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Lump sum invoices and itemised bills

Lump sum invoices and itemised bills

By Anna Sango

Taxation Uniform Laws 


Practitioners need to be aware that in a costs review they may not be permitted to amend their initial invoice to the client and may be bound by it. The Legal Profession Uniform Law (Uniform Law) and its predecessor, the Legal Profession Act 2004 (LPA), both make provision for a law practice to provide an itemised bill following provision of a lump sum bill. A recent decision of the Victorian Supreme Court1 considered, in the context of the LPA, the issues of lump sum bills and itemised bills and held that, despite the law practice’s contention to the contrary, the law practice’s tax invoices were itemised bills capable of review/assessment. The law practice was not permitted to amend the tax invoices by providing itemised bills which would have had the effect that the law practice was not bound by the tax invoices rendered, some of which had been discounted. The relevant section of the LPA,2 s3.4.43(2), provides: “If, before giving an itemised bill the law practice had previously given a lump sum bill, on a costs review the law practice is not bound by the amount and matters stated in the lump sum bill”. Both the LPA3 and Uniform Law4 define lump sum bill and itemised bill of costs in similar terms. Lump sum bill means a bill that describes the legal services to which it relates and specifies the total amount of the legal costs”. Itemised bill of costs is defined as a bill that specifies in detail how the legal costs are made up so as to enable assessment/review.5 In determining that the invoices were effectively itemised bills, McMillan J held that the invoices, together with the costs agreements and the law practice’s file, specified with sufficient detail how the legal costs were made up in a way that would allow them to be reviewed by the Costs Court. McMillan J noted that the invoices contained information such as: fee earner initials time spent on each item date and description of work undertaken charge out rate for the work (some invoices) dollar amount of each item of work (some invoices). McMillan J further noted that the law practice could have, but did not, render the discounted fees reserving its right to rely on the higher amounts upon a costs review.6 In respect of amendment of practitioner own client bills of costs, the general rule is that a practitioner cannot amend or withdraw a bill of costs without a valid reservation after it has been challenged, except with the consent of the client or the leave of the Court.7 Given the similarities between the provisions of the LPA and Uniform Law, this decision may well be relevant to Uniform Law matters. Anna Sango is accredited in costs law and director of Kirk Barclay Pty Ltd. 1. Smoel & Wooster v Piper Alderman [2016] VSC 237 (13 May 2016) (on appeal). 2. The decision concerned the LPA but see a similar provision at r74(1) of the Legal Profession Uniform General Rules 2015. 3. LPA, s3.4.2. 4. Rule 5(1) of the Legal Profession Uniform General Rules 2015. 5. See also Supreme Court (General Civil Procedure) Rules 2015 r63.42. 6. In respect of Uniform Law matters, the process for recovering additional costs in a subsequent itemised bill is set out at r74(1) of the Legal Profession Uniform General Rules 2015. 7. See Oliver, Law of Costs, p25ff and cases referred to therein & Dal Pont, Law of Costs (3rd edn), paras 5.54ff.

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