Last Updated 8 August 2016
One of the most common areas of complaint against solicitors is that the legal bill exceeded what the client was expecting to pay. Fortunately, the widespread use of client agreements has greatly improved this situation. The Legal Profession Act 2007 (Qld) (Legal Profession Act) requirement that solicitors provide an estimate of costs should also help to keep clients’ expectations realistic.
Many people also do not fully understand how costs in court cases will be awarded by the courts. In the civil courts, the successful party normally will receive their costs unless the court orders otherwise. When cases go to court, the courts have discretion to award standard costs to the successful party. Standard costs are costs for the actual court steps of the case (or costs of the proceedings) and are limited to costs necessary and proper for the running of the case in court. Indemnity costs are all the costs that a client agrees to pay a solicitor during the running of a matter, including the costs before the matter goes to court. Where a party is successful in court proceedings and obtains an order requiring the other party to pay their standard costs, that party will rarely recover their actual total legal costs. The gap between the two amounts can be substantial. Under ch 17A of the Uniform Civil Procedure Rules 1999 (Qld), a process exists for the appointment of costs assessors to review the costs claimed by solicitors, which can impact upon the amounts of a client’s recoverable costs. The Queensland Law Society also has more information about potential costs involved.
In respect of a client’s own legal costs, some solicitors will be prepared to offer an arrangement where those costs are only paid at the end of proceedings, usually from the proceeds of any settlement of the client’s matter. Others may send out regular accounts at either monthly intervals or at certain stages of proceedings, and may require clients to pay money up front at various stages of proceedings.
Some solicitors are prepared to offer a speculative arrangement whereby the client will pay the full range of legal fees if their matter is successful. While some solicitors may undertake cases on a ‘no win, no fee’ basis, the Personal Injuries Proceedings Act 2002 (Qld) severely restricts the ability of solicitors to advertise their services in personal injury matters. Part 3.4 div 8 of the Legal Profession Act also sets out a formula for calculating the maximum payment for legal fees in a speculative personal injury claim. A client who is offered a ‘no win, no fee’ arrangement should carefully read the terms of their costs agreement before taking up the offer. A five-day cooling-off period also allows a client to change their mind about proceeding with a conditional costs agreement in that time. Written notice of this is required.
In Queensland, the charging by solicitors of contingency fees is prohibited (s 325 Legal Profession Act). Contingency fees are those where some or all of the legal fees payable by the client are calculated according to the amount of any final settlement. There are severe penalties for breaching these rules.