Solicitor refers costs dispute to VCAT’s legal practice list

In  Robert J Lawyers v Kirby [2006] VCAT 2609 A client complained about his solicitor’s fees. The Legal Services Commissioner was unable to  settle the costs dispute. The solicitor exercised his right to refer the matter to the Legal Practice List of VCAT. Unusual, but sensible, since the Legal Practice Act, 1996 empowers VCAT to give judgment, effectively, for outstanding fees, and that is what he got, after having 15% knocked off for what I would characterise as a rather technical breach of the Legal Practice Act, 1996’s costs disclosure rules.

The solicitor charged about $7,000 for the preparation of a disclosure document, a share sale agreement, a loan agreement and charge, a franchise agreement, and a lease, for a prospective franchisor, described as “a relatively complex commercial arrangement”. He had estimated that the work would cost, in total, $6,250, plus whatever the lease cost at the rates then being charged by partners and employees of the firm (which turned out to be lower, for a legally qualified person than any of the quoted rates). Not only does $7,000 seem pretty reasonable for this work, but it was right on the money of the estimate. Nevertheless, the ingrate client complained. The solicitor, and not the client, exercised his right to have the costs dispute referred to the Legal Practice List of VCAT.
But though only $750 was attributable to the lease over and above the sums of the estimates for the other components of the work, Member Butcher exercised his discretion to knock 15% ($1,000) off the total because no estimate or range of estimates for the lease had been given. The Client must have known that drafting the lease would take a couple of hours. The hourly rates quoted were $375 to $390 for partners, $250 to $325 for senior associates and $100 per hour for support staff. The rate in fact charged was $200. Regrettably, the amount charged for the lease does not appear from the reasons. Why it was thought necessary in these circumstances to exercise the discretion to reduce the amount of the bill for the non-compliance with s. 86(3) of the Legal Practice Act, 1996 is regrettably not explained either. Nevertheless, the solicitor probably came away happy, with a more or less immediately enforceable judgment for 85% of his costs, having avoided the costs of a Magistrates’ Court suit for his fees.

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