Legal billing - don't get a raw deal

When you need to see a solicitor, how do you know if you’ve been overcharged – and what can you do about it?
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01.Balancing the bill

Please note: this information was current as of August 2009 but is still a useful guide to today's market.

In brief

  • Justice weighing lawyer an moneyYou can avoid getting overcharged for legal consultations, provided you know your rights.
  • If you think you have been overcharged, there are steps you can take before making a formal complaint.

When it comes to legal fees, consumers are still getting a raw deal. In the 2007-08 financial year, Victoria’s Legal Services Commissioner received 827 complaints of overcharging , while in South Australia almost 40% of cases at the state’s Legal Practitioners Conduct Board related to overbilling.

In the same period, complaints about legal costs comprised 23.5% of all written complaints received by the NSW Office of the Legal Services Commissioner (OLSC) . In one case, a lawyer charged $750 for typing a three-page document and $40 for receiving a message to return a phone call.

CHOICE outlines what you can do to minimise the risk of legal overcharging and the steps to take if you suspect you’ve been ripped off.

Preventative action

There are steps you can take to avoid being unfairly slogged with excessive legal fees and expenses

  • Beware the "free" visit
    Several law firms offer free first sessions, but this may only cover the first hour of your consultation – so make sure you find out how long the “free” visit lasts. Also check if you’ll be charged for any legal advice given. Most lawyers do not give written advice during the first free visit and may charge you a fee to do so as they can be sued for giving the wrong opinion based on a one-hour consultation.
  • Professional first, friend second
    Never assume you’ll be able to bag a bargain with a lawyer you know personally or who is recommended to you. Last year, CHOICE subscriber Russell engaged a lawyer acquaintance to handle his mother’s estate. Three months later, he received a bill for almost $8000, with a costs disclosure document he claims he’d never seen before nor been told about. He complained to the NSW OLSC, which is looking into the matter. Whoever you choose as your lawyer, formalise the arrangement before proceeding.
  • Know your rights
    Getting things right at the beginning will save you time and money. Consumers often don’t know it is their right to ask a lawyer at the outset for a costs agreement - a document summarising and itemising the lawyer’s work. “Consumers should be more proactive when engaging lawyers because they are the ones paying, and lawyers are merely agents with legal knowledge who advise and act on the client’s instructions,” says former NSW Supreme Court costs assessor Paul Garde, a lawyer with 30 years’ industry experience.
  • Is it defendable?
    The consumer should first establish whether their claim is worth defending. “Solicitors should tell their clients, either at the outset or as the case progresses, whether the case is winnable, risky or a maybe,” says Garde. The lawyer’s job is to explain this in simple terms.
  • Check costs
    When you later receive an itemised bill, it should reflect the costs to which you’ve agreed. You also have the right to be notified of any changes in your case, such as court developments, and how they will affect costs. Under most states’ Legal Profession Acts, before being retained by the client lawyers are legally obliged to disclose costs such as their hourly rate and the cost of expenses such as photocopying documents. Not doing so can amount to professional misconduct, and several lawyers have been taken to task by relevant state legal bodies.

    Garde says consumers’ lack of awareness of their rights resulted in a substantial number of the overcharging cases he saw as a costs assessor. “What’s most astonishing is that a surprising number of lawyers still do not do any costs disclosure whatsoever, even though they are legally obliged to do so.” This information gap, coupled with the fact that most clients are generally in a state of distress when a lawyer is needed, may explain why some shoddy disclosure practices still occur.

Illustrations by Michel Streich



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