You may have heard about the RBA earlier this year reducing its cash rate from 4.35% to 3.85%:
This decision affects the interest lawyers can charge on outstanding bills.
s 321(3) of the Legal Profession Act 2007 provides that:
“(3) A law practice may not charge interest under this section, including under a costs agreement, at a rate that is more than the rate prescribed under a regulation.”
s 308 of the Legal Profession Act 2007 relevantly provides that:
The law practice must disclose to the client under this division…
the rate of interest, if any, that the law practice charges on overdue legal costs, whether that rate is a stated rate of interest or is a benchmark rate of interest as mentioned in subsection (5);…
(5) For subsection (4) (e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is stated or decided from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available.
s 72 of the Legal Profession Regulation 2017 provides that:
72 Rate of interest on unpaid legal costs—Act, s 321
(1) For section 321 (3) of the Act , the prescribed rate of interest is the rate that is equal to the prescribed rate as at the relevant date.
(3) In this section—
“prescribed rate” means the rate prescribed under the Civil Proceedings Act 2011 , section 59 (3) for a money order debt.
“relevant date” means the date the bill, to which the interest relates, was given by the law practice concerned.
s 59(3) of the Civil Proceedings Act 2011 provides that:
“(3) The interest is payable at the rate prescribed under a practice direction made under the Supreme Court of Queensland Act 1991.”
Rule 283(7) of the Uniform Civil Procedure Rules provides that:
“If the plaintiff elects to accept interest at a rate not higher than that specified in a practice direction for any period mentioned in the direction, the registrar may award interest under the direction, whether or not the defendant has paid the debt or liquidated demand after the proceeding is started.”
Supreme Court Practice Direction 7 of 2013 – Interest rates, which is on your computer, relevantly provides that:
The following is the rate applicable to a money order debt:
(a) in respect of the period from 1 January to 30 June in any year, a rate six percent above the cash rate last published by the Reserve Bank of Australia before that period commenced; and
(b) in respect of the period from 1 July to 31 December in any year, a rate six percent above the cash rate last published by the Reserve Bank of Australia before that period commenced.
s 321(3) of the Legal Profession Act 2007 provides that:
“(3) A law practice may not charge interest under this section, including under a costs agreement, at a rate that is more than the rate prescribed under a regulation.”
s 308 of the Legal Profession Act 2007 relevantly provides that:
The law practice must disclose to the client under this division…
the rate of interest, if any, that the law practice charges on overdue legal costs, whether that rate is a stated rate of interest or is a benchmark rate of interest as mentioned in subsection (5);…
(5) For subsection (4) (e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is stated or decided from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available.
s 72 of the Legal Profession Regulation 2017 provides that:
72 Rate of interest on unpaid legal costs—Act, s 321
(1) For section 321 (3) of the Act , the prescribed rate of interest is the rate that is equal to the prescribed rate as at the relevant date.
(3) In this section—
“prescribed rate” means the rate prescribed under the Civil Proceedings Act 2011 , section 59 (3) for a money order debt.
“relevant date” means the date the bill, to which the interest relates, was given by the law practice concerned.
s 59(3) of the Civil Proceedings Act 2011 provides that:
“(3) The interest is payable at the rate prescribed under a practice direction made under the Supreme Court of Queensland Act 1991.”
Rule 283(7) of the Uniform Civil Procedure Rules provides that:
“If the plaintiff elects to accept interest at a rate not higher than that specified in a practice direction for any period mentioned in the direction, the registrar may award interest under the direction, whether or not the defendant has paid the debt or liquidated demand after the proceeding is started.”
Supreme Court Practice Direction 7 of 2013 – Interest rates relevantly provides that:
The following is the rate applicable to a money order debt:
(a) in respect of the period from 1 January to 30 June in any year, a rate six percent above the cash rate last published by the Reserve Bank of Australia before that period commenced; and
(b) in respect of the period from 1 July to 31 December in any year, a rate six percent above the cash rate last published by the Reserve Bank of Australia before that period commenced.
Therefore, from 1 July 2025, the maximum interest rate lawyers can charge on unpaid bills is 9.85%pa.
Author adminPosted on Categories Professional fees