Legal Costs in NSW.
Who pays the legal costs ?
You may have heard that your legal costs will be paid out of the estate. Well, that may or may not be true depending upon whether or not you 'win' and then, the amount you 'win'. A poor 'win' could see you paying as much as one half of your legal costs out of your share of your 'win'. That's why you should try to learn as much as possible about legal costs.
How to save up to $15,000 in legal costs. Do the same as you would if you were going to have your house painted. Get two or three quotes. Not estimates... Quotes. And, ask the solicitor a few questions like, how long have you been doing this work and how many cases have you done. I guarantee you will be amazed with the results.
The difference in legal costs from one legal firm to another could be as much as $20,000 for virtually the same Family Provision Claim. So this is not a small amount of money for consideration. There are two types of costs explained as follows;
'Solicitor/client costs' represents 100% of your legal costs.
'Ordinary costs' If the court orders the estate to pay you legal costs the estate will not be required to pay 100% but instead will be required to pay costs on the 'ordinary basis' ('ordinary costs') which excludes personal work between you and your solicitor. Ordinary costs are usually about 70% of your solicitor/client costs.
Example. Say your share of the estate is to be $100,000. Your 'solicitor/client legal costs are $50,000. The estate pays $35,000 and you pay your solicitor the balance namely $15,000 out of your $100,000 leaving you $85,000.
At mediation if you 'win', you will receive a portion of the deceased estate and out of that portion you will be required to pay your Solicitor/clients legal costs. 100%.
At hearing if you 'win', usually the estate will be required to pay your 'ordinary costs' and you will be required to pay your solicitor the difference between your 'ordinary costs ' and your 'solicitor/client costs'.
How much will it cost ?
A normal case that finalises at mediation will cost about $30,000. Go to the page "33 Steps to Mediation" to see why and what is involved. However, the answer to what it will cost depends upon three main factors.
Firstly, whether you have agreed to a fixed quote for fees, a ceiling on your fees or simply an estimate of fees.
Secondly, if you have agreed to an estimate, what hourly rate have you agreed to? $350 per hour or $550 per hour. All solicitors charge differently. However hourly rates can also be misleading. Lower hourly rates don't necessarily mean less fees at the end. A junior or less experienced solicitor may have a lower hourly rate but take much longer to achieve a result. And, a good result or not? A higher hourly rate may also be misleading if the work is not done effectively. A higher rate would be understandable if you were to achieve faster and better result.
Be sure however to make sure that if your solicitor is charging a high hourly rate he or she is actually experienced and qualified in this area of law and not say, divorce law or compensation law. It's like comparing Apples and Oranges. To be sure, select a Law Society Accredited Specialist.
Thirdly, how experienced (or inexperienced) your solicitor is in this law.
Solicitors' Costs Agreements.
These documents can often consist of 8, 10 or 12 pages and sometimes difficult to understand. The following is a list of matters you might want to take into consideration when negotiating your cost agreement with your preferred solicitor:
Time Costing at Hourly Rates.
You might know the joke about the solicitor who goes to heaven and St Peter says to him "according to your time sheet you are 185 years old". If you have an agreement based on hourly rates, your solicitor will charge you in 10 minute intervals for the work he or she does for you including emails and phone conversations with you and the estate lawyer, letters to you and the estate lawyer, affidavits, attending mediation, attending court and more.
Supreme Court Chief Justice The Hon Wayne Martin.
Seven years ago the Chief Justice made a speech at the launch of Law Week critical of the legal profession for continuing to charge clients on the basis of time costing using hourly rates. The backdrop to his speech was the thousands of complaints made over many years by clients to costs assessors and the Legal Services Commissioners.
His full speech is available if you would like a copy.
One point was, the only way for clients to truly compare solicitors costs was for both solicitors to quote a fixed fee. Because, if two solicitors just gave an estimate it would be impossible to compare. The first solicitor may estimate $50,000 and at the end give a final bill of $50,000 whereas the second solicitor may also estimate $50,000 but give a final bill of $70,000.
This is a summary of the Judge's criticism of time costing/hourly rates;
Good for lawyers because:
It transfers all the risk to the client.
It is easy and efficient for the lawyer.
It allows lawyers to keep track of their employees' time.
It enables lawyers to be certain to make a profit.
It is supposed to allow clients to compare lawyers but that’s not true.
It is supposed to be fairer than fixed fees but that’s not true.
Bad for clients because:
The client bears all the risk.
Unlike normal business there is no upfront price.
The focus of the lawyer can be on hours not value.
It encourages the lawyer to over service the client.
Lawyers may focus more on billing than on the work
There is significant staff cost in recording data and billing.
Time billing can result in cost subsidisation amongst clients.
(i.e. learning the work and charging the first client more).
Time billing can encourage boosting profits by boosting targets.
Time billing can encourage time sheet padding.
No Win No Fee Cost Agreements.
The following is a list of items you may not want to find in your Costs Agreement:
- 10% extra fee for a 'Successful Outcome'.
- 25% extra fee for a 'Successful Outcome'.
- Interest on any late payment of fees.
- Charges for secretaries, paralegals or other juniors.
- Increase in hourly rates half way through your matter.
- Five (5) day cooling off period.
- Charges for work done during the cooling off period.
- Charges for postage, photocopying, searches.
- Charge for couriers, messengers and travel.
- Upfront charges for your barrister.
- Upfront charges for subpoenas and searches.
- Monthly or interim invoices.
In Family Provision cases the defendants' costs (win or lose) are almost always paid out of the estate.
In Family Provision cases The claimants' costs are always paid out of the estate if you "win". However if you lose you will have to pay your own costs (unless you have a 'No Win No Fees' solicitor agreement). If you lose in most cases you will have to pay the defendants' costs. The decision as to whether you pay the defendants' costs is at the discretion of the judge and will vary from case to case.