Lawyers who are ‘law practices’: a distinction between the private and the professional hats?

The other day, the Supreme Court granted an application to dismiss a summons for taxation on the basis that, as a solicitor in sole practice, the applicant was a ‘commercial client’, to whom the costs provisions of the LPUL (including the right to seek taxation as between solicitor and own client) did not apply.

In the course of doing so it rejected an argument that she was not a commercial client because, in seeking representation in her matrimonial dispute, she was not wearing her professional hat; she was just a woman who needed a family lawyer who happened to be a solicitor.

Often enough, I come across lawyers who see distinctions between themselves and their law practices, even though they are sole traders. I have seen individuals purport to retain themselves qua law practice, and think they have to give costs disclosure to themselves. Sole traders sometimes refer in correspondence to ‘our Mr Soandso’, writing in the first person plural. One memorable former practitioner, who worked out of his home and had no staff, called his firm ‘Horak, Frankovich, Rose & Cross, Lawyers and Public Notaries’.

One of the great under-appreciated differences between the Legal Profession Uniform Law and its predecessor the Legal Profession Act 2004 (Vic.) is that whereas under the latter, ‘sophisticated clients’ were not owed disclosure obligations, the costs provisions of the LPUL do not even apply to ‘commercial and government clients’, as VCAT explained to the Victorian Legal Services Commissioner in another case won by a client of mine this year. So liquidators and large proprietary companies and public companies’ subsidiaries, for example, cannot seek taxation of their lawyers’ fees under the LPUL. Note, though, that lawyers who are not sole practitioners (employees, a partner of a firm, a director of an incorporated legal practice) are not ‘law practices’ and so are not ‘commercial and government clients’ (unless of course the true client on whose behalf they engage the lawyer is the law practice: their employers, their partnership, or their incorporated legal practice).

My research assistant and I could only turn up very limited authority on the hat question to assist the Supreme Court, perhaps because not many people have tried it on. As is sometimes frustratingly the case, I stumbled upon an authority pretty well on point soon after the Supreme Court’s decision: NSW Architects Registration Board v Cserhalmi [2006] NSWADT 110.

There, the architect asserted that the disciplinary tribunal he was being prosecuted in did not have jurisdiction because the disciplinary complaint which started things off had not been verified by a solicitor or a fellow architect. The complainant happened to be a barrister, and lawyers’ complaints were exempt from the verification obligation. The architect said that the relevant legislation should be interpreted as exempting lawyers’ complaints only when the lawyers were complaining qua lawyer, not qua domestic user of an architect in their private life. The Tribunal gave the argument short shrift at [68] et seq.

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