By Charlotte Morson -
There will come a time in your career when a client doesn’t pay your bill. They may be a disgruntled client or a ‘huge fan’ of your work who is unable to pay.
To recover your unpaid fees, you may be able to sue the client via the Court system and recover the amount as a debt. Fortunately (or unfortunately, depending on how you look at it), solicitors have the option of utilising the costs assessment process to recover their unpaid fees.
Why should you get your costs assessed?
There are many reasons to have your costs assessed. To start with, if you have a choice between debt recovery and costs assessment, the costs assessment process:
- can be less adversarial (as it is paper based);
- potentially involves less risk than debt recovery proceedings (the client can’t file a cross-claim for negligence resulting in a call to your insurer);
- is relatively low-cost; and
- may end up happening as a step in debt recovery proceedings in any event.
Sometimes, you may not have a choice and you must go through the costs assessment process before you are able to recover your unpaid fees. Section 178 of the Legal Profession Uniform Law 2014 (NSW) (‘Uniform Law’) prescribes that if a law practice contravenes the disclosure obligations of Part 4.3 of the Uniform Law, ‘the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation.’
When should you get your costs assessed?
You can file a costs assessment application after 30 days from:
(a) the date on which the client was given an invoice; or
(b) the date on which that person received an itemised bill following a request made pursuant to section 187 of the Uniform Law and within 12 months from the date of your final invoice in a matter.
Interim invoices can be assessed at the date of the final bill. For example, you have unpaid invoices in a matter from November and December 2023. Say the final bill was issued in January 2024, you can file a costs assessment application for all three invoices from 30 days of the date of the January 2024 invoice. The application can be made anytime within 12 months of the January invoice.
The 12 months’ time limit is strict. The Uniform Law does not allow for an extension of time to be made by the law practice seeking to have its costs assessed. If you haven’t strictly complied with the disclosure requirements of the Uniform Law and you miss the 12 months’ time limit, you may be statute-barred from recovering your unpaid fees.
How do you get your costs assessed?
The Supreme Court of NSW website contains the prescribed forms for a costs assessment application. When filing an application to recover unpaid fees from a client, the correct form to use is Form A2.1. You need to complete the form, attach the unpaid invoices and your costs agreement/costs disclosures, and file the application with the Supreme Court. The Supreme Court will serve it on your client and they have 21 days to put on objections after which time it will be assigned to a Costs Assessor for assessment.
The Costs Assessor will usually contact both parties seeking further information, submissions, or supporting documents, or they may simply proceed to assess the costs on the basis of the documents already provided. Once a determination is made, an invoice will be issued for the Costs Assessor’s fees. Upon payment of the invoice by either party, the Certificate of Determination will be released. You can request payment of the determined amount based upon the certificate alone, or register the certificate as a judgment and enforce it through the courts.
