LETTER OF ENGAGEMENT — COSTS AGREEMENT
GUIDANCE NOTEThis letter of engagement precedent takes the form of a costs agreement. It can be tailored for use in either non-litigated matters (Option A) or litigated matters (Option B).
Key terms:
●In litigated matters, the firm can recover costs as awarded or agreed as part of a settlement, and the agreement details the process of estimating costs that would be recovered. Estimates are provided of costs likely to be awarded (if successful) or alternatively paid (if unsuccessful).
●In non-litigated matters, professional fees are not charged.
●Disbursements are charged to the client (unless approval is obtained to do otherwise).
Precedents in the Australian Pro Bono Manual are provided with the generous assistance of leading Australian law firms, and have been developed to reflect best practice in pro bono.
There are two or more examples of each type of precedent to accommodate the various ways in which firms coordinate their pro bono programs. Use the precedent that best reflects the firm’s size, structure, systems, organisational culture and policies. Precedents should also be adapted as necessary to comply with the firm’s house style and terminology.
The Centre welcomes feedback on the usefulness and ease of use of these precedents, especially from firms in the early stages of developing a formal pro bono program.
LETTER OF ENGAGEMENT — COSTS AGREEMENT
Costs Agreement
Note: this agreement provides for disbursements to be charged to clients in all cases. If you do not plan to charge disbursements (for example, if the client is a disadvantaged individual) please seek approval from the pro bono coordinator first.
Details
You, our client / [Name][ABN]
[Address]
Contact: [name and title]
Associated Third Party Payer / [Name]
[ABN]
[Address]
Contact: [name and title]
The work we have been asked to do / [insert]
Responsible contact at [Firm] / [Name]
This agreement starts on / [date]
Hourly rates / These are given on page [insert] (Only for Option B — Litigated Matter)
File name and number / [insert]
Costs / Note: select either Option A (Non Litigated Matter) or Option B (Litigated Matter)
Option A — Non Litigated Matter
We have agreed to act for you in this matter on a pro bono basis.
This means that we will not charge you for our professional fees.
However, we will charge you for our disbursements.
Disbursements are expenses we incur on your behalf for services supplied or payments charged by third parties. We will incur such disbursements as agent for you and we will only recover from you the amount paid by us to the third party (inclusive of any GST the third party has included in that amount).
Set out below is a list of the likely disbursements you will incur in this matter and an estimate of your total disbursements. However, this is only an estimate and is not binding on us. We will let you know if the estimate needs revising.
We will also obtain your approval and consent before we incur any disbursements which are not listed in the table below.
GST exclusive
($) / GST amount
($) / GST inclusive
($)
Disbursements
(GST-free) / [amount] / [amount] / [amount]
Disbursements
(not GST-free) / [amount] / [amount] / [amount]
Cost / [amount] / [amount] / [amount]
For litigious matters only / Option B — Litigated Matter
We have agreed to act for you in this matter on a pro bonobasis.
This means that we will not charge you for our professional fees unless the work we perform for you results in an ‘Entitlement to Costs’ (as defined below).
Regardless of whether or not the work we perform for you results in an ‘Entitlement to Costs’, we will charge you for our disbursements. Disbursements are expenses we incur on your behalf for services supplied or payments charged by third parties. We will incur such disbursements as agent for you and we will only recover from you the amount paid by us to the third party (inclusive of any GST the third party has included in that amount).
The standard hourly rates that will apply in this matter are as follows:
Title / Estimated number of hours / Rate
Partner
Special Counsel
Senior Associate
Solicitor
Paralegal
An estimate of the costs that may be payable, if you are successful or not, is given on page [insert].
As soon as practicable after there is any significant change to anything previously disclosed to you, we will provide you with information disclosing the change, including information about any significant change to legal costs that will be payable by you.
Set out below is a list of the likely disbursements you will incur in this matter and an estimate of your total disbursements. However, this is only an estimate and is not binding on us. Wewill let you know if the estimate needs revising.
We will obtain your approval and consent before we incur any disbursements which are not listed in the table below.
GST exclusive
($) / GST amount
($) / GST inclusive
($)
Disbursements
(GST-free) / [amount] / [amount] / [amount]
Disbursements
(not GST-free) / [amount] / [amount] / [amount]
Cost / [amount] / [amount] / [amount]
An ‘Entitlement to Costs’ means any of the following during or at the end of the work performed for you:
(a)either of:
(i)a court or tribunal judgment, award or order for costs in your favour; or
(ii)an agreement that our costs or disbursements or both be paid by another party; and
(b)you are able to recover some or all of our standard hourly charges and disbursements from the other party.
As soon as practicable after there is any significant change to anything previously disclosed to you, we will provide you with information disclosing the change, including information about any significant change to legal costs that will be payable by you.
Important
We are obliged to take all reasonable steps to satisfy ourselves that you have understood and given consent to the proposed course of action for the conduct of the matter and the proposed costs. If you have any questions in respect of any of the matters set out in this costs agreement, please contact us. We will endeavour to provide answers to you in respect of any such questions.
Signing Page
Signed as an agreement.
Signed by on behalf of [Name]
sign (authorised person)
title (authorised person)
full name (authorised person)
Signed by [Associated Third Party Payer name (oruse alternative clause forindividuals)] in accordance with the provisions of s127(1) of the Corporations Act 2001 (Cth) / sign sign
office (director or secretary) office (director or secretary)
full name full name
Signed on behalf of [Firm]
sign (authorised person)
Partner
title (authorised person)
full name (authorised person)
Agreement
1Client
References in this agreement to you are references to you, our client. If there is more than one of you then this binds each separately and you each need to consider obtaining independent advice.
In that case, we may report to and take instructions from any one of you on behalf of all. Byacting for more than one of you, we may be prevented from disclosing all relevant information which is within our knowledge or giving advice to one, which is contrary to the interests of another. We may have to cease to act for all if we would otherwise have to act in a manner contrary to the interests of one of you. Further, if we decide to cease to act for you in such circumstances, you agree that we may decide to continue to act for one or more of the others if our duty of confidentiality owed to you is not put at risk and all have given informed consent.
We may invoice one or any number of you without affecting the separate liability of each.
We are not accepting any obligation to consider or act for anyone you may represent or who is interested, but not named.
Where any contact is named, you also authorise us to report to and take instructions from that contact (or any of them, if more than one) on your behalf. This does not limit who else may have authority to represent you.
If you are a company and unless you tell us in writing otherwise, you authorise us to accept instructions from any of the people who are introduced to us as a company director or secretary or as a senior executive with authority to instruct, without confirming those instructions with the other directors or the secretary or any executive or shareholder. We are entitled to assume that any person who has been an executive or a director or secretary of the company is still an executive or a director or secretary until you have notified us otherwise.
2Your responsible contact at [Firm]
Your responsible contact with us at [Firm] is the partner named in the details. You may contact him or her to discuss legal costs or the work at any time.
3The work
We will do the work described in the details. Our responsibility to you is limited to that work, and any other work we agree in writing to do. If you have any concern that the work is not properly and fully described please let us know.
4What we will do
We will act competently, diligently and as promptly as reasonably possible in doing the work. We may do anything that we reasonably regard as being required by the [relevant legislation, eg Legal Profession Uniform Law (Vic)] or related rules. You can ask us for a copy.
5Offer to enter into a costs agreement
This is an offer made by us to you to enter into a costs agreement about the payment of our legal costs. You accept it if you, or someone on your behalf:
(a)signs and returns this agreement — this is our preference;
(b)instructs us that you accept it, whether in person or by post, telephone, fax, email or other form of communication; or
(c)give us further instructions.
If our offer is accepted, the costs agreement is between you as the client and us as the law practice.
6Costs
[Delete if using Option A — Non Litigated Matter.]
In this agreement, unless the context otherwise requires, costs include legal fees, charges disbursements, expenses and remuneration. You must pay us all costs in connection with the work that we do for you, in accordance with this agreement. References to money or monetary amounts are in Australian dollars, unless stated otherwise.
7Timing of payment of costs
[Delete if using Option A — Non Litigated Matter.]
We may require payment of costs at any time in whole or in part, in advance or in arrears.
8Recovery of costs
[Delete if using Option A — Non Litigated Matter.]
The Uniform Law provides that we cannot take action for recovery of legal costs until 30 days after a tax invoice (which complies with the Uniform Law) has been given to you and any other relevant conditions, if any, in the Uniform Law have been satisfied.
9Your rights
Unless you are a commercial or government client, it is your right to:
(a)negotiate a costs agreement with us;
(b)negotiate the method of billing (eg task based or time based);
(c)request and receive an itemised bill within 30 days after a lump sum bill or partially itemised bill is payable;
(d)seek the assistance of the designated local regulatory authority (the Victorian Commissioner) in the event of a dispute about legal costs;
(e)be notified as soon as is reasonably practicable of any significant change to any matter affecting costs;
(f)accept or reject any offer we make for an interstate costs law to apply to your matter; and
(g)notify us that you require an interstate costs law to apply to your matter.
If you request an itemised bill and the total amount of the legal costs specified in it exceeds the amount previously specified in the lump sum bill for the same matter, the additional costs may be recovered by us only if:
(a)when the lump sum bill is given, we inform you in writing that the total amount of the legal costs specified in any itemised bill may be higher than the amount specified in the lump sum bill; and
(b)the costs are determined to be payable after a costs assessment or after a binding determination under [relevant provision eg, s 292 of the Uniform Law].
Nothing in these terms affects your rights under the Australian Consumer Law.
10Your rights in relation to a dispute concerning costs
If you have a dispute in relation to any aspect of our legal costs you have the following avenues of redress:
(a)in the first instance we encourage you to discuss your concerns with us so that any issue can be identified and we can have the opportunity of resolving the matter promptly and without it adversely impacting on our business relationship; or
(b)you may apply for an assessment of our costs. This application must be made within 12months after the bill was provided or request for payment made or after the costs were paid.
11Progress reports on the matter
We may charge you an additional amount for any progress report that you request, calculated in accordance with this agreement.
12Progress reports on costs
[Delete if using Option A — Non Litigated Matter.]
We will provide you, on reasonable request, without charge and within a reasonable period, a written report of the legal costs incurred by you to date, or since the last bill (if any).
13Request for documents
If at any time you ask for any of your documents from our file, we may prepare an index of the documents, and make a set of copies, for our records. We will charge you an additional amount, calculated at the rates set according to this agreement, for the associated work including identifying the documents and supervising the copying.
14Nature of estimates given by us
[Delete if using Option A — Non Litigated Matters.]
Any estimate given by us is our best estimate based on our understanding of the work and your present circumstances as you have described them. We may change any estimate at any time for any reason, including where the nature of the work has changed.
An estimate is a general guide to assist you, but does not bind us. It may not be accurate. Actual costs may exceed the estimate.
An estimate is based on current rates. For any part of the work that might be carried out in the next or any subsequent financial year, you need to allow for an estimate to increase in line with any increase in our rates. Any estimate of a disbursement is also based on current rates and is subject to increase in charges by the relevant supplier or authority.
The major variables that will affect the calculation of costs, whether given as a range or not, include:
(a)commercial decisions taken by you during the matter regarding the work, including any change to the scope or nature of the work;
(b)time spent advising you, including discussing issues and alternatives;
(c)the extent of any due diligence that you require us to do;
(d)the extent of negotiations, including time spent preparing for and participating in negotiations;
(e)the conduct of other parties or people we deal with, requires more or less work than anticipated;
(f)any change in the law or in legal or commercial practice;
(g)any change in the circumstances or your requirements;
(h)any unexpected matters arising at any time;
(i)the amount of time actually required to do the work; and
(j)anything outside our control that causes a delay or causes our work to be protracted.
15Fixed costs provision
[Delete if using Option A — Non Litigated Matter.]
A fixed cost provision does not apply to this costs agreement.
A fixed costs provision is a determination, scale, arrangement or other provision fixing the costs or maximum costs of any legal services that is made by or under legislation.
16Hourly rate
[Delete if using Option A — Non Litigated Matters.]
Time is charged for work done by our lawyers, and some other professional staff, in units at an hourly rate that reflects that person’s skills and experience. A unit is six minutes or part of six minutes. For example, 26 minutes is five units.
We may change our hourly rates at any time. We will notify you before any change occurs.
For any work in the next or any subsequent financial year, any costs estimate that we have provided is subject to increase in line with any notified increases in our rates.
17Disbursements
A disbursement is money paid or to be paid by us to any person for costs arising in connection with the work. We pay disbursements as your agent.
You must pay us the cost of each disbursement.
We may work with our immediate service provider [name of organisation/company] and include their costs or fees for work by their staff, in our invoices as fees or disbursements.
Disbursements include the office services that we provide listed on page [insert], filing fees, registration fees, barrister’s and expert’s fees, bank charges, travel expenses, office services, stamp duty, courier fees, long distance telephone calls, photocopying fees, company searches, document conversion and title searches, or similar costs.
18Barristers and other consultants
All barristers and other consultants engaged in relation to your work must be engaged directly by you and not by us.
If a barrister or consultant does not agree to a direct engagement with you, with your consent we may engage that person. If we do so, we do so as your agent. We will require payment to our trust account to cover our estimate of the barrister’s or consultant’s costs. Our estimate may be higher than the estimate given by your barrister or consultant.