In Arya v TD  VCAT 923, Member Tang, a former President of the Law Institute now a full-time member of VCAT, had to decide what were the fair and reasonable costs (in the Legal Profession Uniform Law sense of that phrase) of more than 11 hours’ work by a Victorian barrister of 18 years’ call. The work product was a 23 page memo of high quality advice in a field in which the barrister had literally written the book. He had entered into no costs agreement and had given no costs disclosure, in a direct access brief.
Because the case reached VCAT via a costs dispute before the Victorian Legal Services Commissioner, there was an additional layer of fairness and reasonableness to be considered, compared with the same analysis in a taxation: s. 99 of the Application Act associated with the Uniform Law required the Tribunal to fix the costs in an amount which was ‘fair and reasonable in all the circumstances’, an invitation to palm tree justice if ever I heard one.
The barrister’s fee slip was for $10,175 calculated at $595 per hour reduced on a but say basis to $9,900. The fair and reasonable cost of the work was just over one-third of the larger figure, or $3,500, found Member Tang.
Until 2015, solicitors and barristers were entitled in the absence of a valid costs agreement to costs on the relevant court scale or, for non-contentious business, on the Practitioner Remuneration Order. Where there was a void costs agreement that entitlement was capped at the amount which would have been recoverable under the costs agreement. Since the introduction of the Uniform Law, how a lawyer recovers fees in the case of a void costs agreement is not spelt out, but since no one can ever recover fees from persons other than ‘commercial or government clients’ which are not ‘fair and reasonable’, the fees recovered certainly have to meet that criteria.
In those Uniform Law taxations where the Costs Judge has figured that the costs disclosure defaults might have been opportunistically seized upon by clients who had not been materially prejudiced by the defaults in question, Associate Justice Wood has been finding that the fair and reasonable costs may be prima facie calculated by reference to the void costs agreement in question. See, e.g., Johnston v Dimos Lawyers  VSC 462; Bennett v Farrar Gesini Dunn Pty Ltd  VSC 744; Cameron v Thomson Geer  VSC 75.
What this case demonstrates is that, in the case where a client really has been sucked into something they might not have signed up for if they had been given appropriate disclosure in advance, the fair and reasonable costs may be considerably less than the reasonable rate multiplied by the number of hours spent, and significant ‘penalties’ for non-disclosure and inutility may be operative.
By virtue of the direct access relationship between the barrister and the solicitor, the same law should apply in cases involving a solicitor and client.
It’s an odd set of facts. The barrister was contacted by a person whom he assumed was his instructing solicitor but was in fact the solicitor’s clerk. He asked that person to deal with his clerk in relation to fees, again somewhat unusual. Perhaps the lesson is that having my people speak to your people has its risks.
The barrister’s clerk advised the barrister of the deal struck by an email: 1 hour conference; $525 per hour (not $595 per hour as the barrister charged for the advice); no solicitor involved, i.e. a direct access brief. The barrister overlooked the bit about no solicitor being involved. In fact, the client was looking for a second opinion in relation to that given by her solicitors.
The barrister conferred with the client alone on 9 November 2018 and charged $700 since the conference went longer than an hour. The client, an employee who considered she had been bullied and constructively dismissed, reported by email to her solicitor after the conference that the barrister would provide a written advice by the 17th and paid the $700. So far, so uncontroversial.
There was a dispute about to what extent the client asked for a written advice, but she clearly acquiesced in the plan that the barrister would provide it. But no arrangement in relation to costs was arrived at for the written advice, and no estimate of its cost given, and when the bill came, the client refused to pay any of it. If the advice brief were a new retainer, then it somewhat more obviously involved no solicitor, and the elaborate procedures required when barristers accept direct access briefs ought to have been followed, making the disclosure defaults more serious than usual, though this did not appear to be a matter raised in the Tribunal. Those procedures are mandated by r. 22 of the Legal Profession Uniform Conduct (Barristers) Rules 2015. If the barrister thought that the conference brief was from the solicitor, it is hard to see how he could regard the client as having the solicitor’s agency to extend the scope of the brief and thereby presumably in the barrister’s mind extend the solicitor’s liability to the barrister for fees.
On 21 November 2018, the client asked where the advice was, and it was not given until 4 December 2018, the barrister having included in his bill a claim for 15 minutes spent apologising by email for the delay. This was in circumstances where any claim which the client might bring if so advised by the barrister had to be filed by early January 2019. The client said that, by 4 December 2018, much of the information in the advice had been overtaken by advice given by another barrister briefed to prepare the claim. The Tribunal only partially accepted that proposition, finding that the advice was of some value at the time it was received.
The barrister charged for more than 4 hours’ work before the conference and properly conceded that these costs should not be allowed, and that his fees should have been charged at $525 per hour, not $595 per hour. He also conceded it was appropriate that his fees be diminished to take account of his costs disclosure defaults, probably figuring that since such discounts in the past have been between 5% – 15%, it was better to position himself by reference to the agreed hourly rate and take a small cut than argue from first principles what the fair and reasonable costs were by reference to the factors set out in ss. 172 and 200 of the Uniform Law, namely:
- compliance with the Uniform Law and the Uniform Rules (including the Barristers’ Conduct Rules);
- any disclosures made;
- any relevant advertisements;
- skill, experience, specialisation of the barrister;
- difficulty and complexity of the work;
- labour and responsibility involved;
- quality of the work;
- retainer and instructions (express or implied);
- time spent;
- the time and place when business was transacted in the matter;
- number and importance of any documents involved.
Ignoring the conference and the work which preceded it, the advice itself took 11 hours and so, at $525 per hour, should have cost $5,775. Member Tang took nearly 40% off that figure to take account of the delay in provision of the advice rendering it of less value than had it been promptly delivered, and to take account of the complete absence of costs disclosure, and disallowed the pre-conference work claimed mischievously in the post-conference bill.
So it’s not really a case of a bill for $9,900 being reduced to $3,500. There was a costs agreement for the conference, which must have included preparation. In slipping in pre-conference work to the post-conference bill, the barrister’s conduct was contrary to that costs agreement. So the barrister properly recovered nothing for that. Then the barrister charged at $595 per hour when the only actual costs agreement had been negotiated at $525 per hour, which Member Tang found as a matter of fact was a reasonable sum for a barrister who was an expert in the field of 18 years’ call. So the $70 per hour came off the post-conference work too.
In using $525 per hour as a starting point for the analysis, Member Tang may be said to have adopted the methodology of the Costs Judge in the taxations referred to above, still using the hourly rate in the only costs agreement between the client and the barrister (for the conference) as the starting point for ascertaining the fair and reasonable costs, even in the absence of a costs agreement in relation to the advice.
All that is really novel in the case, once you work out all the above, is that costs on that basis were reduced by about 40% in circumstances where delay diminished the value of the advice, and there was a wholesale failure to give costs disclosure to a client who must not have been a ‘commercial or government client’, though the decision is silent on that point.
Another thing which comes out of this case is that, as usual, the Victorian Legal Services Commissioner apparently did not regard the complaint as a disciplinary complaint, even though the barrister charged otherwise than in accordance with a costs agreement, and sought payment of fees which the client was, as a matter of law, excused by s. 178 of the Uniform Law from paying (see para 25 of the Tribunal’s reasons).
The Commissioner is inconsistent in how she prosecutes costs disclosure defaults, and often just ignores them from a disciplinary perspective, treating disputes about costs as exclusively ‘costs disputes’ even though she is obliged by s. 315 to investigate any allegation which, if established would amount to unsatisfactory professional conduct or professional misconduct (which is defined to include charging more than fair and reasonable costs): s. 270. Since there is a costs disclosure default in just about every file which isn’t a conveyance, the reality is that if she investigated them all, she would be at her wits’ end. But that really means she should seek more funding, until the problem is eradicated.
When she wants to throw the book at you, the Commissioner will bring a prosecution for conduct which she would not even characterise as giving rise to a disciplinary complaint 90% of the time. For example, one of my clients gave an oral estimate that a conveyance would cost $1,200 and then charged $1,079. The Commissioner charged my client with unsatisfactory professional conduct for not reducing the oral quote to writing and VCAT found him guilty of that charge which my client defended unsuccessfully.
In this case, the Commissioner seems to have ignored the fact that the barrister charged for four hours’ work which he was not allowed by the costs agreement for that work to charge, and at $70 more per hour than had been agreed for the previous work, though whether these aspects were properly ascertained in the investigation of the complaint, or whether they only became clear during the VCAT proceeding, I suppose we cannot know.
Finally, the client misconceivedly sought a compensation order under Part 5.5 of the Uniform Law. Only the Commissioner in the determination of a consumer complaint (s. 290) and VCAT in a disciplinary prosecution (s. 302) may grant a compensation order (s. 306). That application was unsuccessful.
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