Unpaid Legal Fees in Victoria: Why the Twelve-Month Costs Court Deadline Still Matters
If your law firm has an unpaid bill in Victoria, you have twelve months to have it taxed in the Costs Court. Missing that date does not always end the matter. The Supreme Court of Victoria does have discretion to allow assessments out of time. However, this requires a separate application before a Registrar of the Costs Court, including sworn evidence and likely incurring the costs of this application. For Melbourne and Victorian law firms, recovering unpaid legal fees through the Costs Court is time-sensitive.
Our advice to Victorian firms: file within twelve months.
In short
• You have twelve months from the final bill in a matter to file a Summons for Taxation in the Costs Court.
• Interim bills can wait for the final bill provided they fall within the same matter.
• After twelve months, the Costs Court decides whether the taxation can go ahead. It is a discretion, not a right, and the route is technical.
• If your costs disclosure has gaps, taxation may be the only way to recover your fees.
• If the bill is cut by 15% or more, you may have to pay the costs of the taxation.
The twelve-month deadline for taxation in Victoria
Under section 198(3) of the Legal Profession Uniform Law (LPUL), an application for costs assessment must be made within twelve months after the bill was given or the request for payment was made. If there was neither, the twelve months runs from when the costs were paid.
In Victoria the application goes to the Costs Court of the Supreme Court in Melbourne, by filing a Summons for Taxation. The matter is listed for a directions hearing before a Judicial Registrar. Many matters go to mediation before any full taxation and settle at this stage.
When the clock starts
The twelve months runs from the final bill in the matter. It does not run separately from each invoice.
Section 193(2) LPUL allows for costs to be assessed at the time of the interim bill, or within 12 months of the final bill. In lengthy matters, the date that matters is the final bill.
What counts as the final bill? The leading appeal decision comes from Queensland. In Challen v Golder Associates Pty Ltd [2012] QCA 307, the Court of Appeal determined that the final bill is the last bill for the legal services the practice was retained to provide. While Challen was decided under Queensland legislation, the relevant QLD provision was in the same terms as section 193(2) LPUL.
The clock runs matter by matter. A client can still be with you on three files while a fourth, finished last year, quietly runs out of time. Discrete jobs under separate retainers each have their own final bill too.
Costs disclosure and unpaid fees
If your costs disclosure fell short, two things follow. Costs disclosure under the LPUL can decide whether you recover your fees at all.
First, under section 178 LPUL the client does not have to pay until the costs are assessed, and you cannot sue for the fees until then. A client can raise this late, after your twelve months has gone. In Eventus Lawyers Pty Ltd v Richens [2021] VSC 370 and Marshalls & Dent & Wilmoth v Tandos [2024] VSC 44, both firms first sued for their fees in other courts. Both claims stalled on disclosure.
Second, a client with a disclosure argument will usually find it easier to have your bill taxed out of time.
In our experience, taxation is usually the better route for unpaid fees. Where disclosure is in doubt, it may be the only one. Filing within twelve months keeps it open. Our costs lawyers in Melbourne regularly act in solicitor-client taxations and unpaid fee disputes.
Your bill has to stand up in the Costs Court
Since 1 January 2025, the Supreme Court’s costs rules require a bill to explain each item. By way of example, grouped entries or “call with client” without further explanation will be subject to significant reductions on assessment. The Costs Court also generally expects attendance notes to support the work.
The 15% rule in a Costs Court taxation
If the Costs Court cuts the bill by 15% or more, the law practice will generally pay the costs of the taxation. There is now a burgeoning industry for challenging a law firm’s bill.
How Victoria differs from NSW
We recently covered the same deadline for NSW firms, in our insight on Dive Lawyers. We act in costs matters in both states, and across Australia, including Queensland and the Federal Court. The law is the same in NSW and Victoria. The process is not.
Implications of a failure to disclose
In both states, a disclosure failure can make the costs agreement void under section 178 LPUL. The bill is then assessed on what is fair and reasonable, not on the terms the client agreed to.
In NSW, that can mean deep cuts. In Malvina Park Pty Ltd v Johnson [2019] NSWSC 1490, a firm claimed $70,800 under a fixed fee agreement. It had sent the agreement by email but never discussed it with the client. The amount allowed was $24,247, a reduction of about 65%. In Victoria, the result in our experience has usually been more modest. The agreed hourly rates are cut back to a reasonable level. That may be changing. Since the 2025 reforms, the Costs Court looks more closely at the time claimed, not just the rate.
What Victorian law firms should do this week
• Pull your aged debtors list and note the final bill date for each matter.
• As part of our complimentary preliminary advice, we will tell you which matters are close to the deadline and which are worth taxing.
• Already past twelve months? Call us before you take any step. Early advice decides whether a late application is worth making at all.
• Before you issue a debt claim, let us check the costs agreement and disclosure. A gap we find now costs far less than one the client’s lawyer finds later.
• Before you file or settle, let us run the numbers. With the 15% rule in play, they often change the decision.
Call our Melbourne team on (03) 9070 9851. No charge and no obligation.
This insight deals with solicitor and client costs. Party and party costs in Victoria are dealt with separately.
About Rose Legal
Rose Legal is a specialist legal costs law firm with offices in Sydney and Melbourne, working across Australia. Our costs lawyers and legal costs consultants advise law firms, barristers and clients on legal costs, costs assessments, solicitor and client costs disputes, expert witness services and legal costs recovery.
How Rose Legal Can Help Your Practice
We offer complimentary preliminary advice on any legal costs question, costs agreement, Costs Court taxation or file management issue. No charge and no obligation.
We also run complimentary in-house CPD sessions on legal costs for law firms, tailored to your team and your practice areas. We will come to you. Contact us to find out more.
From our Melbourne CBD office at Level 11, 456 Lonsdale Street, we act for law firms, barristers and clients across Victoria.
Get in touch with one of our legal costs consultants and costs lawyers. Melbourne (03) 9070 9851. Sydney (02) 8089 3167. Or visit rose-lawyers.com.au.
