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Gross overcharging penalties surveyed

February 29th, 2012 · No Comments

In Legal Profession Complaints Committee v PJO’H [2011] WASAT 95 (S), delivered on 20 February 2012 and not yet on Austlii, the Tribunal helpfully reviewed the penalties awarded in the gross overcharging cases over the years before suspending the respondent from practice for 6 months (the Committee wanted 18).  Two other things are notable about the case.  First, the Complaints Committee’s costs of the matter were $134,000 and were described as reasonable.  Second, the practitioner drafted his character witnesses’ evidence himself.  Didn’t go down well.  The decision was the work of a tribunal of three presided over by Justice Cheney.  Here’s the Tribunal’s survey:

‘In Re Veron; Ex parte Law Society (NSW) [1966] 84 WN (Pt 1) (NSW) 136, the practitioner was struck off following findings of some 65 instances of overcharging clients in respect of personal injury actions. The overcharging was found to be deliberate and there were related charges proved against the practitioner involving dishonesty or fraud in respect to the practitioner’s dealings with his clients and their money.

The court noted that the charges were not only grossly excessive, but were also arbitrary when compared with the work actually done.

Practitioners were also struck off in the decisions in Veghelyi v The Law Society of New South Wales (Unreported, Supreme Court of New South Wales Court of Appeal, 6 October 1995) (Veghelyi) and New South Wales Bar Association v Amor-Smith [2003] NSWADT 239 (Amor-Smith). In Veghelyi, the practitioner was found guilty of grossly overcharging in 11 matters. He was also found guilty of wilful breaches of the Legal Profession Act 1898 (NSW) concerning the handling of client monies, including the payment of costs from trusts without authority. In Amor-Smith, the overcharging related to a single retainer, but involved charges which the Tribunal found to have been nearly five times a reasonable and fair amount for the services provided. The practitioner had aggressively pursued recovery of his fees notwithstanding his appreciation of the excessive nature of the charges.

In Re A Legal Practitioner of the Supreme Court of Western Australia (Unreported, WASC, Library No 970032, 12 February 1997) (BC9700434), the Full Court suspended a Practitioner for five years following findings of six separate instances of overcharging in respect of personal injuries matters. The disciplinary Tribunal, which had transmitted a report to the Full Bench, had concluded that the overcharging had arisen from the system of practice adopted by the practitioner over a long period of time and that the practitioner had been substantially motivated by self-interest. The Full Court noted a history of prior complaints about the practitioner.

In NSW Bar Association v Evatt [1968] 117 CLR 177, a barrister was found to have knowingly assisted and facilitated a systemic course of action by two solicitors (including Mr Veron, the subject of proceedings referred to above). Mr Evatt was found to have knowingly shared in the proceeds of the extortionate charges by charging and being paid excessive fees, and the High Court concluded that the findings demonstrated the practitioner was unfit to be a barrister and ordered that he be disbarred.

In Law Society of Australian Capital Territory and Roche [2002] ACTSC 104, the practitioners were found guilty of systemic overcharging of personal injuries clients through the use of a standard form costs agreement that imposed a standard hourly rate for all fee earners, regardless of whether or not they were legally qualified, standard charges for disbursements, and entitled the practitioners to charge an uplift of up to 30% of their professional fees for ‘care, skill and consideration’. The solicitors’ conduct was described as ‘extortionate’ [67] and as ‘an exercise in calculated greed’ [89]. A period of 18 months suspension from practice was imposed. The Court regarded as a significant mitigatory factor that the practitioners offered to (and were subsequently ordered) to make substantial payment to establish a compensation for the benefit of their clients who had entered into the standard costs agreement.

Those decisions demonstrate the very serious view taken by the courts or other disciplinary authorities in relation to significant overcharging by legal practitioners.

A decision in which suspension was not ordered is NSW Bar Association v Meakes [2006] NSWCA 340. The disciplinary Tribunal in that matter had imposed a public reprimand, having concluded that the practitioner was guilty of gross overcharging by charging a client in excess of 66% more than a reasonable fee and had characterised that conduct as unsatisfactory professional conduct. The Court of Appeal disagreed with that characterisation, and concluded that the gross overcharging amounted to professional misconduct. Tobias JA said at [85] that ‘At its highest, the respondent’s conduct was dishonest; at its lowest, it was highly irresponsible’. The Court of Appeal declined, however, to alter the penalty imposed by the Tribunal given that six and a half years had passed since the conduct occurred, the finding of professional misconduct would seriously reflect on the practitioner’s reputation, a refund had been made to the client, and the practitioner would pay the costs of the appeal.’

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Tags: Costs agreements · gross overcharging · Misconduct · Professional fees and disbursements