Pricing Practice: Exploring Costs in Victorian Legal Services

Lawyers’ matter scoping and billing practices are central to the cost and market for legal services. They have a direct relationship with access to justice. Lawyer communication with clients about these practices is a major driver of client understanding and agency in the service relationship. This communication is also an important aspect of the quality of legal services and has a direct bearing on consumer experience.

The Victorian Legal Services Board + Commissioner (VLSB+C) commissioned this research to examine the factors that influence the pricing of legal services, how practitioners communicate with clients about anticipated costs, and how service costs, and communications about costs, affect the lawyer-client relationship.

The project was led by Associate Professor Catrina Denvir and Dr Jess Mant with Associate Professor Genevieve Grant from Monash University, and VLF Principal Researcher Dr Hugh McDonald and Research Director Professor Nigel Balmer.

Implications and way forward

The Efficacy of Uniform Law Requirements

• The Legal Profession Uniform Law Act 2015 (Vic) (LPUL) requirement to provide an ‘estimate of total legal costs’ may not be operating to enhance costs transparency in the manner intended.
• The obligation under the LPUL to minimise a client incurring unnecessary costs should be considered in parallel with courts’ case management duties and powers.
• Negotiated costs agreements rarely occurred in practice.

Improving Support for Legal Practitioners

• It is unclear how reliable ‘fixed’ fees may be in practice, given associated cost inclusions and exclusions, and the potential for costs to be updated.
• There are misconceptions about pricing models and what they require of practitioners, and the client groups for who they are most appropriate.
• Practitioners were concerned that cost disclosure and cost agreements had to be comprehensive, and that streamlining information to improve client comprehension, risked non-compliance.

Improving Public Capability to Evaluate Legal Costs

• It is extremely difficult for clients to make an accurate assessment of what constitutes value for money, and to meaningfully compare estimated costs.
• Additional public legal information may help clients to better understand the cost information supplied to them.

General Observations of Good Practice

There were examples of good practices among the sample of practitioners interviewed, including:

• The use of regular billing cycles to prevent bill shock and keep clients informed.
• Raising the matter of costs directly and up-front with a client at the initial interview, clarifying exclusions and inclusions, and providing price breakdowns in respect of complex or multistage work.
• Setting clear boundaries to help clients understand the service being provided.
• Adopting digital tools to track billing against the estimate.

Gaps in the Knowledge Base and Avenues for Future Research

• Further research to examine client comprehension of legal costs is necessary.