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In NSW, costs disclosure is regulated by the Legal Profession Uniform Law (NSW) (Uniform Law) and associated Rules. Specifically, section 174(1)(a) of the Uniform Law requires a law practice, when or as soon as practicable after instructions are initially given in a matter, to provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs.

The requirements under section 174 of the Uniform Law were considered in the recent decision of the District Court of NSW in the matter of A.C.N. 627 087 030 Pty Ltd atf The YBL Trust v Elisabeth Theodore; A.C.N. 627 087 030 Pty Ltd atf The YBL Trust v Andrew John Price [2024] NSWDC 592 (YBL Trust).

In this matter, the Court considered, among other things, whether the plaintiff law practice discharged its obligations under section 174(1)(a) of the Uniform Law by providing a range, rather than a single figure estimate of legal costs, to its client.

A common enquiry which the Professional Support Unit receives from practitioners relates to this issue, is whether a single figure estimate is required, or whether it is sufficient to give a range. A range was expressly allowed under the old legislation (the Legal Profession Act 2004 (NSW)).

Most practitioners would agree that providing a single figure estimate is not an easy thing to do. In fact, it is often very difficult. While it may be easier to estimate a single figure of costs for certain types of transactional work, the same cannot be said for litigious or family law matters, where the legal services required are highly variable.

YBL Trust reminds practitioners that costs disclosure is not a tick box exercise. When providing disclosure to a client, practitioners should turn their minds to the particular matter and client that is before them. Whether providing a single figure estimate or range of legal costs, the disclosure should be sufficient to enable the client to understand and consent to the proposed course of action for the conduct of the matter and the proposed costs.[1]

The decision

The Plaintiff was a law practice trading under the name ‘Yates Beaggi’.

It represented the Defendant (Andrew Price) in three pieces of related proceedings which arose out of a matrimonial dispute. The first was a case in the then Family Court involving a dispute over a financial settlement. The second was in the Supreme Court of NSW, an action against the Defendant’s son seeking vacant possession of property. The third case was again in the Supreme Court of NSW, and which involved removal of the Defendant’s enduring guardian and attorney.

The particular matter involved an appeal from a number of decisions of the Cost Assessment Review Panel (the ‘Review Panel’).

Amongst the several issues addressed by the Court was the issue surrounding disclosure of a law practice’s costs to a client. Specifically, the Court considered the determination of the Review Panel, which held that the Plaintiff failed to provide an estimate of the total legal costs to their client in accordance with section 174(1)(a) of the Uniform Law.

The Review Panel had found that there had not been proper compliance with cost disclosure requirements, which consequently rendered the cost agreement, entered into by the client and the law practice, void.

His Honour Newlinds SC DCJ, in summarising the Review Panel’s reasoning that disclosure had not properly been made, said at [92]:

“Reading paragraphs 15.2 and 15.4 above together, I think it is fair to summarise the Review Panel’s reasoning by saying that it concluded that the disclosure was not consistent with the requirements of s 174(1)(a) because it:

  1. provided fee estimates by reference to stages of the work to be performed by “generic” description.
  2. provided an estimate by use of a “range”.
  3. provided separate estimates for disbursements; and
  4. provided fee estimates which were expressly described as “plus GST”.
  5. Failed to provide a single estimate by reference to one total figure.”

His Honour referred to the Review Panel’s findings at [93]:

“It was not a disclosure that was likely to assist Mr Price in determining whether to proceed with the family Court proceedings and to engage Yates-Beaggi, and that Yates Beaggi failed to provide an estimate of the total legal costs.”

The Plaintiff submitted that the Review Panel made an error of law because there was no requirement, on the proper construction of section 174(1)(a) of the Uniform Law, for a law practice to provide a costs estimate by way of a single figure and that the provision of an estimate by providing a range was compliant.

The Plaintiff also submitted that there was no problem with generic descriptions of stages of proceedings.

Conversely, the Defendant placed significant reliance on a guideline and direction – Cost estimates – issued by the Legal Services Council on 11 March 2013 (the ‘Guideline’) at paragraph [3]:

“… an estimate of the total legal costs in a matter, as required by section 174(1)(a) of the LPUL, is a reasonable approximation of the total costs that a client is likely to have to pay in the matter for which instructions have been given, expressed as a single figure, from time to time (the estimate). The definition of total legal costs in this context includes professional fees, any disbursements and GST, which should be separately identified, but not interest: LPUL section 6. It should be noted that where a costs agreement includes an uplift fee, that fee should be included as part of the estimate of total legal costs and the circumstances in which it would be payable explained to the client.’ (emphasis added).”

His Honour, however, also noted another section of the Guideline at [101]:

“The provision of an estimate or estimates from time to time does not preclude the provision of other information to a client about the steps or stages in a matter and the provision of such information to a client should be encouraged. It will not be inconsistent with section 174(1)(a) to provide estimates for each of the stages that the matter might reach, whether individual stage estimates are expressed as a single figure or as a range of figures, PROVIDED the law practice, having considered all the circumstances and the most likely outcome, always gives the single figure estimate of the total legal costs in the matter that section 174(1)(a) requires. It is permissible and may be desirable to preface a single figure estimate with the word “about” to reflect the fact that the figure is an estimate and is not a fixed fee.”

His Honour ultimately found that the Review Panel made an error in determining that the original costs disclosure and costs estimate failed to comply with the requirements under section 174(1)(a) of the Uniform Law.

His Honour said at [104]:

“I do not think it is right [a]s a matter of law that a single figure estimate must always be provided. Whilst it is true that each case will turn on its own facts, to my mind, a cost estimate which breaks up estimated future legal expenses into a small number of separate, albeit generic, categories and provides an estimate for each does not need to then perform the arithmetical exercise and add up each of those figures to arrive at a single total. I also consider the provision of an estimate by way of a range, if that is the best estimate the legal practitioner can provide, satisfies the mandatory requirement.”

His Honour further added at [105]:

“Nothing in the words of the legislation suggests such a result and, whilst acknowledging that the legislation is protective of consumers of legal practices, such an overly strict construction does not in any way promote the clear purpose of the legislation if a particular client does not in fact understand the estimate.”

Conclusion

In YBL Trust, the judge formed an opinion that:

  1. section 174(1)(a) of the Uniform Law does not require an estimate of total legal costs to be expressed as a single figure, and
  2. providing an estimate by way of a range, if that is the best estimate the legal practitioner can provide, satisfies the disclosure requirement.

Key takeaways

When providing disclosure to a client, practitioners are reminded that section 174(1)(a) of the Uniform Law requires provision of:

  • information disclosing the basis on which legal costs will be calculated; and
  • an estimate of the total legal costs.

An estimate that allows for a very wide range is less likely to fulfil the aims of the legislation than a single figure or a tighter range; however, rather than scrutinising whether the estimate provided is by way of a range or a single figure, practitioners should consider whether they have provided the best estimate they can provide based on the information and instructions before them.

Further, practitioners are reminded that a law practice must take all reasonable steps to satisfy itself that the client has understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs.

Further guidance

Practitioners in need of assistance in matters concerning legal costs are encouraged to utilise costs resources available on the Law Society’s website. The Law Society’s Costs Guidebook (8th ed.) provides helpful guidance to practitioners on a range of topics in the area of legal costs, including in relation to client engagement and costs disclosure.

For further guidance, contact the  Professional Support Unit (PSU) by emailing costs@lawsociety.com.au or calling (02) 9926 0116. PSU provides free and confidential guidance to legal practitioners in the areas of AML/CTF, costs, ethics and regulatory compliance.

Nick Satouris is a Professional Support Solicitor at the Law Society of NSW. Nick provides guidance to members of the legal profession in relation to practising certificate conditions, legal practice management and legal costs.  

[1] Legal Profession Uniform Law (NSW), section 174(3).