Litigation Cost Estimate

 Lawyers’ billing procedures should keep the client informed as to the anticipated costs of legal services. Accordingly, lawyers may wish to prepare a litigation cost estimate to review with their clients prior to commencing or defending any proceeding.

In determining the amounts to charge for fees and disbursements, lawyers should refer to Section 3.6, Fees and Disbursements, of the Rules of Professional Conduct. Lawyers should routinely review the litigation cost estimate with their client during the course of the litigation, and advise the client of any circumstances that may affect it.

Lawyers who provide a litigation cost estimate to their clients should ensure that the client understands that it is   

  • an estimate only 
  • not binding 
  • may be subject to change 
  • for information only 

Lawyers are still expected to docket their time, keep the client informed of their progress and bill the client at regular intervals.

LITIGATION COST ESTIMATE TEMPLATE

The Litigation Cost Estimate Template (“Template”) may be used by litigation lawyers as a tool for providing clients with meaningful information about the cost of legal services. It is not mandatory.

The Template forms the basis of a task-based litigation cost estimate that enables lawyers to plan for expenditures and, if they wish, to bill by litigation task. The Template does not take into consideration the complexity of the issues, the time required to complete each task, or whether special skills or services are required. Litigation cost estimates assist clients and lawyers to understand and agree on the steps to be taken and the related cost consequences. It can be an effective risk management tool.

The goals of the task-based litigation cost estimate are as follows:   

  1. enable the client and the lawyer to plan and maintain an efficient and effective litigation strategy 
  2. facilitate effective communication of the tasks and costs of litigation, and any variations from the expected or the norm 
  3. provide each client and law firm with a means to understand and compare the costs of litigation 
  4. provide a foundation for the use of alternative billing arrangements 

The Template is divided into five phases of litigation:   

  1. Assessment of the Matter, Development and Administration 
  2. Pre-trial Pleadings and Motions 
  3. Discovery 
  4. Trial Preparation and Trial 
  5. Appeal 

Each phase consists of a number of tasks. For example, “Examinations for Discovery” consists of all time spent on discoveries, including issuing Notices of Examination, scheduling, planning, and preparing for the examination. The intent is to provide the lawyer and the client with a true picture of the labour cost of each task. Out-of-pocket expenses, such as transcripts, are treated under “Disbursements.”

For each billing period, the lawyer or other professional’s charges are recorded by task. The time charges will accumulate, allowing the lawyer and client to compare at a glance the cost of each phase and each task for the month or for a specified period, and cumulatively for the litigation. Expenses can also be reported on a period and cumulative basis on request.

Lawyers may use the Template to provide minimum cost estimates, or to provide a range of estimated costs.

Lawyers may wish to customize the Template to reflect the area of law in which they practise.

The Template can be prepared for each phase and each task for the whole case (and/or by quarter or other time period). The monthly invoices to clients would then compare that month’s bill and the cumulative total with the cost estimate.

Lawyers may choose to use either the long form Template, which includes definitions of each task, or the short form Template, which sets out the tasks but omits the definitions. Depending on the nature of the matter and the client’s needs, either template can be modified to best serve individual needs.

These Templates are based on the Uniform Task-Based Management System, jointly developed by the American Bar Association Section of Litigation, the American Corporate Counsel Association, and a group of corporate clients and law firms coordinated and supported by Price Waterhouse LLP.

Additional Resources:

Sample Long Form Litigation Cost Estimate Template

Sample Short Form Litigation Cost Estimate Template