The cost disclosure document, explained

The first time I was handed a cost disclosure, I was sitting in a beige office on Queen Street, holding a coffee that had gone cold while the solicitor talked. He slid the document across the desk and said, "have a read of this when you get home". Six pages, single-spaced, set in a font that did not want to be read. I took it home. I did not read it. Two months later I was three thousand dollars in and still did not know what the scope was.

That mistake cost me. Not just the three grand. The bigger cost was that I did not know what I had signed up for, so I could not tell whether I was getting value, and I could not push back on the bits that were vague. I want to spare you that. The cost disclosure document is the single most important piece of paper your family lawyer will give you, and most blokes treat it like the terms and conditions on a software install.

This is plain explanation, not legal advice. For your specific situation, see a solicitor.

What the cost disclosure is, and why it exists

In Australia, the Legal Profession Uniform Law (which applies in NSW and Victoria, with cousin legislation in the other states) requires a lawyer to give you written disclosure of likely costs before they take you on, or as soon as practicable after. The threshold is low. If your matter is going to cost more than $750, you get one. Family law matters always exceed that, so you always get one.

The point of the document is to make the lawyer say, in writing, what you are buying and what it is going to cost. It exists because, historically, clients found out the price after the work was done, which is a terrible position to negotiate from. The Uniform Law forces the conversation up front.

It comes in two parts that often arrive stapled together. The cost disclosure (a statement of likely costs and the basis on which they are charged) and the costs agreement (the contract you sign accepting those terms). They are different documents doing different jobs. People treat them as one thing. They are not.

What is actually inside it

A proper cost disclosure has six things. If yours is missing any of them, that is a flag.

• Hourly rates, broken down by who is doing the work (partner, senior associate, junior solicitor, paralegal, often with different rates)
• An estimate of the total cost of the matter, or at least the next stage of it
• The scope of work, meaning what the lawyer will and will not do for that fee
• When and how fees are charged (monthly billing, on completion, in advance against a trust deposit)
• Disbursements, the third-party costs the lawyer pays on your behalf and passes through (court filing fees, barrister fees, expert reports)
• Your right to negotiate the costs agreement, get an itemised bill, and refer disputes to the legal services commissioner in your state

The estimate is the bit that matters most. A good one will give you a range, broken into stages. Initial advice and correspondence: $X to $Y. Drafting consent orders: $X to $Y. Mediation preparation and attendance: $X to $Y. If contested, hearing preparation and a one-day hearing: $X to $Y, with a note that this could escalate significantly.

Some lawyers will only give you a stage one estimate, because they genuinely do not know how the matter will unfold. That is fair. But they should still give you a realistic upper bound for the whole thing, even if it is wide. "Probably between $8,000 and $30,000 depending on whether it settles at mediation" is a useful number. "It depends entirely on the other side" is not.

How to read one

Take it to the kitchen table with a highlighter and a cup of tea. Read it twice. The first read, you are just trying to understand the shape of the document. The second read, you are looking for the specific things below.

Find the hourly rates. Note the highest one. Multiply it by 100. That is roughly what your matter will cost if it goes to a contested hearing with one lawyer working on it for two weeks. Now ask whether you can afford that. If not, you need a different engagement model (see the next article in this series on limited versus full retainer).

Find the estimate. Read it carefully. Is it a single figure or a range? Does it cover the whole matter or only the first stage? Are there carve-outs ("does not include any contested hearing", "does not include barrister fees")? Write the carve-outs in the margin in your own words. Most people miss them because they are buried in a clause that starts with the words "for the avoidance of doubt".

Find the scope. This is what the lawyer is committing to do. "Provide advice and prepare initial correspondence" is narrow. "Conduct the matter through to resolution" is broad. Make sure the scope matches what you actually want. If you are paying for narrow scope but expect broad service, you will be billed for every extra task as a variation.

Find the billing terms. Monthly is standard. Some firms bill in advance against a trust deposit (you put $5,000 in trust, they bill against it, you top it up). Some bill on completion. Each has trade-offs. Trust deposits give you visibility and stop the bill running away. Monthly billing means you get nasty surprises a month after the work is done. On-completion billing means you do not know the total until the end, which is the worst of both worlds.

Red flags

The body metaphor is this: a good cost disclosure is like a doctor showing you the X-ray before they operate. You want to see the bone before they touch it. The flags below are the equivalent of a surgeon waving you into theatre without any imaging.

• No estimate at all, or an estimate so wide it is meaningless ("$5,000 to $200,000")
• The phrase "as work requires" attached to the scope, with no cap
• An hourly rate higher than $650 plus GST for a senior associate, or higher than $850 for a partner, in a metro practice (rural rates are different, and specialists charge more, but most family matters do not need a specialist)
• No breakdown by fee earner, just a single blended rate (means juniors get billed at partner rates)
• A clause letting them increase the rates mid-matter without your written consent
• No mention of your right to an itemised bill or to dispute the costs
• A trust deposit demand that is more than the first stage estimate (they should not be holding more of your money than they need)

If you see any of these, push back in writing before you sign. Ask for the estimate to be tightened. Ask for the scope to be capped. Ask for a fee earner breakdown. A reasonable lawyer will work with you on this. An unreasonable one will tell you it is "standard". Standard is not a defence under the Uniform Law.

How to negotiate it

Most clients do not realise this is negotiable. It is. The costs agreement is a contract. You can amend it. The Uniform Law explicitly says so.

The three things worth negotiating are scope, cap, and review. Scope: tighten what is and is not included, in writing. Cap: ask for a not-to-exceed figure for each stage, with a clause that says the lawyer must seek written authorisation before exceeding it. Review: ask for a monthly bill review and a fixed-fee option for any predictable stage.

Lawyers will resist caps for genuinely uncertain work, and that is fair. They will not resist caps for predictable stages. Initial advice, document drafting, consent order preparation, divorce applications. These can all be priced as fixed fees if you ask.

NEGOTIATE BEFORE YOU SIGN. The bargaining power you have at the start is gone the moment your name is on the page. Once you are a client, the lawyer is doing you a favour to revise. Before you are a client, they want your business.

Final note

I am not anti-lawyer. The right family lawyer is worth every dollar, and the wrong one will cost you ten times their fee in bad outcomes. But the cost disclosure document is the place where the relationship is defined, and most men sign it without reading it because they are emotionally exhausted and want to feel like the problem is being handled.

The problem is not being handled when you sign. It starts being handled when you understand what you signed.

Read the document. Negotiate the document. Then sign.

Read it. Push back. Then sign.