Updated: Apr 13, 2021
Billing is one of the top issues confronting law firms during trust account inspections. It is also among the top causes of complaints filed against firms.
The lack of open and transparent billing has seen many law firms fall foul of the New Zealand Law Society (NZLS). But what constitutes open and transparent billing practices?
Disclosure of billing practices:
expertise required to complete the services;
consultation of an independent third party if applicable;
and level of complexity and anticipated timeframe to complete.
Disclosure of billing rate
Detailed and correctly itemised bills
Charging correctly for recoverable disbursements
Charging reasonable and legitimate recovery of office expenses
Conflating disbursements and expenses, inflating disbursements and charging for recoveries such as administration fees and agency fees may be disallowed and may not comply with r3.4 and r3.4A, r9 and r11.1 of the LCA Rules 2008.
For an example of a lawyer censured by the New Zealand Lawyers and Conveyancers Disciplinary Tribunal for charging in this way, see Canterbury Westland Standards Committee v P Currie  NZLCDT 15.
In addition, understanding how to correctly lay out a firm’s letters of engagement, terms and conditions of engagement and bills to disclose these requirements is important to ensure clarity and the correct classification and practice of recovering disbursements and expenses.
Before commencing any work, a clear disclosure to clients is required under r3.4 LCA Rules 2008. Maintaining open communication with clients and keeping them informed throughout the provision of services r3.3 LCA Rules 2008 can reduce unnecessary complaints.
Our next article will address billing, disbursements and expenses.