Client joy to abound in draft national profession legislation’s costs provisions

For a long time after the new national profession legislation is introduced, if it is introduced in its present form, many lawyers are likely to find themselves restricted to charging scale, and not being able to recover their costs until there has been a taxation in the Costs Court, even when they have negotiated a costs agreement.

Reproduced below is that part of the proposed national law regulating lawyers that relates to legal costs.  The whole draft law may be downloaded here, and it is hoped that this will be the final version to be adopted by Victoria, New South Wales, Queensland and the Northern Territory, home to about 85% of Australia’s lawyers.  Truly scary stuff:

  1. There is an obligation that all legal costs be ‘no more than fair and reasonable in all the circumstances’ and that ‘in particular’, they be ‘(a) proportionately and reasonably incurred; and (b) proportionate and reasonable in amount’: s. 4.3.4(1);
  2. A costs agreement will be only ‘prima facie’ evidence that costs disclosed in it are fair and reasonable in that sense: s. 4.3.4(4); and
  3. Non-compliance with any of the costs disclosure obligations will render the costs agreement void: s. 4.3.9(1)(a) and the client need not pay them [on scale…] until they have been taxed as between solicitor and own client.

The first point really introduces into the Act fairness and reasonableness requirements as to the amount billed which presently only apply expressly at the moment of taxation, and which are found in r. 63.61 of the Supreme Court Rules, which says ‘(1) On a taxation of the costs payable to a solicitor by the solicitor’s client all costs reasonably incurred and of reasonable amount shall be allowed.’ The present s. 3.4.44 of the Legal Profession Act, 2004 is more limited in its restraint of billing, in the case of negotiated costs agreements. It says ‘(1) In conducting a review of legal costs, the Costs Court must consider- (a) whether or not it was reasonable to carry out the work to which the legal costs relate; and (b) whether or not the work was carried out in a reasonable manner’: nothing about the reasonableness of the amount billed per se.

Since virtually no lawyers I have anything to do with manage to comply to the letter with the existing not dissimilar costs disclosure obligations, it seems very likely that there will be a lot of retainers in which the client will be able to establish the voidness of the costs agreements.  Lawyers will then be left to seek recovery of their costs on scale, but may not have recorded the information necessary to prepare a scale bill in taxable form which will do justice to the work they have done.  Fun times ahead for costs lawyers!

Compare the situation presently in Victoria where non-compliance with the costs disclosure obligations only [I never thought I would say ‘only’] means that the client need not pay the fees until they have been taxed as between solicitor and own client, and on that taxation, the solicitor is presumptively liable to pay its costs, and the taxed costs are to be discounted by a proportion that reflects the seriousness of the non-disclosure.  Presently, the costs agreement will be disregarded only when it is set aside by VCAT (a jurisdiction which looks to fall away), or where by virtue of a material non-disclosure, it is disregarded pursuant to s. 3.4.44A of the Legal Profession Act, 2004, which has rarely happened. Continue reading “Client joy to abound in draft national profession legislation’s costs provisions”

Misconduct and Costs

I’m giving a seminar on Wednesday: see  I’m talking about Misconduct and Costs. The Supreme Court of Victoria’s Costs Judge, Associate Justice Jamie Wood, is talking about best practice in taxations of costs, and Liz Harris, the founder of Harris Costs Lawyers, is talking about costs agreements and risk management.  I think it’s going to be a really good seminar.  Now, I have an offer and a request.  I have two free tickets to give away.  If you would like one, let me know.

As to the request: foolishly, I have promised to tell those attending the answers to the following questions:

  • Is it charging by the hour that stinks or the abuse of charging by the hour?
  • Will fixed fees be any less problematic?
  • For what activities is it permissible to charge time-based fees?
  • Can you charge two clients for one piece of work?
  • When does overcharging become gross overcharging?

There is no clear answer to the third question, except perhaps in the heads of taxing officers, and little commentary that I can find.  If you have any experiences of what is allowed and disallowed in taxations between solicitor and own client (as opposed to taxations between parties on a solicitor-client basis) which are conducted by reference to a costs agreement specifying charges at an hourly rate,  I would be interested to hear them.

Similarly any experiences of costs disputes involving fixed fees.

Lawyer haters: some schadenfreude

Martinez v Morris [2011] FMCA 478 will be enjoyed by those who take pleasure in the suffering of lawyers.  A well known national law firm with over 500 staff acted for a man.  They had a low opinion of him, and so required that his wife promise to pay his fees.  Since her promise was made directly to the law firm, she was an ‘associated third party payer’ to whom disclosure obligations in relation to costs estimates and the manner of charging and so on were owed.  The obligations were not satisfied though.  Sure enough, the husband did not pay the firm’s fees.  So they sued his wife.  She did not defend, ignorant of s. 317(1) of the Legal Profession Act, 2004 (NSW) which said that by virtue of the disclosure defaults, she need not pay the fees until there had been what used to be known as a solicitor-client taxation at the solicitors’ expense.  Default judgment was obtained and no attempt was made to set it aside.  And then the firm set out to bankrupt her.  A creditor’s petition resulted in a sequestration order.  It was the end of the road; they’d got their pound of flesh and could move a trustee in bankruptcy in to scoop up her worldly possessions, and take away any income she might earn, to restore the hole in their profits.

Then some bright spark alerted the wife to the solicitors’ problem.  ‘Too late!’ you might say to yourself diving for a statement of res judicata, if you have not been reading my blog properly (see this post and this one about Quaresmini v Crouch & Lindon (a firm) [2010] FMCA 750 and Chadwick Lawyers v McMullen [2009] FMCA 992, both Queensland cases to which no reference was made in the NSW case at hand).  But no, not too late: Federal Magistrate Driver set aside the sequestration order — that is he unbankrupted the wife — and completely sicked the solicitors on costs for good measure.  In the process, he looked beyond the default judgment, rendering it worthless for the purposes of bankrupting the wife without it having been set aside.  And now, no doubt, the wife has a right to set aside the default judgment ex debito justitiae (as of right), so the firm cannot substitute the Sheriff for the trustee in bankruptcy.  The wife may still have to pay her husband’s legal fees; whether she does or not will depend on whether the firm can be bothered having the NSW equivalent of a taxation at which the taxed bills may be reduced on account of the wholesale costs disclosure defaults. Whatever the case, she won’t have to pay them for some time, and there must be a real issue about whether the lawyers are entitled to interest since the bills were originally given.

The costs order was that the law firm pay the costs of the creditors’ petition in which they were successful as well as in the application to set aside the sequestration order in which they were unsuccessful.  His Honour reasoned as follows at [16] to [17]:

Continue reading “Lawyer haters: some schadenfreude”

Costs disclosure defaults and solicitors’ creditors statutory demands addressed to clients for unpaid fees

In AMI Australia Holdings Pty Ltd v PHD Networks Pty Ltd [2011] NSWSC 161, the NSW Supreme Court’s Associate Justice Macready noted another decision, which illustrates the potential for costs disclosure defaults to be raised as a foundation for a genuine dispute such as to warrant the setting aside of a creditors’ statutory demand for unpaid legal fees.  The decision of Santow J in Callite Pty Ltd v Adams [2001] NSWSC 52 was described as follows:

‘There, a solicitor served a statutory demand demanding payment of an amount of unpaid legal costs. One of the grounds of challenge to the demand was that the solicitor had failed to make the disclosure required by section 175 of the Legal Profession Act 1987 (NSW). Santow J (as his Honour then was) held that this ground of challenge was not available because no facts were deposed to from which one could infer that there was no fee disclosure and the costs agreement. However, the affidavit did deposed to the receipt of accounts and those accounts were annexed. Santow J held (at [10]) that a perusal of the accounts showed that they lacked the prescribed statutory content as required by section 192 of the Legal Profession Act and a regulation 22A of the Legal Profession Regulations 1994 (NSW). Section 192 of the Act precluded any action being taken for recovery of costs until 30 days had passed after the provision of a bill of costs which complied with the Act. Santow J held (at [12]) that the legal consequences which flowed from the form in which the accounts were rendered were not required to be pleaded in the affidavit. His Honour set aside the statutory demand on the basis that public policy precluded a statutory demand being used to bypass the safeguards of the Legal Profession Act.’

Costs disclosure obligations and consequences of not complying: part 4

This is part 4 of a serialisation of a paper I gave on about costs disclosure obligations and the consequences of not complying.  Parts 1, 2, and 3 are here, here, and here.  This post begins to answer the question ‘What must be disclosed’.  The balance of the answers to that question is to be found in instalments yet to come. Continue reading “Costs disclosure obligations and consequences of not complying: part 4”

Applicants for taxation can call for other side’s costs agreement and bills

Update: for the incredible backstory to this latest piece in the litigation over $705 in repairs to Mr Kuek’s Toyota Camry, see this story at Justinian.  You will have to subscribe for $22.

The indemnity principle in costs law says that an award of party party costs must never exceed the beneficiary’s liability to his or her own lawyers.  That is, party party costs must not exceed solicitor-client costs.  Traditionally, however, those ordered to pay costs by a court have not been allowed to look at the costs agreement or bills between the party whose costs they have been ordered to pay.  Kuek v Devflan Pty Ltd [2011] VSCA 25 says that at least where there is some reason to believe that the indemnity principle might be infringed, the costs disclosure letters, costs agreement, and, probably, solicitor client bills may be inspected by the party ordered to pay the costs, and used to argue the application of the indemnity principle.

Justice of Appeal Hansen, with whom Justices of Appeal Neave and Harper agreed, said that the Taxing Master’s view that ‘the course proposed [requiring production of the costs agreement and costs disclosures, and having regard to them in the taxation] will lead to the taxation of two different bills with additional delay, expense and inconvenience … is a floodgates type argument which is no answer to a taxing officer’s fundamental duty to conduct each taxation on its own merits in accordance with law.’  His Honour continued:

‘This type of issue will not often arise because, in the ordinary case, party / party costs fall well short of the receiving party’s actual liability to its lawyers.  But, as I have noted, here the material is sufficient to suggest that the position may be otherwise.  It follows that the taxing officer must be satisfied that, as a question of fact, the party / party costs do not exceed the respondents’ liability to their lawyers.  Both the Taxing Master and the judge seemed to assume that the consequence of such a factual exercise would be the (inconvenient) step of requiring the respondents to produce a solicitor / client bill, and that there was nothing in the authorities to require a solicitor / client bill.  However it does not follow that the factual question posed can only be determined by reference to a solicitor / client bill.  It may be readily apparent on the face of the lawyers’ accounts that the receiving party has actually paid its lawyers more than the amount of the party / party bill.’

Many lawyers do not enter into proper costs agreements with their clients, because they trust them to pay the bills.  Most lawyers, for a variety of reasons, do not comply perfectly with the costs disclosure regime, but get away with it because their clients are happy with their services and charges, or are ignorant of the consequences of costs disclosure defaults.  This decision constitutes a reason why it is important to have a valid costs agreement and to comply with the costs disclosure obligations: otherwise the party may recover less on a party party costs award than he or she otherwise would.  The decision whether to do things properly is no longer just a decision about whether to take the risk that the client will unexpectedly take advantage of the law, but must be taken in the context of the lawyer’s duty of care to avoid foreseeable economic loss to the client.

Continue reading “Applicants for taxation can call for other side’s costs agreement and bills”

The prudent way to plead a suit for fees

The case which was the subject of the previous post, Quaresmini v Crouch & Lindon (a firm) [2010] FMCA 750, and Chadwick Lawyers v McMullen [2009] FMCA 992, decisions of Federal Magistrates Wilson and Jarrett sitting in Brisbane suggest what I have long suspected: that it is dangerous to use traditional precedents for suing for legal fees.  The relevant bit from Quaresmini is set out in the previous post, and that from McMullen is set out at the end of this post.  Although Federal Magistrates’ views on pleadings may not necessarily be listened to by state courts, the endgame of your suit for fees, bankruptcy, may well be played out there.  Quaresmini is an illustration of how things can go wrong in the endgame.

Before a Victorian solicitor can sue for fees, she must show that 65 days have elapsed since service conforming with the Legal Profession Act, 2004 (Vic.)’s s. 3.4.34(5) of a bill conforming with ss. 3.4.34 and 3.4.35: so says s. 3.4.33. The requirements for clients other than ‘sophisticated clients’ are:

  • the bill must be signed appropriately (generally, by a lawyer);
  • it must be served properly (by post, in person, or delivered to the address of the client or his agent authorised to accept legal process, or left with a person who looks at least 16, apparently living or working at the client or agent’s usual or last known residential or business address, but not by fax or email); and
  • it must include or be accompanied by a written notice (presumably correctly) setting out the options and time limits for challenging it.

These two decisions suggest that at least these matters ought to be pleaded, along with the basis for the claim for fees.  If the basis is a costs agreement, then of course that is a contract which ought to be pleaded like any other contract.  If the basis is a scale, then it may be necessary to plead facts which attract the scale to the work.  If the basis is the fair and reasonable basis, then the fact that there was no costs agreement and no scale applicable would need to be pleaded, at least.

Is anyone else aware of any other authority on this point, or does anyone have experience of this point having been taken?

Continue reading “The prudent way to plead a suit for fees”

Here’s why you should comply with the costs disclosure regime

Quaresmini v Crouch & Lindon (a firm) [2010] FMCA 750 is a salutary tale. The lawyers did some work back in 2007. They sued the client for their unpaid fees and in 2009 got a default judgment having applied successfully for substituted service. Then in 2010, they bankrupted the client. 3 weeks out of time, without any adequate explanation for his delay, the client applied for a review of the decision to bankrupt him, saying that he wanted to apply to set aside the default judgment of which (along with the suit for fees) he had been unaware.

Because the pre-requisites to a suit for fees were not pleaded by the lawyers in the suit for fees, and because they put on no evidence in response to the application for an extension of time that those prerequisites had been satisfied, the Federal Magistrate considered that the client had a sufficiently arguable defence to set aside the bankruptcy to enable him to apply to set aside the judgment.  The prerequisites not pleaded or deposed to included the obligation to provide a written notice together with a bill outlining the methods and time limits for challenging it, and identification of the basis (whether in the bill or in the statement of claim) of the claim for the fees — costs agreement, scale or a fair and reasonable charge.  It may well be that the solicitors are back to square one, the provision of a lump sum bill which complied with the Legal Profession Act, 2007 (Qld).  There are similar provisions in Victoria.  The Federal Magistrate said: Continue reading “Here’s why you should comply with the costs disclosure regime”

Costs disclosure obligations and consequences of not complying: part 3

This is part 3 of a serialisation of a paper I gave on about costs disclosure obligations and the consequences of not complying.  Parts 1 and 2 are here and here.  This post continues the answers to the question ‘To whom need disclosures not be given?’  Anyone who has any insights into the interpretation of the various definitions which refer back to the Corporations Law is invited to provide them by commenting on this post. Continue reading “Costs disclosure obligations and consequences of not complying: part 3”

Costs disclosure obligations and consequences of not complying: part 2

This is part 2 of a serialisation of a paper I gave on costs disclosure obligations under the Legal Profession Act, 2004 and the consequences of not complying.  Part 1 is here.  This post is not exhaustive of the answers to the question ‘To whom need disclosures not be given?’  For more answers to that question, see subsequent posts. Continue reading “Costs disclosure obligations and consequences of not complying: part 2”

Lodging a civil complaint with the Legal Services Commissioner limits you to compensation of $25,000 per complaint

First of all, happy new year!

The take-home point of this post is that if you lodge a civil complaint (e.g. a pecuniary loss dispute or a costs dispute) with the Legal Services Commissioner, you limit the amount of compensation you can get in VCAT to $25,000 because of s. 4.3.2(1)(c) of the Legal Profession Act, 2004. That prevents the commencement of proceedings in relation to the subject matter of the complaint until the complaint has been finally determined, or dismissed, by which time it will often be res judicata, at least in those cases where the final determination is by VCAT or the Supreme Court or the Court of Appeal (subject, perhaps, to (i) the operation of s. 4.2.14(2), which is what the Court of Appeal calls the ‘two bites of the cherry’ provision, and (ii) the possibility of adding a Fair Trading Act, 1999 cause of action to a proceeding originally instituted in VCAT under the Legal Profession Act, 2004, discussed below).  In this touchy feely win win alternative dispute resolution Civil Procedure Act, 2010 world, it is apparently anomalous that those who choose to travel to VCAT’s Legal Practice List via the obvious alternative dispute resolution channel (i.e. via a civil complaint to the Commissioner’s dispute resolution jurisdiction) are penalised so severely in comparison with those who proceed immediately to litigation in that List by invoking the parallel jurisdiction of the Fair Trading Act, 1999. Continue reading “Lodging a civil complaint with the Legal Services Commissioner limits you to compensation of $25,000 per complaint”

Costs disclosure obligations and consequences of not complying: part 1

Here begins a series of posts on costs disclosure obligations under the Legal Profession Act, 2004, and the consequences of not complying with them.  It is a work in process, and I would be grateful for any experiences of this area of the law you might have, and any authorities of interest which I have not included.

*   *   *

The legislation
We have had costs disclosure obligations mandated by legislation for a long time now.  The Legal Practice Act, 1996 came into operation on 1 January 1997, and applied to matters in which the solicitor was retained after that date, and to costs agreements made after that date: cl 18, Schedule 2.  There is a similar regime under the Legal Profession Act, 2004, which came into force on 12 December 2005 but, as we will see, the differences are kickers. The Legal Profession Regulations, 2005 contain provisions relevant to about the costs disclosure and bill disclosure regimes alike. Continue reading “Costs disclosure obligations and consequences of not complying: part 1”

On the desirability of requesting a written progress report

I deal with clients who have been economically raped by rapacious lawyers.  How these crimes  manage to be perpetrated is a source of constant amazement to me.  Of course these evildoers never provide written advice.  They would be incapable of giving it, and would never tie themselves down like that. Most Australian clients have a statutory right to written progress reports: Section 3.4.18 Legal Profession Act, 2004 (Vic), and see the other jurisdictions’ provisions below.  That says:

‘A law practice must give a client, on reasonable request — (a) a written report of the progress of the matter in which the law practice is retained’.

Many clients would be well advised to exercise this right.  A request might say:

‘Dear Madam,

I would be grateful if you would provide me with a written report of the progress of this matter, under s. 3.4.18 of the Legal Profession Act, 2004.  In particular, I would be interested to know [specify].

Yours etc.’

The consequences for the lawyer of not complying are probably spelt out in s. 3.4.17, and are very significant: Continue reading “On the desirability of requesting a written progress report”

What are ‘legal proceedings to recover legal costs’?

A barrister rang me the other day in relation to what he probably thought was a simple question: if a lawyer settles a dispute about legal costs and then sues for specific performance, is it a ‘proceeding to recover legal costs’?  No, I said, but I could not find, on my blog, or anywhere else where I store things for later use, authority for the proposition.  Now I have come across the authority I had in the back of my mind and have forgotten who asked the question.  So here it is, for the whole world to enjoy: Koutsourais & v Metledge & Associates [2004] NSWCA 313.  In fact, it is not authority for the proposition I had in my mind, since one judge held in favour of the proposition, one against, and one abstained from deciding the case on that issue.  Its investigation of previous cases is nonetheless useful, and it and those cases provide a useful jumping off point for anyone who needs to research the issue.  It has been considered subsequently, in cases published on Austlii, in these cases.  The ones I have looked at suggest that the proposition is a good one, at least where the character of the settlement agreement is sufficiently removed conceptually from the original indebtedness, but don’t quote me on that tentative conclusion.  Anyone know of any Victorian authority on the question? Continue reading “What are ‘legal proceedings to recover legal costs’?”

The consequences of substituting lawyers responsible for client matters

My experience of working in and representing big firms is that they consider they have an entitlement to swap lawyers in and out of files, even if that involves the loss of accumulated knowledge and a need to spend time on (and therefore charge fees for) the newbie coming up to speed.  One of the things solicitors whose retainers are governed by the Legal Practice Act, 1996 are required to disclose before, or as soon as reasonably practicable after, being retained, is the name of the person who will be principally responsible for the matter (s. 86(3)(a)).  Under the Legal Profession Act, 2004 there is no such requirement, but I often see disclosures and costs agreements which specify who is going to work on a matter, and at what rate.  In Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] EWHC 1552 (TCC), the Queen’s Bench Division of the English High Court considered an alleged breach of a promise in a professional services contract that a certain person would work on an engagement. I will link to CMS Cameron McKenna’s excellent Law Now service’s helpful case note rather than reinventing the wheel.

How to deal with a Legal Services Commissioner complaint

In the 2007-08 financial year, the Legal Services Commissioner (aka the Bureau de Spank on this blog) received 2033 complaints (801 civil complaints, and 1584 disciplinary complaints).  That’s one for every 7 of the 13,837 lawyers who worked in Victoria as at the end of March 2008.  17% of them were characterised as mixed civil and disciplinary complaints.  One in 12 complaints was referred to the Law Institute for investigation.  Comparatively few prosecutions were brought.  In fact in only 1 in 25 complaints was the trigger for a prosecution arrived at, and a small fraction of those were or will be prosecuted.  Only 32 reprimands or cautions were issued by the Commissioner.  I take all this from the latest annual reports of the Commissioner (see my posts on the two previous annual reports here and here) and the Legal Service Board.  It makes me realise that mine is a skewed perspective, and that solicitors hire barristers to represent them in the complaints which are more complicated, more serious, or more anxiety-provoking.  Accordingly, much of what follows must be taken as advice in relation to the more serious end of the complaints spectrum.

Most of my clients want to avoid, above everything else, prosecution in VCAT.  Fair enough too.  All other outcomes remain hidden from public scrutiny.  Successfully defending a prosecution is a hollow victory: the allegations against you still get published in the reasons on Austlii, and the prospect of a costs order in your favour is virtually nil: Clause 46D, Schedule 1, Victorian Civil & Administrative Tribunal Act 1998.  It is the lawyers who do not do a good job of responding to the complaint who get prosecuted, rather than those who do the worst things. There is of course a limit to that proposition: do something bad enough (especially in relation to trust accounts) and you will be prosecuted, assuming that the Commissioner thinks she can prove it, regardless of how cooperative you are in the investigation.  The Commissioner has recently published guidelines in relation to her prosecutorial discretion: here and here.  Some of the factors she considers are:

  • whether the practitioner acknowledges his or her error and/or has shown remorse;
  • whether the practitioner made a mistake and is unlikely to repeat the conduct;
  • whether the practitioner cooperated during the investigation;
  • whether a guilty finding may entitle the complainant or others who may have been adversely affected to compensation.

Not doing a good job during the investigation phase manifests in two ways:

  • failing to take legitimate and forensically useful technical points; and
  • (where there are none) failing to realise that demonstrating a current understanding of the relevant law, admitting the error, expressing contrition, and taking the rap is always a better policy than being uncooperative.

Continue reading “How to deal with a Legal Services Commissioner complaint”

Applications to set aside costs agreements

This post has been sitting around as a draft waiting to be finished.  There is little chance of that for a long time.  So here is my incomplete annotation to s. 103 of the Legal Practice Act, 1996.  That is the provision which gives VCAT (formerly the Legal Profession Tribunal) jurisdiction to set aside costs agreements on a statutory basis peculiar to that species of contracts.  All costs agreements in all matters in which first instructions were taken prior to 12 December 2005, regardless of when the costs agreements were entered into, may be argued to be governed by the old Act.  So there is some life left in the old s. 103 yet. Continue reading “Applications to set aside costs agreements”

Nicholson v B&S — the first important Victorian decision about setting aside costs agreements

Nicholson v B&S [2000] VLPT 28 was the first decision to deal in detail with the principles which govern the extremely wide discretions granted by s. 103 of the old Legal Practice Act, 1996. Registrar Howell cancelled a costs agreement, and ordered that one of the bills the client challenged — the only one she had really jumped up and down about — be taxed by the Taxing Master of the Supreme Court.  Mr Howell did so in the following circumstances: Continue reading “Nicholson v B&S — the first important Victorian decision about setting aside costs agreements”

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.’

Continue reading “The costs disclosure provisions in statutes regulating the profession are not codes”

Two costs disclosure default cases in VCAT

In retainers governed by the Legal Profession Act, 2004, failures to disclose matters which the Act requires to be disclosed about future legal costs can have the result that the solicitors may not recover their fees whether by proceedings or otherwise until they have been the subject of a solicitor-client taxation in the Supreme Court, generally at the solicitors’ expense regardless of who ‘wins’ the taxation (i.e. regardless of whether the Supreme Court affirms the solicitors’ bill or substantially discounts it). The draconian provision which says so, s. 3.4.17, and the provision which says one of the things non-disclosure of will trigger s. 3.4.17 is a change to the original estimate (s. 3.4.16) are set out at the end of this post.

In the first case, a file handler changed firms. The new firm did not reiterate the old firm’s estimate of fees and they were told to go off and have a Supreme Court taxation over a bill for $2,500 before coming back and continuing their proceeding. Unless the solicitor is found not to be entitled to any fees, a Supreme Court taxation ends with a Supreme Court order to the client to pay the amount found to be appropriate. The solicitor would presumably go back to the Tribunal only if there were defences which the Taxing Master did not have power to deal with and which VCAT’s Legal Practice List would.

In the second, the failure of a solicitor to update his fee estimate for the first 10 days of a retainer in which the original estimate blew out by over 50%, was found not to have breached s. 3.4.16 because in the context of the retainer over 10 days, it was not reasonably practicable to give the update. The decision must mean that there is no absolute duty on a solicitor to keep track of costs as they are accruing and to advise the client when the original estimate is exceeded. Continue reading “Two costs disclosure default cases in VCAT”