Legal billing can often be a complex and confusing process, leaving clients feeling frustrated and overwhelmed.
However, with a few simple tips and strategies, you can navigate the world of legal billing with greater ease and confidence, while also reducing costs along the way.
1️⃣ Ask for a detailed costs estimate, including a spreadsheet to see how it was calculated: Before hiring a lawyer, make sure to ask for a detailed Costs Agreement and/or Costs Disclosure that outlines the hourly rate, any additional charges, and the estimated total cost. Sometimes lawyers will have relied on 'gut feel' or a template. Therefore, you should ask for a spreadsheet to minimise the risk you just receive a precedent or template that has not been tailored to your specific case. This will give you a clear understanding of what you can expect to pay and help you avoid any surprises down the line.
2️⃣ Communicate with your lawyer about costs: Regular communication with your lawyer is key to managing costs. Discuss your financial circumstances, budget and goals, and make sure to ask for regular updates on the status of your case and the expenses incurred. This will give you a better understanding of where your money is going and help you to make informed decisions about future expenses. Do not assume your lawyer will know whether you are rich or poor or in-between. If they do not know, they will not be likely to guess. They will just 'chug along', assuming you have the means to pay for any twists and turns in the case.
3️⃣ Consider alternative fee arrangements: Instead of traditional hourly billing, consider alternative fee arrangements such as conditional 'no win no fee' arrangements, fixed fees, or value-based fees. These arrangements can provide greater predictability and stability in terms of costs, and can also incentivise your lawyer to resolve your case more efficiently.
4️⃣ Be mindful of expenses: Expenses can often be a profit-centre for lawyers, where they charge much more than the cost of production. Avoid unnecessary spending on things like photocopying, by negotiating to do any photocopying yourself, with you then delivering the photocopied documents to the lawyers to use.
5️⃣ Challenge unreasonable charges: If you feel that a charge is unreasonable or unjustified, don't be afraid to challenge it. A good lawyer should be willing to explain their charges and work with you to find a mutually acceptable solution.
I frequently act for disgruntled clients who challenge their legal bills. This includes where it progress to a lawyer-client costs assessment at the Supreme Court of Western Australia.
By taking these steps, you can navigate the complex world of legal billing with greater confidence, and reduce costs along the way.
Staying Within Budget: The Consequences of Deviating from Approved Costs in Litigation
The role of cost budgeting in modern litigation has gained significant attention in recent years, in light of the Lord Jackson Report and the subsequent reforms in the UK.
The report, which was published in 2010, emphasized the need for greater transparency and predictability in legal costs.
As a result of the report, the UK introduced a number of measures to promote cost budgeting, including:
1️⃣ mandatory cost budgeting in more complex legal matters, and
2️⃣ the requirement for parties to file cost budgets at various stages of the litigation process.
Once the cost budget is approved by the judge, it serves as a guideline and a benchmark for the parties to follow throughout the litigation process.
The judge will review and approve the budgets at various stages of the litigation.
Deviations from the approved budget may be subject to scrutiny.
If a party exceeds their approved budget without good cause, they may have their costs limited to the budgeted amount in the event that they succeed at trial and costs are awarded to them.
For example, imagine a case where a plaintiff is suing for breach of contract.
The plaintiff's legal team prepared a detailed cost budget, outlining all of the expenses they anticipate incurring over the course of the litigation. After reviewing the budget, the judge approves it as reasonable and proportionate.
Throughout the litigation, the company's lawyers are not diligent in keeping their expenses within the approved budget.
After the trial, the judge awards costs to the plaintiff, but limits the sum to the amount budgeted, rather than the actual expenses incurred.
As a result, the out-of-pocket legal costs exceed the damages awarded for breach of contract, and it was a pointless exercise to have commenced the litigation. ▶ It cost more than was gained.
The process of costs budgeting serves as a powerful incentive for both parties to stay within their budget and to be mindful of the costs of their actions. Any deviation from the approved budget could result in significant financial consequences. Not to mention embarrassment for the lawyers involved.
This serves as a powerful incentive for parties to stay within their budget and to be mindful of the costs of their actions.
Additionally, it also helps to ensure that the litigation remains fair and proportionate, with the costs of the proceedings being proportionate to the amount in dispute.
While these reforms have not yet been implemented in Australia, it seems inevitable cost budgeting will be introduced to our legal system at some stage.