I have a broomstick in my office.   If I were to reach up and whack the ceiling it would be Justin Castellan who might jump out of his seat, one storey up.  He has started a defamation blog called Defamation Watch.  It’s entertaining and has a useful page ‘Defamation; The Basics’. Welcome to the blogosphere.

From the latest newsletter of Queensland’s Legal Services Commissioner, we learn that he is tentatively of the view that incorporated legal practices are required to give itemised bills within 7 days of a ‘consumer’ client’s request.  Certain others may be in other situations as well, by virtue of the extended operation of the Australian Consumer Law as a law of the Commonwealth provided for by s. 6 of the Competition and Consumer Act 2010 (Cth) (good luck working out what that provision means in a hurry). I raised this possibility back here, and have been meaning to get around to working out exactly how s. 161A of the Fair Trading Act 1999 (Vic) operates ever since.  Section 161A is the Victorian analogue of the Queensland provision s. 55 referred to below.  Kudos to the Commissioner for putting out for comment a discussion draft of a future regulatory guide ‘The Application of the Australian Consumer Law to Lawyers’.  See also the ACCC’s publication ‘The Professions and the Australian Consumer Law’.  The Commissioner’s tentative analysis is reproduced below.  What I want to know next is what the consequences are if s. 101 of the Australian Consumer Law is breached. [Read more →]

Liu v Barakat, unreported, District Court of NSW, Curtis J, 8 November 2011 is the latest in an ongoing scandal in NSW in relation to overcharging by a prominent personal injuries practice which traded as Keddies, but has subsequently been gobbled up by a publicly listed company.  Many are unhappy at the strike rate of the NSW Legal Services Commissioner in the whole affair (the sole remaining disciplinary prosecution is two and a half years old and not heading to hearing until April next year), but now the District Court has given judgment in a case finding what appears to amount to fraudulent misrepresentation in relation to the billing of about $69,000 (reduced on a ‘but say’ basis to about $64,000) in a personal injuries case where liability was admitted before Keddies got in the harness, and where the proper charge was about $21,000.  Justinian‘s Richard Ackland has the background and latest here.

The partnership apparently bungled the settlement of a taxation allowing the claim to slip through to judgment, and Judge Curtis of the NSW District Court ended up ordering Keddies to repay to the client the difference between what they charged and what they were entitled to charge.  The reasons provide food for thought for those out of time to commence taxation because the judge found that the bills had within them implied representations that the amounts billed were properly chargeable at law.  He reduced the fees chargeable by Keddies to the amount in fact properly chargeable at law, something which would ordinarily be achieved in a taxation.  Such logic might be employed in many cases in the 5 years after a bill during which the client is out of time for taxation but within the 6 year limitation period for prosecuting a misleading and deceptive conduct claim.

The case will be seized on by opponents of hourly billing, and perhaps properly so (the first 6 minutes or part thereof charged for sending a pro forma welcome letter which required only the insertion of the client’s name is an example of why minimum charges of 6 minutes are abhorrent when applied literally, for example).  But it really appears to be a case about simple dishonesty (by whom is not made clear), because in the main this was not a case where the clients were billed outrageously albeit according to the terms of a contractual agreement which bound them.  I say that because if there was any innocent explanation advanced by the Keddies partners for the conduct the most obvious explanation for which was someone’s dishonesty, it was not recorded in the judgment.  This was a case where, in the main, work was charged for which was not done (most likely as in the case of the second 6 minutes or part thereof billed for the welcome letter), or not done by a person whose contractually agreed rate warranted the charge for the time spent.  For example:

• A secretary was impermissibly charged at partners’ rates ($460 per hour).
• One hour’s work was charged on 4 October 2005 for drafting the costs agreement which had been signed on 30 September 2005, and an associated explanatory document at  senior litigation lawyer rates, when in fact all that was required was the insertion of the client’s name.  The Court held that the rate which would have been properly chargeable under the costs agreement had that been the appropriate method of billing was 6 minutes of a secretary’s time at secretaries’ rates. No argument appears to have been advanced that this was not work done for the client, but the lawyers’ own costs of entering into a contract to which they were a party and which they wished to propose the terms of.  There is no record of any evidence having been given that the time entry was a mistake, and it is hard to see how the recording of time beyond (at most) one block of 6 minutes or part thereof could have been anything other than outright dishonesty on at least someone’s part within Keddies, even if this activity was properly taken to be work engaged in by the solicitors on the client’s behalf.
• A charge for two blocks of 6 minutes or part thereof was charged at the secretaries’ rate for reading a letter advising the time, date and place of a medical appointment, a further charge of two such blocks for ‘considering’ that letter, and a further charge of two such blocks for advising the plaintiff by letter of that information.  The total bill for work which it is hard to see taking 5 minutes of a secretary’s time was $108 (for which incidentally, just to keep this real, you can currently have a linguine with fresh sardines, pine nuts, currants and saffron, a gravlax, three glasses of Italian prosecco, a chocolate pudding with peanut butter ice cream and a strawberry mousse with jelly and meringues at Gill’s Diner).
• The plaintiff was charged $184 (4 blocks of 6 minutes or part thereof at partner rates) for reading, then considering, a letter which said ‘We enclose authority for execution by your client to enable us to obtain documentation from the Department of Immigration and multicultural and indigenous affairs.  Please have your client sign the authority and returned to us as soon as possible.’
• The plaintiff was charged $131 (3 blocks of 6 minutes or part thereof at partner rates) for reading an email the non-formal parts of which read ‘Rcv’d’.  (What a freaking joke!) She was charged the same amount for reading the email to which that was a reply, the non-formal part of which read ‘I refer to our telephone call this morning.  I have been directed by Assessor J Snell, to inform CARS: 1.  The CARS hearing date on 14 September 2005 has been vacated — please cancel the interpreter arranged by CARS. The CARS hearing date has been rebooked for 17 November 2006 at 10 am — please rebook a Mandarin interpreter.’

It will be interesting to see the response of the police, the NSW Legal Services Commissioner and the Council of the NSW Law Society to the judgment, especially in light of the fact that the plaintiff’s complaint to the Commissioner was officially withdrawn, a fact which did not of course prevent the Commissioner from continuing to investigate it: s. 512 Legal Profession Act 2004 (NSW).  Somewhat surprisingly, I learn from that section, that the withdrawal of the complaint also does not prevent the complainant from re-lodging it: sub-s. (5). [Read more →]

Ireland as Executor of the Estate of the Gordon v Retallack [2011] NSWSC 1096 is the subject of this sister post.  I thought this paragraph might also come in useful for litigators and costs lawyers:

’19.  The fault is not however entirely that of [the solicitors]. Professional experts have an obligation to behave promptly, frankly and openly when or if they become aware that their estimate of fees and expenses is likely to be materially exceeded. They must inform their principal and provide an opportunity for an informed choice to be made – whether or not to proceed with the engagement or to re-negotiate its terms and extent. It is commercially unacceptable for a professional expert to remain silent, to complete the work and then to present a bill significantly in excess of the original estimate – as if it were a fait accompli. Such conduct is unacceptable whether it is merely forgetful, or just sharp.’

The Legal Services Commissioner’s office and its predecessors have apparently long taken the view that the obligation in s. 86 of the Legal Practice Act, 1996 to provide certain costs disclosures to clients at the time of retainer is imposed on the solicitor with responsibility for the file regardless of whether or not the retainer is with them personally, with a firm of which they are a member, or with a company of which they are a director.  The Law Institute had a go at a solicitor on this basis in 1992 and 1999: Victorian Lawyers RPA Ltd v Vernon, unreported T0070 of 2002, 17 May 2002, Registrar Howell and Victorian Lawyers RPA Ltd v GAVS [1999] VLPT 4. Those attempts failed, but not squarely on the basis that the charges were incompetent for having been brought against the wrong person.  Now the question has been fully argued and decided contrary to the Commissioner’s position. According to VCAT, the obligation was prima facie imposed exclusively on the retained entity. In the case of incorporated legal practitioners, there were such provisions under the 1996 Act attributing liability to directors, but not non-director employees.  Quite amazing really that this point was first squarely decided 15 years into the 1996 Act’s operation. [Read more →]

Update: See now Doulman v ACT Electronic Solutions Pty Ltd [2011] FMCA 232.  A solicitor accepted instructions from a fellow solicitor to recover fees allegedly owing by a client.  The proposed plaintiff was a company which the fellow solicitor had until shortly before the retainer been authorised to represent.  The solicitor, acting honestly, accepted these instructions from the fellow solicitor at face value: the proposed plaintiff was well known to him.  He found out only far down the track that the proposed plaintiff had been sold by the fellow solicitor before the instructions were given so that the solicitor had instituted litigation and bankrupted the defendant when he had no instructions to do so from the company.  The proceedings were a nullity.  Everything had to be unravelled.  The solicitor was ordered to pay the costs of this exercise on a party-party basis: he should have done a company search or sought written confirmation of the fellow solicitor’s authority to bind the company. There is a one-paragraph note of the case at ALJ vol 85 no 9 (September 2011) at 537.  Thanks to the Law Institute Library through the LIJ’s ‘In Reference’ page for bringing the case to my attention.

Original post: I had to look hard recently at the cases about lawyers’ obligation to have proper instructions before commencing proceedings on behalf of others. Pretty obvious really, but the grey area exists where lawyers receive instructions from agents of the client, especially where the agent is specifically authorised to retain solicitors, but not specifically authorised to commit their principal to litigation.  Victorian disciplinary tribunals have dealt with such conduct by meting out penalties ranging from a fine of $1,000 in 2011 money to recommending that the practitioner be struck off the rolls.  As this astonishing divergence of dispositions attests, everything depends on the precise facts and the motivations of the practitioners.

Further to this related post, what follows is my case notes of the three Victorian disciplinary decisions I am aware of dealing with this form of conduct warranting discipline.  Are you aware of any similar cases in Victoria or elsewhere? [Read more →]

Allison v Tuna Tasmania Pty Ltd [2011] TASSC 52 is a case decided on the rarest ground for restraining a lawyer from acting, namely that ‘A fair minded reasonably informed member of the public would conclude that the proper administration of justice requires that the lawyer be prevented from acting in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.’ The leading case in Victoria is Grimwade v Meagher (1995) 1 VR 446, which was relied on by Holt AsJ.

A Queensland barrister acted for the plaintiff in Tasmanian litigation on a no-win no-fee basis.  He was in financial difficulties, owing a lot of money.  He had a social relationship with the plaintiff and stayed at his home.  He arranged to meet the defendant alone over lunch without the consent of anyone in the defendant’s legal team. This was contrary to r. 51 of the Queensland 2011 Barristers’ Rules, and amounted to ‘misconduct’. The barrister told the defendant, in the 20 minute meeting, that he thought the plaintiff would recover about $25 million from the defendant but he could convince the plaintiff to settle for $2 million.  He said initially he did not involve the defendant’s solicitor because he did not trust him, without advancing any rational basis for the lack of trust, but later said that he let his emotions get the better of him.  In combination these factors proved that the barrister lacked the independence and objectivity necessary to represent the plaintiff without bringing the administration of justice into disrepute, and the Supreme Court of Tasmania restrained him from acting further.

The application was made within the original litigation, and the order was as follows:

‘[The barrister] is to provide no further legal services, paid or unpaid, direct or indirect, in connection with the action.’

Ireland as Executor of the Estate of the Gordon v Retallack [2011] NSWSC 1096 is a decision by a trial judge disallowing certain of the plaintiff’s solicitors’ costs as between solicitor and client on the basis that they were unnecessarily incurred.  Justice Pembroke exercised power under the Civil Procedure Act, 1995 (NSW) and the Court’s inherent jurisdiction where:

’13.  There was no need for expert evidence to resolve any legitimate question of construction arising out of Clauses 4, 5 and 16 of the will. There appeared to be a misapprehension that the resolution of the questions of construction would be assisted by evidence of the various commercial methodologies that might be utilised to achieve the testator’s objective. This was simply woolly thinking. On several occasions, senior counsel for the first defendant submitted, with admirable restraint, that the case could and should have been conducted on one document, namely the will. He was right of course. That would have been the conventional approach. Instead, I was presented with a plethora of highly complex and unnecessary accounting and taxation evidence. In addition, a great deal of irrelevant factual evidence was adduced – for no purpose and to no avail.’

His Honour made the following observations in relation to the obligations of solicitors acting for executors of deceased estates: [Read more →]

A recent decision of the Supreme Court’s Costs Court means that solicitors have only a non-extendable 60 days in which to seek taxation of counsel’s fees, even though clients and third party payers have an extendable 12 months in which to seek taxation of the solicitors’ fees, including disbursements such as counsel’s fees: Kong v Henty Jepson & Kelly Pty Ltd, unreported, Associate Justice Wood, 4 April 2011.  The same result was reached in I.J.R. Homes v MDM Legal Services SCI, unreported, Associate Justice Wood, 12 September 2011, and the Costs Judge’s comments in that order are reproduced at the end of this post too.  Unless the barrister may be joined to and bound as against the solicitor to the outcome of the taxation of the solicitors’ fees initiated after the expiry of the time allowed to the solicitor for seeking taxation of the counsel’s fees, the solicitors run the risk of the client being liable to them only for the taxed down amount of counsel’s fees while the solicitors remain liable to the barrister for the full whack.

And the solicitor cannot get around the problem by seeking to procure their client to seek taxation of the counsel’s fees directly against counsel, because, the Supreme Court says, clients have no standing to do so.  Though the Court has a discretion under s. 3.4.42 to join ‘concerned law practices’ and order that they be bound by the outcome, it did not make such orders in the Kong Case joining the barrister, though for reasons peculiar to that case, the Court’s reluctance to do so may not be as great in future. All of that applies where the traditional relations between client, solicitor and counsel are entered into; where the client has a costs agreement with the barrister, things are different, and less problematic for solicitors.

But for the fact that solicitors tend to disregard the law of costs and carry on as they always have, no matter what the law is and how it is changed, four reactions might be expected in Victoria and the many other states with analogous statutory provisions:

1.   Solicitors will commence prophylactic applications for taxation of counsel’s fees within 60 days after service on them of the fee slip, in case the client later seeks to tax the solicitors’ bills (but they may well have to pay the costs of doing so out of their own pockets);

2.  Solicitors will require counsel to contract directly with clients in relation to fees, which many counsel will not be prepared to do;

3.  Solicitors might seek to contract out of clients’ rights to review counsel’s fees as disbursements on their bills, or to contract out of their rights to review counsel’s fees as disbursements on their bills, once their right to seek review of counsel’s fees has expired, but that is likely to be effective only where the clients and third party payers are ‘sophisticated’ within the s. 3.4.2 meaning of that term, since agreements about costs which purport to contract out of normal (as opposed to ‘sophisticated’) clients’ and/or third party payers’ rights to taxation are void: see ss. 3.4.26(5) and 3.4.31; or

4.  Solicitors might make it a term of their costs agreement with counsel that counsel indemnify the solicitors against any difference between the amount paid by the solicitors to the barrister and the amount payable by the client to the solicitors in respect of those same fees, but any such agreement would have to have a degree of sophistication, to avoid counsel taking the rap for a solicitor’s default (such as where counsel provide adequate information for the solicitor to provide disclosure of counsel’s fees to the client, but the solicitor fails to do so, with the result that the solicitor’s taxed costs, including disbursements such as counsel’s fees, are reduced under s. 3.4.17(4).

How are similar problems treated in other states’ and territories’ taxing and review jurisdictions?

[Read more →]

Update, 25 September 2011: Recent American cases on the permissibility of regretted settlement claims for professional negligence are usefully collected at this post on Professor Alberto Bernabe’s Professional Responsibility Blog.  While you’re there, check out the post about the attorney who must show cause why he should not be struck off on account of the impenetrable opacity of his written submissions.  The Federal appeals court who referred him to the stipes described his writing as ‘little more than gibberish’: judgment here.

Original post: The application of the principles of advocates’ immunity has long been unclear in relation to cases where the negligence is said to have led to the acceptance of an unfavourable settlement or the non-acceptance of a favourable settlement. Below is a survey of the cases on point.

There are certainly older cases which have held that advocates’ immunity may apply to advice to settle proceedings, e.g. Kelley v Corston [1997] 4 All ER and Biggar v McLeod [1978] 2 NZLR 9.  As a solicitor, I had several successes in the predecessor to VCAT’s Legal Practice List, the Legal Profession Tribunal, obtaining judgment for the defendant lawyers in regretted settlement suits. [Read more →]