Understanding your attorney’s invoice

Petro is about to realise her dream by buying a business and becoming her own boss. But to finalise the deal Petro must have a sale agreement and a new lease drafted. And then she will have to start collecting on the outstanding debt book as well as put in place new employment agreements for her new staff.

Petro shops around and hears from a friend about a reputable law firm she can approach to assist her with her legal needs. But Petro is worried. How much will this cost? She has heard that legal costs can be quite extensive. Fortunately the firm she approaches if very professional, and the attorney goes to great pains to explain to Petro how attorney costs work.

Firstly a distinction must be drawn between ‘litigious’ and ‘non-litigious’ costs.

Non-litigious costs refer to costs for work done by an attorney that does not involve litigation. These costs are often regulated by specific guidelines or statutes. Examples of such non-litigious work can include:

  • The transfer and registration of properties being sold.
  • Commercial work such as drafting of sale and lease agreements.
  • Setting up of legal entities such as companies, trusts etc. 
  • Administration of a deceased or insolvent estate.

Where a statute does not make provision for a specific tariff for a type of legal work, the cost guidelines published by the Law Societies are generally applied to determine the attorney fees for this type of work. It is important to note, that the Law Society guidelines are exactly that, only a guideline and in most cases the attorney can and will agree a specific fee structure with the client for the type of legal work required by the client. Ask your attorney how his costs are structured and feel free to discuss the scope of work with your attorney to ensure that the account does not catch you unawares.

As a client, you have the right to have the attorney’s account assessed and taxed if you are of the opinion that it is too high and unreasonable.

Litigious costs on the other hand, refer to those types of costs charged by an attorney for work done in respect of action or application proceedings in a court. With litigious costs a distinction can further be made between three types of costs, namely:

1. Party and Party Costs

These are costs which are determined to be necessary and proper and as a general rule the applicable court tariffs is applicable. This is generally the legal costs that are payable by an unsuccessful litigious party to his succesful opponent.

2. Attorney and Client Costs

These are costs prescribed by the applicable court tariffs but also includes all work done by the attorney and will also include payments of special fees to legal counsel and all charges and expenses incurred by such counsel. This is generally the legal costs that are payable by a client to his legal team for all services rendered and are payable whatever the outcome of the matter and are not dependent upon any award of costs by a court.

3.Attorney and Own Client Costs

These are legal costs that can generally be described as an agreed fee payable by the client to his legal team in terms of a written agreement and which fees are generally higher that the hourly tariff prescribed by the Law Societies. Legal costs charged on this basis will usually be higher than Attorney and Client Costs.

In summary:

Non-litigious costs are payable by the client as it usually does not involve another party and court proceedings. With litigious costs on the other hand, the legal costs are payable by the relevant party depending on the type of cost as set out above under litigious costs.

You should have no fear in discussing your legal costs with your attorney of even contacting your attorney to inquire about the different costs making up your invoice. An attorney is a professional and entitled to charge for services rendered. But a professional attorney will always welcome the chance to engage with his clients to ensure that clients are informed and not burdened by unexpected costs.

September 27, 2012
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