Y O U R E S S E N T I A L P R O F E S S I O N A L PA R T N E R Y O U R E S S E N T I A L P R O F E S S I O N A L PA R T N E R Y O U R E S S E N T I A L P R O F E S S I O N A L PA R T N E R

2015 marks the commencement of a uniform regulatory regime that applies to lawyers in Victoria and New South Wales. The Legal Profession Uniform Law Application Act 2014 (Vic) (the Act), of which the Legal Profession Uniform Law (Uniform Law) is Schedule 1, commenced on 1 July 2015 together with subordinate legislation (Uniform Rules). The Act will replace the Legal Profession Act 2004 (Vic) (LPA). It is important that you become familiar with the Act, the Uniform Law and the Uniform Rules to fully understand your obligations and those of your law practice.

The Uniform Law contains provisions relating to legal costs, costs disclosure, costs agreements, billing, unpaid legal costs and costs assessment. Significant provisions that may affect your practice are set out below.

COSTS MUST BE FAIR AND REASONABLE• Legal costs must be fair, reasonable and proportionate, having regard

to matters such as the complexity and urgency of the matter, quality of the work, instructions given and the experience of the lawyers involved.1 This differs from the current LPA position. You must carefully consider these provisions when drawing a bill of costs.

COSTS DISCLOSURE• Law practices must provide written disclosure to clients about estimated

legal costs as well as substantial changes to previous disclosures, and take reasonable steps to satisfy themselves that the client has understood and given consent to the proposed costs.2 Your costs disclosure precedents should be updated to reflect these requirements.

• There is scope to provide a uniform standard disclosure form to clients rather than more comprehensive disclosure where legal costs are not likely to exceed a higher threshold of $3000 excluding GST and disbursements.3 The short form disclosure form can be found in the Uniform General Rules.

COSTS AGREEMENTS• There are specific requirements and restrictions regarding the content

of costs agreements, including contingency and uplift fees.4 You should review your costs agreement precedents to ensure compliance.

BILLING• As under the LPA, there is scope to issue a lump sum bill or an

itemised bill. Your bills must include a statement which sets out the client’s options in the event of a dispute regarding legal costs, and relevant time limits.5

UNPAID LEGAL COSTS• A law practice can commence costs recovery action 30 days after

the client has been given the bill (this is shorter than the period under the LPA).6

FOR MORE INFORMATION CONTACT:LIV Legal Policy and Practice

E: lpul@liv.asn.au W: www.liv.asn.au/uniformlaw

• Interest can be charged on unpaid legal costs in accordance with a costs agreement or otherwise if costs are unpaid 30 days or more after the client has been given the bill. To apply interest, the bill must be given no later than six months after completion of the matter (with limited exception).7

COSTS DISPUTES• The Legal Services Commissioner (LSC) can deal with costs disputes

if the total bill for costs is less than $100,000 or if the bill is greater than this amount but the amount in dispute is less than $10,000. The LSC can make a determination if the costs in dispute are less than $10,000.8 VCAT otherwise has jurisdiction to determine costs disputes where the amount in dispute does not exceed $25,000 and the parties have been informed of their right to apply to VCAT.9

NON-COMPLIANCE• While there are some exceptions to the above if your client is a

commercial or government client (as defined in the Uniform Law)10, there are significant consequences if you or your law practice do not comply with the new legal costs provisions, including that your costs agreement might be void or that your client is not required to pay your legal costs. Failure to comply can also amount to unsatisfactory professional conduct or professional misconduct.11

TRANSITIONAL ARRANGEMENTS

• The Uniform Law contains transitional provisions regarding costs. If a client first instructed the law practice prior to the commencement of the Act and the Uniform Law, the provisions of the LPA will apply. 12

1. Legal Profession Uniform Law s1722. Note 1 above, s1743. Note 1 above, s1744. Note 1 above, ss179 to 1855. Note 1 above, ss187, 1926. Note 1 above, s1947. Note 1 above, s1958. Note 1 above, s292 and Legal Profession Uniform Law Application Act 2014 (Vic) s99.9. Note 1 above, s9910. Note 1 above, s17011. Note 1 above, part 4.3.12. Note 1 above, sch 4, cl 18

LEGAL COSTS

DISCLAIMER: The information above is intended to be a general guide only. The information is not intended to constitute professional or legal advice, and you should rely on your own inquiries and assessment. The Law Institute of Victoria expressly disclaims any and all liability for any loss or damage arising from reliance upon any information in this document. VERSION: 3 DATED: 2/7/2015