Lawyer Fees and Costs

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This article is a topic within the subject Law, Lawyers and Society.

Required Reading

Y. Ross & P. MacFarlane, Lawyers’ Responsibility and Accountability: Cases, Problems and Commentary, Fourth Edition (Butterworth’s, 2012), pp. .

Balachandran, R. (2007) A summary of the Legal Profession Further Amendment Act 2006, Law Society Journal, April, p. 53 (pp. 76-79)

[1] Disclosure

  • s 4: A client is a person to or for whom legal services are provided
  • s 302A(1)(a-b): Third-party payers are those who pay but do not receive the service. Third party payers can be associated (i.e. they are liable to the practice) or non-associated (i.e. they are liable to the client). In such cases disclosure is required for associated third party payers
  • s 318A: Disclosure must be made regarding all the relevant details relating to costs
  • s 311: Disclosure must be made in writing

Notification of the client’s rights

  • s 309(1)(b)(i-iii),(g),(i),(j),(l): Two prescribed forms notify clients of their rights: the disclosure document and the bill.
  • s 302: A sophisticated client (i.e. one who does not require) does not require notification

Uplift fees

  • The law practise must disclose its uplift costs and why they are required

Ongoing obligation to disclose

  • s 316: Ongoing obligation to disclose any relevant or substantial change ASAP, e.g. change of solicitor, length of trial, offers of compromise, witnesses and briefing etc.

Exceptions to disclosure

  • s 312: Not required where fees are $750 or less excluding GST
  • Not required with sophisticated clients

Failure to disclose

  • s 317(3): Law practise cannot take recovery proceedings in event of failure to disclose and clients are indemnified of costs.

Costs agreements

  • s 322 (1)(d): Can be made with clients or associated third party payer
  • s 323(4)(b): Conditional costs agreements relating to independent legal advice or signing are not applicable to sophisticated clients.
  • s 322(6): Costs agreements can be set aside by a client or third party payer
  • May be assessed by a costs assessor

Contingency fees

  • s 325: … in non-litigious matters, fees may be calculated by reference to the value of any property or of any transaction involved in the matter to which the agreement relates
  • s 324: No uplifts in damages.

Bills of costs

  • s 309(1)(b)(iii): Client or third party payer could request an itemised bill at any time. If requested, the practise must provide it within 21 days. The law practise must provide it free of charge and in paper (except for sophisticated clients).

Forms

  • s 309(1),(3): Must contain rights to negotiate costs agreements, bills and itemised bills, progress reports and legal avenues available and client’s rights to accept offers into costs agreements

Costs assessments

  • s 349(A): In regards to costs agreements, a client is only defined as a person to whom or for whom legal services are, or have been, provided.
  • s 350: Assessments may be applied for by clients and/or third party payers within 12 months after request for payment.
  • Cannot be made by sophisticated clients
  • Law practise is bound by costs assessment.
  • Costs assessor must assess any disputed costs/amounts

Law Society of NSW, Notes for completing the Standard Costs Disclosure Document

  • [2] Clients should be reminded that estimates are just that – estimates.
  • Disclosures apply to the practice and Family Law Act matters – but not the Family Court
  • Disclosure must be made to associated third party payers
  • Must be made before or ASAP after the law practice is retained
  • Not required for sophisticated clients
  • Clauses of the Document correspond and comply with relevant legislation:
  1. GST legislation
  2. S 309(1)(a)
  3. S 309(1)(c)
  4. S 309(1)(d)
  5. S 309(1)(e)
  6. [mentions mediation]
  7. S 309(1)(h)
  8. S 309(1)(b)(iv)
  9. S 310
  10. [Litigious matters]
  11. n/a
  12. S 309(1)(f)/309(2)
  • Clauses of the Costs Agreement also comply with relevant legislation

NSW Bar Association v Meakes

  • [3] NSWBA accused barrister Meakes of professional misconduct by overcharging, failure to provide a fee agreement and failure to provide a disclosure.
  • Meakes agreed that he overcharged but denied the professional misconduct allegations
  • Barrister Robinson found Meakes’ costs to be almost double the required charge
  • Issue: Did overcharging constitute professional misconduct?
  • … gross over-charging may of itself constitute professional misconduct (Veghelyi v The Law Society of New South Wales (1995))
  • In my opinion, in either case it was conduct which in the circumstances would be reasonably regarded by barristers of good repute and competency as disgraceful or dishonourable

Changing the billable hour, Law Society of NSW Journal, July 2003, pp. 2-3 (95-6)

  • An integral part of a viable, healthy and independent legal profession is the provision of fair and reasonable remuneration for qualified practitioners who engage in legal work
  • It is accepted custom for barristers to charge per hour – but sometimes the required billable hours are excessive and/or unrealistic
  • One lawyer mentioned If not for time sheets I would stay in practice many more years
  • Specialisation develops by experience – why instead charge a lump sum fee? It is already done by pharmaceuticals, bankers, accountants, etc. based on their expertise.
  • Fees based on success of outcomes?
  • May encourage efficiency and be more rewarding

The Council of the Law Society of New South Wales v Foreman(1994)

Facts:
  • Solicitor Foreman was found guilty of professional misconduct and fined $20,000 as well as having her name removed from the Roll
Issues:
  • Foreman tampered with time sheets to inflate her records for the sake of maintaining her department within her firm. However her deceptive conduct extended past firm records and to her partners, counsel, and even the Family Court
  • The Court is appointed to retain integrity and standards in legal practice
  • Kirby P: The removal of Foreman from the bar is appropriately punitive and for the protection of the public, however there is an element of double jeopardy … [in that] the practitioner has to face, for a second time, the scrutiny of a body which supervises the legal profession
  • Essentially, this is the case of one major blunder in her reputation instead of a notorious trend of deception
  • Kirby thus argues that while the removal from the right to practice is appropriate, the fine is inappropriate (but this is a dissenting judgment)

Veghelyi v The Law Society of New South Wales (1995)

Facts:
  • Veghelyi was found guilty of gross overcharging and misappropriation of professional costs, fined and was struck off the Roll
Issues:
  • Mahoney JA: It is, in my opinion, settled for this Court that gross over-charging may itself constitute professional misconduct
  • Clients are, or may frequently be, in a vulnerable position vis-à-vis their solicitors; the presumption of undue influence is [based on that] clients … frequently place trust in their solicitors … solicitors are, on the other hand, informed, or in a position to inform themselves , of what work may be required and what are fair and reasonable charges
  • Cf. Legal Profession Act 1987, S 208G.
  • An argument that professional misconduct should not be based upon errors of judgment, written costs agreements or excessive view of his/her expertise, is credible but must be seen in light of the changing nature of the legal practice.
  • There are limits to these calculations and errors – there are degrees to which this must be found overtly excessive, as in this case.

End

This is the end of this topic. Click here to go back to the main subject page for Law, Lawyers and Society.

References

Textbook refers to Y. Ross & P. MacFarlane, Lawyers’ Responsibility and Accountability: Cases, Problems and Commentary, Fourth Edition (Butterworth’s, 2012).

  1. Textbook, p. 76
  2. Textbook, p. 86
  3. Textbook, p. 92
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