By Marina Dulhunty -
Snapshot
- Giving an estimate of total legal costs is not a courtesy but a statutory obligation, and courts now insist on strict, not substantial, compliance.
- Failure to give or update a reasonable estimate can unravel a costs agreement, lead to assessment, delay recovery and expose a practice to regulatory action or damages claims.
- In an era of heightened scrutiny, disciplined disclosure is a core element of professional risk management.
Giving estimates of total legal costs is one of the principal disclosures required under the Legal Profession Uniform Law (NSW) (‘LUPL’), subject to limited statutory exceptions.
Non-compliance with the disclosure obligations in section 174 can have significant consequences. These can include exposure to claims for misleading and deceptive conduct, complaints being made to the Office of the Legal Services Commission (‘OLSC’) and findings of unsatisfactory professional conduct or professional misconduct. Under section 178, if the costs disclosure provisions are contravened, a costs agreement is void and costs must be assessed.
BGM v Australasian Lawyers Group Pty Limited t/as Butlers Barristers and Solicitors [2014] WASC 290 (‘BGM’) demonstrates that an estimate must be objectively ‘reasonable’. Honest mistake will not suffice where the practice failed to take reasonable steps, such as checking its records and confirming fees with counsel, to ensure the estimate was accurate (at [84]).
