As a costs lawyer, I often come across situations where disputes arise between clients and their legal practitioners over the accuracy of legal costs estimates.
A recent decision from Victoria, Australia, Song v PCL Lawyers Pty Ltd (Legal Practice) [2023] VCAT 505, highlights the importance of providing accurate legal costs estimates and the potential consequences of failing to do so.
In this blog post, I discuss the key takeaways from this decision and the importance of accurate legal costs estimates in maintaining a healthy client-lawyer relationship.
Accurate Legal Costs Estimates
In this case of Song v PCL Lawyers Pty Ltd (Legal Practice) [2023] VCAT 505, Mr. Song argued that he was provided with an inaccurate cost estimate for a brief to be prepared for an expert witness.
This, he claimed, constituted misleading and deceptive conduct under section 18 of the ACL. However, the Tribunal found that the cost estimate provided to Mr. Song was not misleading or deceptive. It was found to be a genuine and honest assessment of the costs likely to be incurred at the time it was given.
Significantly, the Tribunal determined that the initial “quote” given by the law firm was not a fixed quote but an estimate that was based on assumptions, and these assumptions were made clear to Mr. Song. The Tribunal highlighted the importance of clear communication between the legal practitioner and the client when giving cost estimates, noting that the legal practitioner had taken reasonable steps to explain that the quote was an estimate and could be subject to change.
However, the Tribunal Member stated:
“I accept that Mr Song was misled by the estimate provided and that had Mr Song been informed of the actual cost prior to engaging PCL to prepare the brief, he may not have asked them to do so. Further, he has not obtained any benefit from that brief as he ultimately engaged a different expert and briefed that expert himself.”
Despite not finding the legal practitioner or the firm guilty of misleading or deceptive conduct, the Tribunal did order the law firm to refund Mr. Song the sum of $1,000.
This was based on the Tribunal's findings that the law firm had received the sum for the preparation of the brief, but that the brief had not been used, because Mr. Song had engaged a different expert and briefed that expert himself.
Furthermore, Mr. Song claimed for 'time waste and mental damage' due to delays in obtaining an expert report. However, the Tribunal did not find any loss or damage suffered as a result of this delay, as Mr. Song had ultimately filed his own expert report.
Potential Consequences
The Australian Consumer Law (ACL) and the Legal Profession Uniform Law (LPUL) set out the standards and obligations for legal practitioners when providing legal costs estimates.
Failure to comply with these obligations may lead to disputes and potential consequences, including:
Refunds: In some cases, if a client has paid for a service based on misleading cost estimates, they may be entitled to a refund for the amount paid.
Misleading and Deceptive Conduct: Under section 18 of the ACL, legal practitioners are prohibited from engaging in misleading or deceptive conduct. Breaching this provision may lead to legal action and potential penalties.
Disciplinary Action: If a client believes that their legal practitioner has engaged in unsatisfactory professional conduct or professional misconduct, they may lodge a complaint with the relevant Legal Services Commissioner. Disciplinary proceedings may follow, leading to potential consequences for the legal practitioner.
Tips for Providing Accurate Legal Costs Estimates
To avoid disputes and potential consequences, legal practitioners should consider the following tips when providing legal costs estimates to their clients:
Be thorough and realistic: Provide a detailed and realistic estimate based on a comprehensive understanding of the client's matter and the potential work involved.
Communicate clearly: Ensure that the client understands the basis of the estimate and any factors that may impact the final costs, such as the complexity of the case or the possibility of additional work.
Update the estimate as needed: Regularly review the costs estimate and update it as necessary to reflect any changes in circumstances or new information that comes to light.
Keep the client informed: Maintain open communication with the client about their legal costs throughout the matter, addressing any concerns or questions they may have.
Key Take-Aways
Providing accurate legal costs estimates is an essential aspect of the client-lawyer relationship.
The case of Song v PCL Lawyers Pty Ltd (Legal Practice) [2023] VCAT 505 serves as a reminder of the importance of fulfilling this obligation and the potential consequences of failing to do so.
By being thorough, realistic, and transparent in their estimates, legal practitioners can help ensure that clients are well-informed and maintain a positive working relationship throughout the course of their legal matter.