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Costs disclosure and billing practices

Legal practice directors of incorporated legal practices are required to ensure they have appropriate management systems in place, but the QLS Ethics and Practice Centre recommends all practices (whether ILP, sole trader or partnership) have appropriate management systems in place.1

There are 10 areas identified in which appropriate management systems ought to be implemented in order to comply with the Legal Profession Act 2007 (Qld). Compliance with statutory obligations and providing clear communications with your clients concerning the terms of your retainer (including in what circumstances it may be terminated), cost disclosure and maintaining appropriate billing practices during the retainer is one of the 10 areas.

“If a client does not like our fee, are we better off knowing before we do the work or after?”2

Solicitors costs remains one of the key areas for client dissatisfaction and one of the top four areas under investigation by the Legal Services Commission (LSC).3 Implementing a process to properly address legal costs with clients as early as possible and to continue to provide costs information throughout the course of the client’s matter is essential to maintaining strong relationships with clients and a sustainable practice.

Equally, it is important that your client retainer agreement clearly prescribes the basis upon which the client and your practice may terminate the retainer. For matters where legal fees will be below the regulated amount (currently $1500),4 a client retainer agreement is an effective way to document the terms of engagement.

Throughout December and January, we are highlighting resources to help you ensure you are meeting both your regulatory obligations and client expectations in making costs disclosure and managing your client retainers. Keep a lookout on our QLS Solicitor Support LinkedIn Group, and Instagram for further posts.

We will look at:

  • where to find sample cost agreements
  • the requirements for a cost disclosure notice and ongoing costs disclosure
  • whether you may charge interest on unpaid legal costs
  • the requirement to obtain a client’s consent before sending invoices by electronic methods
  • recent court commentary on time-based billing practices
  • key termination provisions to include in your client retainer agreements to protect your legal practice
  • The courts’ supervisory jurisdiction over legal practitioners who may be considered to have charged excessive legal costs.

Practitioners should ensure that accurate estimates of costs are provided to clients to avoid tension and client dissatisfaction if the final bill does not accurately reflect the estimate provided. Agreeing with clients upfront about when and how you will bill them can also reduce client dissatisfaction. Open discussions with clients about their needs, objectives and preferences can assist you in determining an accurate estimate.

The Practice Advisory Service is a complimentary service for sole/micro practices across Queensland and can assist you with the above issues and other practice management queries. For further information or to book a practice visit, contact the QLS Ethics and Practice Centre on 07 3842 5843 or email ethics@qls.com.au.

Footnotes
1 Legal Profession Act 2007 (Qld) s117(3).
2 John Chisholm, practice advisory consultant and former legal practitioner quoted in ‘Billing ain’t pricing – and understanding the difference will pay off for your firm’ at Law Management Hub.
3 Legal Services Commission, ‘Legal Services Commission 2019-2020 Annual Report’, 2020 p18.
4 Legal Profession Regulation 2017 (Qld) s70(1).

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