Understand Legal Costs
Lawyers are entitled to receive reasonable fees for work done for their clients and in general these are made up of two components – professional and disbrusement fees.
Professional fees are charged by a lawyer for his professional services while disbursements refer to out-of-pocket expenditures incurred in the course of representing a client. Out-of-pocket expenditure expenses include photocopying charges and filing fees paid to the Courts.
The Supreme Court of Singapore further publishes its guidelines for a general indication on the quantum and methodology of Supreme Court litigation costs.
– For example, drafting of wills, contracts or conveyancing.
Under the Legal Profession Act and the Legal Profession (Solicitors’ Remuneration) Order, a solicitor’s remuneration for non-contentious matters shall be fair and reasonable having regard to the circumstances of the case, such as the:
- importance of the matter to the client;
- skill, labour, specialised knowledge and responsibility involved on the part of the solicitor;
- complexity of the matter and difficulty or novelty of the question raised;
- when money or property is involved and the amount or value thereof;
- time expended by the solicitor;
- number and importance of documents prepared or perused, without regard to length; and
- place where, and the circumstances under which, the services or business or any part thereof are rendered or transacted.
In addition, a solicitor may charge more if he or she is required to perform the work by special exertion on an urgent basis.
Alternatively, a solicitor and his client may enter into an agreement for the solicitor’s charges for non-contentious work. The agreement may be for:
- payment of an agreed amount irrespective of volume of work done (a fixed fee); or
- a non-refundable retainer (deposit) for work to be undertaken where this deposit should be refunded if the instruction to act is terminated prematurely or if the matter is not proceeded with subsequently; or
- payment on a time-related basis.
Notwithstanding the client having agreed to the fees chargeable, such agreements can still be challenged in Court on the grounds of fairness and reasonableness.
– Involving proceedings before a court of justice or an arbitrator
– For contentious matters, lawyers are under a fundamental ethical obligation to act in the best interests of his or her client, charge fairly for work done pursuant to the Legal Profession (Professional Conduct) Rules (‘Conduct Rules’) and the Rules of Court. A lawyer must provide his client an estimate of fees and disbursements and he must also advise the client if the estimate given had substantially changed and the reason for the change. Legal fees are typically charged based on actual work done for the client and in determining a fair and reasonable fee, relevant considerations include:
- complexity of the matter and difficulty or novelty of the questions involved;
- time spent by the lawyer(s);
- amount or value of any money or property involved;
- number and importance of documents prepared or perused;
- skill, specialised knowledge and responsibility required of the lawyer(s);
- place and circumstances in which the business is transacted; and
- urgency and importance of the matter to the client.
Such factors are unique according to the facts of the matter and vary from case to case. It is prohibited by law for a lawyer to enter into an agreement wth his client with respect to legal costs in a contentious matter which provides for payment only in the event of success in the contentious matter or what is commonly referred to as a ‘contingency fee’. If you are successful in a contentious matter, the other party will usually be ordered to pay you a sum, as partial reimbursement, of your lawyer’s charges. Such costs are called ‘party and party costs’. This sum will either be fixed by the Court or be subject to taxation proceedings. Similarly, if the other party is successful, you may be ordered to pay a portion of their legal costs.
The following addresses frequently asked questions pertaining to legal fees:
In line with anti-competition laws in Singapore, there are presently no guidelines or recommended structure for lawyers’ fees.
Your lawyer may receive a deposit from the client as security for fees to be charged. The money received will be deposited into the law firm's client account. When the lawyer presents an invoice after performing the work, the lawyer may transfer the equivalent to the invoiced amount to the law firm's own bank account provided that the client does not object to the amount billed.
A lawyer may charge interest on his disbursements and Bill of Costs from the end of one month from the date his invoice is dated.
'Solicitor and client costs' refers to the legal costs you are liable to pay to your own lawyer. 'Party and party' costs refers to legal costs that a losing party in a court matter has to pay to the winning party:
If you succeed in your contentious matter, you can expect to recover your 'party and party costs' which will cover part of your 'solicitor and client costs'. If you are unhappy with the legal costs you have to pay the other party's lawyers (in the situation that you have lost your case and have been asked to pay for the other party's costs), you should consult your lawyer as to the taxation procedure of the 'party and party costs’. The 'party and party costs' is in addition to the 'solicitor and client costs' you have to pay your own lawyer.
1. Contact your lawyer
You should first contact your lawyer if you have any grievance concerning your legal fees. Your concerns may be due to a misunderstanding which your lawyer can quickly and easily clarify for you. Sometimes your concerns may be justified and you should still give your lawyer an opportunity to explain.
2. Request an itemized bill
You may also request your lawyer provide you with a detailed bill of costs if you do not already have one. A detailed bill of costs is an itemized bill describing the nature of work done by the lawyer since he began to act for you. The itemized bill should describe items such as time spent on research, drafting correspondence, attending court, attendance with you and other persons including telephone attendance and perusing documents. You may not be aware of all the steps taken by your lawyer on your behalf. One of the purposes of a detailed bill of costs is to tell you exactly what work has been done on your matter.
3. Resolve the dispute by either taxation or mediation.
Taxation is a judicial process to determine the reasonableness of the legal fee. The Legal Profession Act provides for the client and the lawyer to apply to the Court for a formal assessment or 'taxation' of the bill of costs. The client or lawyer must file an application within one year from the delivery of the bill. In a case where you and your lawyer consent to taxation of the bill, the Registrar may proceed to tax the bill notwithstanding that there is no order.
Your lawyer can proceed to tax his own bill of costs if you dispute the quantum of the bill. Your lawyer can only present the bill for taxation one month from the delivery of the bill. Consequently, your lawyer can proceed to sue you on the taxed costs, if you still refuse to pay. After one year from the delivery of the bill, no order shall be made for taxation, except under special circumstances.
There are two types of basis for taxation of legal costs, namely taxation on a standard basis and taxation on an indemnity basis.
'Standard basis' means that the party claiming costs has to show that any particular item was reasonably incurred or reasonable in quantum and therefore allowed. 'Party and party costs' are usually taxed on a standard basis.
'Indemnity basis' means that the party paying costs has to show that any particular item was of an unreasonable amount or unreasonably incurred and therefore disallowed. For contentious matters, 'solicitor and client costs' are usually taxed on an indemnity basis.
In the event that the amount of costs payable under the bill of costs is reduced on taxation, it does not in and of itself suggest professional misconduct.
The Supreme Court of Singapore provides more details on the taxation procedure (link)
The Law Society (LSS) administers a mediation scheme for clients and their lawyers to resolve costs dispute, provided consent from both parties are obtained. You can access the LSS costs dispute rules guide here.
While overcharging is prohibited under the Conduct Rules, it is not professional misconduct merely because a client disagrees with his lawyer about the amount of fees chargeable. It is also recommended to get the bill of costs taxed by the Court before filing a complaint with LSS against a lawyer for 'overcharging'.
Yes, a legal fee owing is treated as a debt and your lawyer may choose to file a Writ of Summons in court to recover the outstanding amount. There could be additional cost involved once a Writ is filed. To avoid such action, it is important that you and your lawyer should try to settle any dispute on legal fees as early as possible.
Under common law, your lawyer has the right to retain your original document as security, or what is commonly known as a 'lien', if you do not pay his legal fees. Your lawyer must however release the document if suitable arrangements to protect his lien are made in accordance with the Conduct Rules. It is important that you and your lawyer should try to settle any dispute on legal fees as early as possible.