The costs disclosure provisions in statutes regulating the profession are not codes

In Nicholson v B&S [2000] VLPT 28, the Legal Profession Tribunal’s Registrar Howell considered whether the costs disclosure provisions of the Legal Practice Act, 1996 constituted a code which demonstrated an intention of the parliament to displace the common law. ‘Nope’, he said:

‘I have considered whether the provisions of Division 1 of Part 4 of the Legal Practice Act 1996 created a code for the provision of information to clients and thus relieved legal practitioners from their previous obligations to provide information. I have concluded that Division 1 is not a code because there is nothing in Division 1 which indicates to me that the legislature intended to change the position at common law or to relieve practitioners of their fiduciary obligations.’

The whole of the relevant passage said:

‘There is a requirement at common law that a costs agreement between a client and his or her solicitor be both fair and reasonable: Weiss v Barker Gosling (1992-93) 16 Fam LR 728, where the following passage appears @ 758:

“… there is, in my view, a requirement at common law that a costs agreement between a solicitor and client be fair and reasonable. Although that expression may be a composite one, it appears generally to have been approached in the cases on the basis that “fairness” relates to the point of entry into the agreement whilst “reasonableness” relates to the terms of the agreement itself.”

The position at common law is similar to various equitable obligations owed by a solicitor to a client, as appears from the following passage in Law Society of NSW v Foreman (1994) 34 NSWLR 408 @ 435:

“But if costs agreements of this kind are to be obtained from clients, it is necessary that the solicitor obtaining them consider carefully her fiduciary and other duties, that she be conscious of the extent to which the agreements contain provisions which put her in a position of advantage and/or conflict of interest, and that she take care that, by explanation, independent advice or otherwise, the client exercises an independent and informed judgment in entering into them.”

The decision in Re Morris Fletcher & Cross’ Bill of Costs [1997] 2 Qd 228 is to much the same effect, although it also makes the important point that the information to be disclosed in order to satisfy a fiduciary obligation will vary from case to case. The type of matter, the likely amount of the costs, and the client’s experience of litigation are but a few of the factors likely to affect the extent of a solicitor’s fiduciary obligation to make disclosure about a proposed costs agreement.

Because of these fiduciary obligations, I have considered whether the provisions of Division 1 of Part 4 of the Legal Practice Act 1996 created a code for the provision of information to clients and thus relieved legal practitioners from their previous obligations to provide information. I have concluded that Division 1 is not a code because there is nothing in Division 1 which indicates to me that the legislature intended to change the position at common law or to relieve practitioners of their fiduciary obligations.’

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