We have recently been involved in a string of costs assessment applications being brought on behalf of clients dissatisfied with the amount charged by their previous legal advisors.
Amounts charged by law firms must be fair and reasonable and there are avenues for clients to contest legal bills if this is not the case.
This article looks specifically at client v law practice costs assessment applications and the process available to a client to contest a bill of costs.
This article considers the costs assessment process in New South Wales under the Legal Profession Uniform Law (NSW) and the Legal Profession Act 2004 (NSW).
THE COSTS ASSESSMENT PROCESS
A client who makes an application for costs assessment must do so within 12 months of receiving the final bill that was issued relating to the work in which the law firm was retained. This means that interim bills issued on a particular matter before the 12 months period can be included in the costs assessment application. If no bill has been issued, the application must be made within 12 months of the final payment.
If a client would like to bring an application for an assessment of costs after the 12 month period has passed, this can still be done but requires an application being made to the Supreme Court of New South Wales.
A costs assessment application requires the payment of a filing fee (the greater of $100 or 1% of the amount in dispute). There are further costs associated with the application process (such as the costs of the costs assessor and legal fees in preparing the application).
At the conclusion of the costs assessment process, the costs assessor may make a determination that a particular party is to pay the costs assessor's costs. The costs of a costs assessor are usually in the vicinity of $2,000 to $5,000.
A costs assessment application usually includes a copy of all the contested bill and sets out clear and concise general and specific objections to the bill of costs. It is prudent to prepare line by line specific objections in response to each contested time entry on an itemised bill.
- Reply and Certificate of Determination
Once a costs assessment application has been filed and a costs assessor appointed, the other side is then given the opportunity to put on submissions and evidence in reply.
Once the costs assessor has reviewed all of the available material on the papers, they will issue a certificate of determination along with written reasons.
The certification of determination will either confirm the bill of costs or substitute an amount that in the costs assessor's opinion is fair and reasonable (this includes reducing the amount paid or the amount outstanding). This could have the effect of determining that a law firm is required to pay money back to a client as that client has been overcharged.
The certificate of determination can be registered with the Supreme Court of New South Wales and then taken to be a judgment of the court. At this stage, it is prudent to obtain further legal advice in relation to enforcing the judgment.
- Review and Appeal of Determination
There are review and appeal avenues if a party is dissatisfied with the certificate of determination and the reasons provided by the costs assessor.
- Timeframe of Costs Assessment Process
A general time frame for the costs assessment process is:
- under 3 months from the date the application is referred to the costs assessor if the amount being reviewed is less than $100,000; or
- under 6 months if the amount being reviewed is more than $100,000.
WHEN SHOULD YOU CONTEST A BILL OF COSTS
A client should seek advice in relation to contesting a bill of costs (including any interim invoices) if they feel that the amount charged by the law firm was not reflective of the work undertaken and was not fair and reasonable in the circumstances. These circumstances may include where:
- the work performed was outside of the scope of the retainer between the client and the law firm;
- the amounts charged grossly exceeded the estimate provided by the law firm for providing the service;
- there has been negligence on behalf of the legal advisor or their work is below the required professional standard;
- there is insufficient detail to ascertain the nature of the work: see Ex Parte Farmers' Fertilizers Corporation Ltd (1916) 16 SR (NSW) 645 at 649;
- there are excessive amounts of travel claimed in the bill of costs: see NSW Crime Commission v Fleming (1991) 54 A Crim R 401; or
- there is excessive duplication of time entries in the bill of costs from multiple parties (including counsel).
WHAT DOES THIS MEAN FOR YOU
There are many benefits in undertaking the costs assessment process. It is relatively quick and may be considerably cheap in comparison to the amount being charged by the law firm in the bill of costs. Often the benefits of the costs assessment application (such as the bill of costs being reduced) outweighs any negatives.
It is important to keep in mind that a costs assessment application can be made even if the bill of costs has been paid in full. However, it is important to keep in mind the 12 month time period to bring the costs assessment application from the date the final bill is issued.
If you would like to discuss the above in further detail or make an application for the assessment of client v law practice costs, please contact us for further information.
Please note that this article is not to be constituted as legal advice. Each matter should be considered on a case by case basis.
For further information please contact:
William Staples, Associate Phone: +61 2 9233 5544 Email: WAS@SWAAB.COM.AU
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.