Can lawyers charge interest on unpaid legal fees?

Solicitors can only recover interest on unpaid legal costs if their bill or invoice contains a statement specifying that interest is payable and specifying the applicable rate of interest.

If the costs agreement does not contain a clause providing for charging interest on unpaid legal costs, then interest is only chargeable if the costs are unpaid 30 days or more after the law practice has given a bill.

If solicitors fail in any of their costs disclosure obligations, then legal costs (even after being invoiced) are not payable until they are assessed. Accordingly, interest is not chargeable on fees that have been invoiced but are not legally payable until they have been assessed.

MAXIMUM INTEREST CHARGEABLE

New South Wales & Victoria

The relevant regulation provides that the maximum rate of interest is the rate that is equal to the Cash Rate Target as at the date the bill was issued by the law practice, increased by two (2) percentage points.

This is much lower than the amount of interest chargeable in Queensland.

The cash rate target was increased to 3.35 per cent on 7 February 2023, and then to 3.6 per cent on 7 March 2023.

In NSW and Victoria, for a bill issued by a law practice between 7 February 2023 and 6 March 2023, the maximum rate of interest rate applicable is 5.1%. For a bill issued on 8 March 2023, the maximum rate of interest rate applicable is 5.6%.

See Legal Profession Uniform Law (NSW) s 195 and Legal Profession Uniform General Rules 2015 r 75.

Queensland

The Supreme Court of Queensland Practice Direction in relation to interest currently allows law practices to charge interest at a rate six (6) percent above the Cash Rate last published by the Reserve Bank of Australia before a 1 January to 30 June period commenced or a 1 July to 31 December period commenced in any year, depending on when the bill was issued. The cash rate target prior to 1 January 2023 and 30 June 2023 period was 3.1%.

In Queensland, for a bill issued by a law practice between 1 January 2023 and 30 June 2023, the maximum rate of interest rate applicable is 9.1%.

See Legal Profession Act 2007 (Qld) s 321; Legal Profession Regulation 2017 (Qld) s 72 ; Civil Proceedings Act 2011 (Qld) s 59 (3); Supreme Court of Queensland, Practice Direction Number 7 of 2013, Interest Rates, cl 4, https://www.courts.qld.gov.au/courts-calculator/interest-rates#money.

If you think you’ve been unfairly charged interest by your lawyer, call Law in Check today on 1800 529 462 or send us an email at kayla@lawincheck.com.au to speak with one of our specialist consultants.