In theory, when a lawyer does work for a client, the costs which they charge are a matter of agreement between the lawyer and client, and are subject to market forces, like other contracts for supply of goods or services. In practice, a number of factors affect the fees the lawyer can charge. Many lawyers do not advertise the fees they charge, which makes comparison of prices difficult. In many types of litigation, the losing party may indemnify the client for some of the costs (see: "Costs in court proceedings", below).

Under the LP Act, all lawyers must provide detailed written information to the client prior to the lawyer being engaged, and provide further information as soon as the client has agreed to engage the lawyer's services. If you do not receive this information, you should insist on it. You may also have the right to have your costs reduced as a penalty for the failure to supply it.

Bill of Costs: A solicitor's bill of costs is in two parts. First, there is the charge for the solicitor's professional services in performing the particular work. This is known as the solicitor's professional costs or profit costs. Second, there are disbursements, which are amounts paid to third parties on the client's behalf, for example for a court appearance by a barrister, for court fees, or for a rates certificate from a local authority.

The professional costs charged by a solicitor can be worked out in a number of ways, as follows.

Item remuneration: A fee is charged for each item of work performed in a particular matter. For example, fixed amounts will be charged for issuing a summons, preparing an affidavit, making a photocopy, etc., and these amounts will be added together to make up the total amount charged. This way of charging is common in litigious matters. The amount that can be charged for each item is set out in a court's scale of costs, and may vary according to which court the case is heard in.

Lump sum fees: The fee charged will be based on the entire matter in which the work is performed, as opposed to each task carried out. For example, a set fee is chargeable for a dissolution of marriage in the Family Court. Lump sum fees are becoming more common in litigious matters, where they are fixed in the applicable rules of court.

Time costing: A set amount is charged for the time the solicitor spends working on a particular matter. The amount charged per hour will vary according to the seniority or experience of the solicitor. Typically, the time of an employee solicitor will be charged at about $150 to $250 per hour, the time of a partner at $300 to $500 per hour.

Conditional fees (including no-win, no-fee): A lawyer and client can agree that the client will pay the lawyer's costs only if the action is successful. The agreement may also provide for the successful litigant to pay up to 25% more than the normal fee (s.3.4.28 LP Act). This is called a "conditional fee arrangement". The lawyer cannot be paid an agreed percentage of the total damages awarded to a successful client; such fee arrangements are not lawful in Victoria (s.3.4.29).