What Happens If You Simply Can't Afford Your Lawyer's Bill?

Receiving a legal bill you simply cannot afford can be incredibly stressful. You may already be dealing with the financial pressure of a family law matter, commercial dispute, court proceedings or another difficult legal issue, only to receive an invoice for thousands of dollars that you have no realistic way of paying.

If this happens, ignoring the bill is rarely the best option. But that does not mean you should immediately find a way to pay an invoice you do not understand or believe may be unreasonable.

If you cannot afford your lawyer's bill, there may be several options available to you. The most important thing is to understand what you have been charged, whether the amount appears fair and reasonable, and what steps you can take next.

First, Don't Ignore the Bill

It can be tempting to put an unaffordable legal bill aside and hope the problem goes away. Unfortunately, an unpaid invoice can potentially lead to further consequences.

Depending on the circumstances, a law firm may follow up the outstanding amount, charge interest where it is legally entitled to do so, or commence debt recovery proceedings.

This is why it is important to deal with the issue early, even if you cannot currently afford to pay the amount requested.

Contacting the law firm, reviewing your invoice and understanding your rights can put you in a much stronger position than simply ignoring the bill.

Check Whether the Bill Matches What You Were Told

Before deciding how you are going to pay the invoice, go back to the beginning of your matter.

What did your lawyer originally tell you the matter was likely to cost?

Your costs agreement and costs disclosure documents should provide important information about how your legal fees would be calculated and, where applicable, the estimate you were given.

Legal matters can change, and sometimes costs genuinely increase because a case becomes more complicated than originally anticipated. However, significant increases in legal costs should not necessarily come as a complete surprise.

If you were initially told your matter would cost $20,000 and suddenly receive invoices totalling $60,000, for example, it is reasonable to ask how and why the costs increased and what information you were provided along the way.

Make Sure You Understand What You're Being Charged For

Being unable to afford a legal bill and believing you have been overcharged are two different issues.

A bill can be completely legitimate but still be beyond your financial means. Alternatively, an unaffordable bill may also contain charges that warrant closer examination.

Take the time to understand exactly what you are paying for.

If you have received a lump sum bill that provides very little information about the work completed, you may be able to request an itemised bill. This can provide significantly more detail about the work performed throughout your matter and how the final amount was calculated.

Once you have this information, you will be in a better position to determine whether your concern is simply affordability or whether there may also be an issue with the fees themselves.

Talk to Your Lawyer About Your Financial Situation

If you accept that the bill is reasonable but simply cannot afford to pay it in full, speak to your lawyer.

Depending on the firm and your circumstances, they may be prepared to discuss a payment arrangement or another way of dealing with the outstanding balance.

The earlier you have this conversation, the better.

Waiting until the law firm has begun pursuing the debt can make the situation more difficult and may add unnecessary stress and expense.

Be clear about what you can realistically afford rather than agreeing to repayments that are likely to create further financial pressure.

What If You Think You've Been Overcharged?

If the problem is not simply that you cannot afford the bill, but that you believe the amount itself may be unreasonable, the situation is different.

You may have concerns about excessive time entries, repeated work, vague billing descriptions, unexpected increases in costs, multiple lawyers charging for the same work or fees that do not appear consistent with what you originally agreed to.

In these circumstances, it may be worth having the legal bill independently reviewed before deciding how to proceed.

A legal costs lawyer can examine your costs agreement, disclosure documents, invoices and other relevant material to help determine whether the fees appear fair and reasonable.

Can Your Lawyer Charge Interest on an Unpaid Bill?

In some circumstances, interest may be charged on unpaid legal costs, but lawyers cannot necessarily impose whatever interest rate they choose.

The ability to charge interest and the rate that may apply can depend on the relevant legislation, the costs agreement, whether appropriate disclosure was provided and other circumstances surrounding the bill.

If interest is being added to an already significant legal debt, it may be particularly important to obtain advice about whether those charges are permitted.

You should not assume that an interest charge is automatically valid simply because it appears on an invoice.

Can a Lawyer Take You to Court for Unpaid Fees?

A law firm may potentially take steps to recover unpaid legal fees as a debt.

However, legal costs are subject to specific rules and procedures, and there may be options available if you dispute the amount being claimed.

If you receive a letter of demand, court documents or another formal notice relating to unpaid legal fees, do not ignore it. At this stage, obtaining independent advice quickly can be particularly important.

There may be deadlines for responding, and failing to act could make the situation more difficult.

There May Be Time Limits for Challenging Legal Costs

If you believe your legal bill is excessive, it is important not to leave the issue sitting unresolved for months or years.

Time limits can apply to formal processes for challenging or assessing legal costs, and those limits can vary depending on the jurisdiction and circumstances.

This is another reason why dealing with an unaffordable legal bill early is so important.

Even if you are not yet sure whether you want to formally challenge the fees, understanding your options now can help prevent you from discovering later that an important deadline has passed.

Don't Let Financial Pressure Stop You From Asking Questions

When people cannot afford their legal bills, they sometimes feel embarrassed about questioning the amount charged.

You should not.

You are entitled to understand what you have been charged for, how the amount was calculated and whether the costs are consistent with the information provided to you throughout your matter.

A large invoice does not automatically mean you have been overcharged. Equally, the fact that the invoice has been issued by a law firm does not mean you should never question it.

The key is to separate two questions: "Can I afford this bill?" and "Is this bill fair and reasonable?"

The answer to those questions will help determine what you should do next.

What Should You Do Next?

If you cannot afford your lawyer's bill, deal with the issue as early as possible.

Review your costs agreement, understand what you have been charged for and compare the final amount with the estimates you received throughout your matter. If you accept that the bill is reasonable but cannot pay it immediately, consider speaking with the law firm about your circumstances.

If you believe the bill may be excessive, however, consider obtaining independent advice before agreeing to pay an amount you are concerned about.

At Law in Check, we help individuals and businesses across Australia understand and challenge legal costs. If your lawyer's bill is significantly higher than expected, contains charges you do not understand or has left you wondering how you are possibly going to pay it, we can review your circumstances and help you understand the options available to you.