Posts Tagged ‘estimates’

Estimates – Ranges or Not under the LPUL?

The Australian Legal Services Commissioner, Mr Dale Boucher, and the Victorian Legal Services Commissioner, Mr Michael McGarvie, have both spoken today at the Law Institute of Victoria seminar on the Legal Profession Uniform Law.

Two issues of concern for practitioners are:

  • Can practitioners still give a range of estimates?
  • What is the meaning of “total legal costs” for the purpose of providing an estimate of same?

Mr McGarvie made it quite clear that it was no longer acceptable to give a range – the Law requires a single estimate to be given.

It was put to the Commissioner that “total legal costs” should reflect the costs for the proposed course of conduct, for which the clients consent is required to be obtained.  A proposed course of conduct may be to a particular point in a matter.  The example given was proposed course of conduct to settle the matter at or before mediation, rather than run the matter to judgment.

Mr McGarvie and one of the members of his office, explained the purpose of an estimate of total legal costs in the matter (for example to the end of litigation), rather than simply of stages (for example to the end of mediation).  One of the complaints clients currently make is that they were told the costs to the end of mediation would be $X, whereas the matter didn’t settle at mediation and the actual costs were $X + $Y.  The client complains that they would not have proceeded with the matter if they had realised what the actual costs might be for the whole of the matter.

It would appear that the expectation is that practitioner will be regularly updating the original estimate to reflect developments on the matter.  Mr McGarvie suggested that it would appropriate for practitioners to be providing estimates for different stages of a matter, as well as an overall estimate of the total costs.  This is certainly a better option than simply telling a client that their total costs might be $500,000, even though it is highly unlikely the matter will even get to trial, but if it does, this is the likely total costs.

The clear message is that practitioners are under an obligation to proactively and on an ongoing basis, engage with their clients about the conduct of the matter and the costs likely to be incurred by the client.  For some years, the Federal and NSW Governments have had platforms of Informed Purchasers of Legal Services in place.  The expectations for lawyer providing services to government in relation to obtaining informed consent align with expectations under the LPUL.  Practitioners will need to improve their estimating and project planning and management skills.

Since 2010, we have provided training to NSW, Queensland and Federal Government departments under the Informed Purchaser platforms, as well as to law practices across the Eastern seaboard, often to enable them to address legal project management and estimating requirements imposed as part of legal panel arrangements.

On 5 August 2015, we are running a workshop on estimating, project planning and providing options regarding proposed on course of conduct.  Further details to follow.