6. Itemised Bills

Please read the Itemised Bills -Explanatory Notes before reading this Regulatory Guide.

The Legal Services Commission deals not infrequently with complaints about the conduct of lawyers after their clients requested an itemised bill. The Commissioner has decided to issue this regulatory guide to help lawyers and users of legal services better understand a lawyer’s professional obligations in these circumstances and the factors the Commission takes into account in dealing with related complaints (see Note 1).

The guide summarizes the Commission’s approach as a ‘ready reference’ for lawyers and users of legal services. We have published separate Explanatory Notes which set out in more detail the legal analysis which underpins the guide (see Note 2).

Note

Regulatory Guides: An Overview. The Overview is published on the Regulatory Guides page on the Commission’s website at www.lsc.qld.gov.au. We emphasize as we explain in the Overview that ‘the guides will be persuasive but they are not, nor could they ever be binding. The Commission is responsible for promoting, monitoring and enforcing appropriate standards of conduct in the provision of legal services, not for setting them. The standards are set by legislation, by the professional bodies and by the disciplinary bodies and the courts. The guides…simply articulate for the benefit of lawyers and users of legal services alike the factors we will take into account in exercising our responsibilities, most relevantly our responsibilities to settle consumer disputes including costs disputes between lawyers and their clients and to decide after investigating a lawyer’s conduct if it is inconsistent with the lawyer’s professional responsibilities and whether to commence disciplinary proceedings.’

The Explanatory Notes are published on the Regulatory Guides page of our website. We are especially grateful for the contribution of Roger Quick and Doug Kerr of QICS Legal Costs Consultants and Ruth Chowdury and Robyn Davis of DG Thomson Legal Costs Lawyers. We accept full responsibility however for any errors and omissions.

1.  The Legal Profession Act 2007 (the Act) entitles users of legal services who have been given a lump sum bill to request an itemised bill. It provides at section 332 that:

a) ‘if a bill is given by a law practice in the form of a lump sum bill, any person who is entitled to apply for an assessment of the legal costs to which the bill relates may request the law practice to give the person an itemised bill

b)  the law practice must comply with the request within 28 days after the date on which the request is made (see Note) … [and] …

c) a law practice is not entitled to charge a person for the preparation of an itemised bill.

2.  Importantly:

a)   section 332 makes no provision for any exceptions. Hence in our view it applies to lump sum bills whether the bills are calculated on a time-costed basis, a fixed fee basis or according to a scale, and

b) the term ‘law practice’ refers to legal practitioners including both solicitors and barristers.

3.  The Act does not set a time limit for a person to request an itemised bill. In our view however the request is best made before the original lump sum bill becomes payable wherever possible but in any event within 12 months of receiving the original bill, allowing the law practice time to comply with the request.

Note

The Australian Consumer Law (the ACL) requires incorporated legal practices to give an itemised bill within 7 days of being requested to do so. See the Explanatory Notes for further information.

4.  The LPA defines an itemised bill at section 300 to be ‘a bill stating in detail how the legal costs are made up, in a way that would allow the legal costs to be assessed.’ It gives no further detail than that, however, and there is no ‘set form’ of itemised bill.

5.  The courts have decided that the level of detail may vary from case to case, depending on factors such as the nature of the matter, the way in which the costs are to be calculated and the client’s ‘sophistication’ in legal matters. The courts have also made it clear however, whatever level of detail may be required in any particular matter, that an itemised bill must give a client sufficient information about the costs the lawyer has charged the client to enable the client to make an informed decision whether the costs are reasonable and whether to exercise his or her entitlement to have the costs independently assessed.

6.  That implies in our view that an itemised bill should include:

a) the basis of the charges for the work done, viz:

• where the fees are calculated on a time basis, details of the time spent on each item of work and the charge-out rate of the person(s) who have done the work
• where the fees are calculated on a scale, sufficient detail to identify which item(s) of the scale are being applied to each item of work, and
• where the fees are calculated on a fixed fee basis, sufficient detail to show how and to what extent the retainer has been carried out in exchange for the costs that are being charged; and

b) a detailed description of each item of work done, including by whom it was done

c)  the date each item of work was done, arranged in chronological order

d)   where the fees are calculated on either a time basis or a scale, the amount charged for each item of work.

We have attached two (mock) bills which meet these requirements at Appendices 1 and 2.

Note

We are grateful to DG Thomson Legal Costs Lawyers and QICS Legal Costs Consultants respectively for providing us these examples.

7. The LPA provides that lawyers are not entitled to charge users of legal services for the preparation of an itemised bill. Hence in our view:

a) lawyers must not ‘adjust’ the amount of the original bill to reflect the time taken to prepare the itemised bill

b)  while an itemised bill may ‘work out’ to a higher amount than the original lump sum bill, lawyers are not entitled to charge more in the itemised bill than they charged in the original lump sum bill

c)  lawyers may have a right to substitute a higher bill if the bill goes to costs assessment, but only if the original lump sum bill is delivered subject to an appropriately worded ‘reservation of rights’ condition in the lawyer’s disclosure notice and costs agreement, but

c)  any such ‘reservation of rights’ condition must be fair and reasonable, and must not discourage or deter users of legal services from exercising their entitlement under the LPA to request an itemised bill.

8. Importantly however users of legal services who apply to have their costs assessed must pay the amount determined by the costs assessment process, whether that amount is more or less than the amount the lawyer charged in the original lump sum bill.

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