes aware of that change.  This would include where:

	extra work is required, that was not initially anticipated;
	there is a change in the nature of the work, for example, where the matter became litigious.

 

Why do Costs Agreements prepared by different Solicitors appear different?

Section 308(5) provides that a law practice is taken to have complied with its disclosure obligations if it discloses all the matters in section 308 in or to the effect of a form approved by the chief executive.   Therefore there is no strict format for Costs Agreements a legal practice free to develop its own format.

 

Void Costs Agreements

Section 327(1) of the Act provides that Costs Agreements that contravene Part 3.4 of the Act are void.

 

When must a Costs Agreement be provided?

Section 310 of the Act provides that the disclosures required to be made under s308 and s309(1) must be made in writing before, or as soon as practicable after, the law practice is retained in the matter.

 

General exceptions to the requirement to provide a Costs Agreement

 

Value of legal work

Section 311 of the Act provides that disclosure under sections 308 or 309 (1) is not required where:
the total legal costs are not likely to exceed $750 exclusive of GST or, an amount prescribed by regulation;
the section 80(1) of the Legal Professional Regulations 2007 (Qld) (the Regulations) specify that this amount is $1500.

 

Previous disclosure

If the client has received previous disclosures in the previous 12 months, the Law Firm may elect not to provide disclosures.

 

Sophisticated clients

The Act creates a general exception to the requirement to provide a Costs Agreement where the client is a sophisticated client. Section 311(1)(c) provides that no disclosure is required if the client is:
a law practice or an Australian legal practitioner; or
a company as follows:

 

	a public company:
	a subsidiary of a public company,
	a large proprietary company,
	a foreign, company,
	a subsidiary of a foreign company or a registered Australian body, each within the meaning of the Corporations Act; or
	a financial services licensee;
	a liquidator
	a large partnership;
	an incorporated joint venture company;
	an unincorporated joint venture, if certain requirements are satisfied under s323;
	a government department;
	the agreement is as a result of a tender process;
	where no fees are to be paid by the Client (Pro-Bono work).

 

Do Cost Agreement have to be signed?

Costs Agreements can be accepted in a number of ways, depending on the type of Costs Agreement. For example:

 

	Conditional Costs Agreement (where an outcome has to be achieved before the law firm has the right to charge its professional fees) must be signed by the client, pursuant to s323(1) of the Act;
	Speculative Personal Injuries matters (no win no fee) are conditional Costs Agreements and can only be validly accepted by signing; and
	Standard Costs Agreements can be accepted by conduct - that is by continuing to instruct the legal practice either verbally or in writing in relation to the matter.

 

Prohibited Costs Agreements

Contingency fees based on a percentage of award are prohibited. A Costs Agreement must not include legal costs based on a percentage of any award or settlement of the value of any property that is recovered in any proceedings.

 

Can a Costs Agreement be set asideby a Court?

On application by a client section 328(1) provides that the Supreme Court may order that a costs agreement be set aside.

 

Your right to negotiate the terms of a Costs Agreement

Generally, a Costs Agreement is an offer by a law firm to enter into a Costs Agreement. Therefore all the terms are negotiable. Rostron Carlyle has advised numerous clients on the terms of these agreements and their obligations under them.  If you have any questions regarding a Costs Agreement please contact one of our Lawyers who can take into account your particular circumstances.

 

"The information contained in this article is general in nature and cannot be regarded as anything more than general comment.  Readers of this article should not act on the basis of this comment without consulting one of Rostron Carlyle's legal practitioners who will consider their particular circumstances".

 

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