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Time limitations on a client’s right to dispute legal costs

A client approaches you with a new matter, having left their former solicitors for a variety of reasons including dissatisfaction with the costs charged.

The latest bill was eight months ago, so you have ample time to address costs concerns… right?

Perhaps not, as more than one time limit may apply and your client’s right to dispute a sizable portion of their costs may expire earlier than you think.

A client or third party payer who is dissatisfied with legal costs can apply for the costs or a disputed component of them to be assessed.1 The QLS Costs Guide (member-only resource) contains a useful overview of that process.

An application for assessment must be brought2 within 12 months3 of the final bill4 of a retainer. Leave to extend may be granted in some circumstances.5 Assessment may be of all prior costs from commencement of the retainer to which the latest bill pertains, and is not restricted to costs rendered in bills during the preceding 12-month period.6 It is important to note that there may be more than one ‘retainer’ within a matter, and a limitation period will run from the final bill of each.

A reminder letter, a copy of a previously rendered bill (with no new charges) or steps to enforce an account already rendered is not a ‘request for payment’.7 Similarly, an itemised bill delivered pursuant to a request under s332 Legal Profession Act 2007 (Qld) (LPA) is not a new bill8 and does not re-start the time limitation clock.

It is also important to note that a solicitor must seek assessment9 of counsel’s bills within 60 days of delivery. Once this period has expired the solicitor cannot dispute their indebtedness to counsel, but the client may still do so as part of the client’s own application for assessment – potentially leaving solicitors liable for counsel’s fees but unable to pass that cost on to their client.10 See QLS Costs FAQs.

Final vs interim bills

The ‘final bill’ for the purpose of the time limit calculation is not necessarily the latest one the firm has issued. What constitutes ‘the matter’ or ‘the retainer’ for the purpose of determining whether a bill was interim or final depends upon the substance of the contract between solicitor and client, the nature of the matter and how the instructions evolve.

Say, for example, a client seeks assistance with transaction documents, then advice when the deal sours, then attempts to negotiate a settlement, then litigates, then appeals – there is likely to be a series of retainers, each with its own 12-month assessment limitation running. Discerning the breaks in such a contiguous series of instructions may not be easy.

Whether or not there are multiple written agreements entered into or multiple files opened by the firm is a relevant consideration, but is not determinative (it is always important to bear in mind the distinction between the costs agreement and the retainer).11 In Turner v Mitchells Solicitors,12 Judge McGill observed:

“If the particular legal work is then completed, and there have been no further instructions, then the legal services the solicitor is retained to provide have been performed. If a bill is sent at that point it is a final bill, and it does not become an interim bill simply because at some later stage further instructions are given for additional legal services to be provided to which the earlier costs agreement also applies.”

In that case he considered the end of the trial a “natural break”13 and ordered assessment of the costs of the appeal but not the trial, which had concluded (and been billed) more than 12 months previously. The Chief Justice considered a similar issue in 2021,14 again concluding that there was a break in instructions – and therefore two sets of retainers – between trial and appeal.

The “break” did not arise because of a delay between bills, but the conclusion of one tranche of work. Payment without demur does not affect entitlement to assessment,15 nor does an agreement compromising costs (or even default judgment in some circumstances)16 although the court may exercise its discretion not to interfere with that agreement or order delivery of an itemised bill if it considers the client has already had an adequate chance to ventilate concerns.17

Practice tips:

  • Whenever taking over a file, clarify whether or not you are to advise on prior costs. If not, ensure you are off risk and that the client is aware of any limitation dates and what they mean.
  • Avoid expressing an adverse opinion on a prior solicitor’s costs until you have carefully examined the issue. This is not only a professional courtesy, but important in managing your client’s expectations.
  • If you are to advise on costs, treat this as a separate piece of litigation. Issue costs disclosure for this item of work and keep in mind that filing the application may require quite a bit of preparation. Like any other litigation, identify and diarise all applicable limitations the first day you touch the matter.
  • If you are not familiar with costs litigation, consider obtaining expert assistance from a costs lawyer. That lawyer will be engaged by you as your expert advisor on the costs assessment process and potentially assist in drafting objections to the prior solicitor’s costs. As such, the costs lawyer’s fees will be in addition to those of the independent assessor to be appointed by the court. Note that your costs lawyer will not produce an assessment binding on the parties as he/she is not formally appointed to the ‘costs assessor’ role.
  • Ensure your client is aware that the unsuccessful party may be exposed to further costs orders.
  • Think carefully before issuing a further bill including leftover WIP or disbursements from a prior phase of a matter. Doing so may expose such prior work to assessment if that tranche of work was billed more than 12 months previously.

David Bowles is a Queensland Law Society ethics solicitor.

Footnotes
1 Legal Profession Act (Qld) (‘LPA’) s335.
2 See Uniform Civil Procedure Rules 1999 (Qld) (UCPR) r743A for procedural requirements (and Pt IV generally). The application must identify the basis upon which costs are disputed, so time will be required to prepare an outline of objections.
3 LPA s335(5).
4 Or request for payment where there is no bill or actual payment of costs where there is neither bill nor request. You do not have to wait until the final bill to seek an assessment of an interim bill or series of them.
5 A “sophisticated client” cannot seek an extension (see LPA s335(6), definition section 300). This includes a legal practice, reinforcing the need to check counsel’s bills promptly (a 60-day limit applies to those).
6 LPA s333(2); Challen, PL T/as Hawthorn Cuppaidge & Badgery v Golder Associates Pty Ltd [2012] QCA 307; Turner v Mitchells Solicitors [2011] QDC 61; Retemu Pty Ltd v Ryan (NSW DC, Coorey DCJ 4300/08), Collection Point Pty Ltd v Cornwalls Lawyers [2012] VSC 493 contra Dromana Estate v Wilmoth Field & Warne [2010] VSC 308.
7 Mackie & Staff Pty Ltd v Khor & Burr [2013] VSC 696.
8 Qld Law Group – A new direction Pty Ltd v Crisp [2018] QCA 245.
9 Disputing or querying costs is not sufficient – the application and supporting material must be filed within that date. Counsel’s bills should be checked and discussed with clients as a matter of priority soon after they are delivered.
10 For such an outcome see: Ipex Itg Pty Ltd v McGarvie [2011] VSC 675.
11 A costs agreement is a specific agreement concerning legal costs made pursuant to the LPA (s322). The retainer is the overall arrangement made by which the client instructs the law practice and the law practice assumes the responsibility for the client’s matter. A firm may enter into multiple successive retainers that will be subject to a single costs agreement.
12 Turner v Mitchells Solicitors (n6) cited with approval and applied: Challen v Golder Associates (n6); Tabtill No.2 Pty Ltd & Ors v DLA Phillips Fox & Anor [2012] QSC 115.
13 This concept has some history. At common law, a solicitor’s retainer was a whole agreement and a solicitor was not entitled to payment until the conclusion of the matter or a “natural break” in proceedings. LPA s333 enshrines a law practice’s right to issue interim bills but the old law concerning breaks in the retainer still has relevance for determining the assessment limitation.
14 Mishra v Bennett & Philp Pty Ltd [2021] QSC 158. The case is a useful one in that it reviews a series of authorities on point, considers the exercise of the discretion to extend time and what the applicant needed to provide as a basis for asserting that the costs should be assessed; cf UCPR r743C.
15 LPA ss335(3), 333(2); Vitobello & Hayter v Russell & Company Solicitors [2009] QDC 249.
16 LPD Holdings Pty Ltd v Russells [2017] QSC 45; see also Thomas v Balanced Securities Ltd [2011] QCA 258.
17 Pott v Clayton Utz [2012] QSC 167.

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