I gave a presentation at the really well organised Junior Bar Conference this year. The Bar sought questions which the junior barristers who attended wanted answers to. One question, which I thought odd, but which I answered earnestly, was ‘What can a barrister charge for?’ This was my answer:
The starting position is freedom of contract, such that barristers can charge for whatever they can get someone to promise to pay. The costs provisions of the LPUL (the Legal Profession Uniform Law (Victoria)) mostly do not apply in favour of commercial or government clients and commercial and government third party payers. There is newly room, therefore, for much greater creativity in contracting with such clients. Note the application of some provisions about conditional costs agreements and contingency fees, however, even in relation to such clients and such third party payers: s. 170.
What counsel can charge for under a costs agreement is obviously delimited by the scope of the work counsel promises in the costs agreement to do, and the instructor or client or third party payer promises to pay him or her for. It is therefore desirable to my way of thinking, and not impermissible, to have a general costs agreement (e.g. ‘$250 per hour for any work you ask me to do for ExxonMobil or any subsidiary this year’) accompanied by matter-specific costs disclosures. Because of the undesirability of getting costs disclosures wrong, it may be desirable to manage briefs such that multiple discrete ‘matters’ are treated as between counsel and instructor as being brought cumulatively into existence, if that is possible.
In a matter regulated by the LPUL, what counsel can charge in the absence of a costs agreement is more mysterious than it used to be. There is no LPUL equivalent of the Legal Profession Act 2004‘s s. 3.4.19 which was understood to make clear that counsel could charge scale (or on a fair and reasonable basis, if there was no applicable scale) in the absence of a costs agreement so long as it had not been expressly agreed that there would be no charge.
But there are some indicia of a right to charge what is ‘fair and reasonable’ in the special new ss. 172 and 200 sense, e.g. the note to s. 185(1), s. 185(2), and the terms of s. 178. The tradition of the law is also reassuring. Quite separately from s. 3.4.19, the courts have always been willing to infer payment obligations into engagements of lawyers, and indeed say that is the presumption, rebutted only by proof of an express agreement that fees would not be charged: Shaw v Yarranova Pty Ltd  VSCA 55 at  et seq.
The switch from provision for payment on scale to payment on a fair and reasonable basis, where there is no costs agreement, may represent a significant and as yet unappreciated change. Where a comparatively commercially astute client has engaged a lawyer under a costs agreement which is voided for a relatively minor infraction of the disclosure provisions, what is fair and reasonable might be the rates provided for in the costs agreement, reduced to take account of any disadvantage suffered by the client by virtue of the non-disclosure. That might be a lot more than scale. Conversely, in a particularly simple or routine case, run principally by clerks, and not particularly well, scale allowances might be successfully argued to be considerably greater than what is fair and reasonable.
Barristers are much less likely than solicitors to agree to do work associated with legal practice which is not actually legal work, e.g., arguably, acting as an administrator of an estate. Professional costs should not be charged for work which is not legal work, and such fees are not amenable to taxation: Dal Pont, Law of Costs [5.40]. Such work should be invoiced separately.
There is no principle of costs law that barristers may not charge for solicitors’ work, but barristers are obliged by our conduct rules not, in the course of practice as a barrister, to engage in work other than barristers’ work, which is now defined. See conduct rules 11-16.
Express statutory restriction
Scores of Victorian lawyers failed to renew their practising certificates before the end of last financial year and practised uncertificated for a period until they realised. The Legal Services Commissioner refuses to issue practising certificates with retrospective operation. In some such cases it is illegal to charge for work done while inadvertently uncertificated, and fees received in ignorance of the problem must in those situations be refunded. See LPUL s. 10(2).
Barristers cannot charge for preparing or serving a bill, including, apparently, an itemized bill: LPUL s. 191. This is probably a codification of a specific instance of a broader proposition, namely that lawyers should not charge for documents created in their own interest rather than in their client’s interests.
Lawyers cannot charge an uplift if they have breached s. 182’s requirements: s. 185(3). We cannot charge anything at all if we have entered into an illegal contingency fee agreement: s. 185(4). Solicitors may not charge for giving a progress report as to unbilled fees under s. 190.
It seems to be a crime to charge for taking an affidavit: s. 123C(5) Evidence (Miscellaneous Provisions) Act 1958 (Vic.).
Only ‘fair and reasonable’ fees
What the Costs Court will allow on taxation is determined by a string of statutory criteria in ss. 172 and 199 – 200. Until LPUL, just because a fee would not be allowed on taxation did not mean it was illegal to charge it. What is new is that, by s. 172, LPUL actually prohibits charging to clients other than commercial or government clients fees that are not ‘fair and reasonable’:
‘A [barrister] must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are—
- proportionately and reasonably incurred; and
- proportionate and reasonable in amount.’
Breach of s. 172(b) would represent a classic species of unsatisfactory professional conduct or professional misconduct (see s. 298(a)) so any breach of the costs proportionality overarching obligation can be seen clearly to carry potential disciplinary consequences. Note also that ‘Charging more than a fair and reasonable amount for legal costs in connection with the practice of law’ is a specifically enumerated instance of professional misconduct: s. 298(d). Once upon a time, the reference was to ‘grossly excessive’ fees.
A proper costs agreement is ‘prima facie evidence that legal costs disclosed in the agreement are fair and reasonable’ where there has been no disclosure breach: s. 172(4), but, except in the case of a fixed fee costs agreement, what I suppose must be regarded as fair and reasonable are the rates agreed upon, rather than whether it was proportionate and reasonable to do the work at those rates.
Further, s. 173 says:
‘[Counsel] must not act in a way that unnecessarily results in increased legal costs payable by a client, and in particular must act reasonably to avoid unnecessary delay resulting in increased legal costs.’
What all this means is for the moment anyone’s guess. I will predict, however, that fees may be allowed as proportionate in the LPUL sense as between counsel and instructor / client and yet disallowed as between the parties to proceedings as having been charged in breach of the Civil Procedure Act 2010 costs proportionality overarching obligation. Same word, two different statutes, two different meanings.
Traditional common law prohibitions
The law about what will not be allowed on taxation as between lawyer and client (or counsel and solicitor) is not particularly clear. Where it is clear (e.g. to members of the Costs Court and a bunch of full-time costs lawyers) it is not particularly accessible. A rare instance of an attempt to write down this law is to be found in the Queensland Legal Services Commissioner’s 21 November 2013 Regulatory Guide no. 8 ‘Billing Practices: Key Principles’.
One of the key principles asserted by the Commissioner is that lawyers should not charge clients for work done principally for their own benefit, e.g. drafting costs agreements, bills, equitable charges to secure fees, or responses to complaints made to the Legal Services Commissioner.
I know of no authority as to whether lawyers may charge for complying with the disclosure obligations of legislation like the LPUL, but it would be foolish to assume unthinkingly that we can.
Queensland’s Regulatory Guide rails against counsel charging ‘cancellation fees’. See also the discussion in Dal Pont, Law of Costs, at [5.33] et seq. Much about such fees is not particularly clear, but one thing is clear. There is an acute over-confidence, especially amongst old-school counsel, about the propriety of charging daily fees for short appearances or any fees for cancelled or adjourned or not reached appearances, in the absence of an express entitlement to do so within a valid costs agreement.
Cancellation fees may be an instance of ‘unusual expenses’ unlikely to be recovered as between party and party and which are unrecoverable ‘under the rule in Re Blyth’ unless the client has expressly authorised them, knowing of the expense’s likely un-recoverability from the other side.
The traditional reluctance to allow fees for legal research has been relaxed, with specific allowances for research appearing in revised scales of costs which more generally look quite different today from how they were five years ago.
Lawyers cannot charge more than once for the same work. As to what this means, which is not particularly clear, see Bechara v Legal Services Commissioner  NSWCA 369, but c.f. the decision about counsel in the same case: Legal Services Commissioner v Galitsky  NSWADT 48,  NSWADT 153.
Lawyers ought not charge for work done remedying their own negligent errors (which may sometimes be established as part of a taxation), or for ‘useless, unnecessary or excessive costs’. See Dal Pont, Law of Costs, at [5.24] et seq and [5.35] et seq.
- Costs disclosure obligations and consequences of not complying: part 1
- Applications to waive fees are not party party costs
- Winner gets indemnity costs but recovers less when loser proves winner’s costs agreement with his solicitors void
- Here’s why you should comply with the costs disclosure regime
- Nicholson v B&S — the first important Victorian decision about setting aside costs agreements