Costs agreements and AI confidentiality: what the fee terms of a matter give away in ChatGPT or Claude.

Every client of a law firm signs a costs agreement, and the firm has a statutory duty to disclose its costs as soon as practicable after it is first instructed. The document is long, repetitive and full of legal wording, which is why staff paste it into ChatGPT or Claude to adapt the template for a new client. What goes with it is more than the clauses: the client’s name and matter, what she can afford, who is paying her bills and what the firm charges. This page marks every item in a costs agreement that rule 9 and the Legal Profession Uniform Law bear on, and shows how the same agreement is prepared on Ermos inside the firm.

The costs agreement and disclosure

Signed at the start of a matter, and revisited if the scope or the estimate changes. It is the document the firm relies on to recover its fees.

An invented agreement. Hover or tap any highlighted item for the analysis; the full list is below.

What leaves the firm

1. 1
   The client and her address

   A named individual at a residential address, with a matter. Personal information, and confidential to the client under rule 9. Rule 9 confidentiality guide.

2. 2
   The scope and the employer

   That a named person is bringing a claim against a named employer, and what the firm will and will not do. A client confidence before the application is lodged. Rule 9 confidentiality guide.

3. 3
   The firm’s rates

   Three hourly rates by seniority. Disclosed to each client, but the firm’s full pricing is its own commercial information.

4. 4
   The estimate and counsel’s fees

   What the client is prepared to spend. An estimate of the total legal costs, which the Uniform Law requires the firm to give and to update after a significant change, also tells a reader how the firm values the case. Law Society AI guidance.

5. 5
   A third person who pays

   A sister liable for the fees and given the same disclosure. Under the Uniform Law a person other than the client who owes the firm a legal obligation to pay the costs is an associated third party payer and is owed the disclosure that relates to the costs they must pay. Her details are personal information of a person who is not the client. Privacy Act guide.

6. 6
   The deposit

   An amount and who paid it. Financial information about the client and her sister. Rule 9 confidentiality guide.

7. 7
   The client’s rights

   The statutory statement of rights: to negotiate the agreement and the billing method, to ask for a bill and an itemised bill, and to seek the Legal Services Commissioner’s help. Standard wording with no client in it.

8. 8
   No percentage fee and the settlement estimate

   The firm does not charge by reference to the amount recovered, and gives a costs estimate before a settlement is signed. Standard wording with no client in it.

9. 9
   The limit on what the sister may be told

   The client’s authority to discuss costs with her sister and nothing else. A record of how far her consent goes under rule 9, which a pasted copy disregards. Rule 9 confidentiality guide.

10. 10
    Signatures and dates

    Three names and a date, repeated from elsewhere in the document.

What happens in Frontier Models (ChatGPT, Claude)

• The whole document is transmitted to the provider’s servers. On personal plans the user cannot choose where it is stored or processed, and for the major providers that has generally meant outside Australia, under that country’s legal process. Some business plans offer storage in Australia, but the provider still receives the content.
• On consumer tiers, prompts can be retained and used to train future models.
• The provider’s staff and systems can reach the content under the provider’s own policies.
• Once sent, the firm no longer controls it. Retention and deletion happen on the provider’s terms.

The same document on Ermos

Part of AI data leakage in law firms. See how this works in practice: Contract drafting on Ermos.

Common questions