QLD LP - Wk 6 – Billing PRACTICE QUESTIONS 2023

However, these will also be limited to the amount that a costs assessor could consider to be a reasonable fee using the criteria set out in Legal Profession Act 2007 s 341
Client - solicitor - barrister
Barrister agreements:
-S 322(a) provides that an agreement may be made between a law practice and a client
-A 'law practice' is defined in the Act in schedule 2 as an Australian Legal Practitioner who is a sole practitioner, a law firm, etc. Therefore, a barrister is now able to be in a contractual relationship with a client.
-S322(b) also allows for the client to have a contractual relationship with the barrister who is briefed by the solicitor - but this does not have to be the case
-Section 309 provides, that if a solicitor briefs a barrister, the barrister must provide costs disclosure to the solicitor (so they are in a contractual relationship)
-Unlikely to be a consumer contract under ACL
--> While the Act allows for barrister to be in a contractual relationship with clients, this is not required - can mean the barrister wont get paid! see Legal Services Board v Simon Gillespie -Jones
Getting paid as a barrister
-This is usually done by sending a note called a 'Memorandum of Fees' to the solicitor who briefs the barrister.
-Barristers now fall under the requirements of ss 329-333 Legal Profession Act 2007 and therefore must comply with those provisions' strictures for itemised bills and methods of serving them.
-Barristers are now subject to all of the limitations set out in the Legal Profession Act 2007 for charging fees, including the unique Queensland provisions concerning the calculation of fees in personal injuries actions.
-There are a number of cases where a solicitor has been disciplined for not paying counsel's fees:
-Council of the Law Society of New South Wales v JAX [2012] NSWADT 283
-Legal Practitioners Conduct Board v Wharff [2012] SASCFC 116.
-Legal Services Board v Simon Gillespie
Disclosure of fees is required by statute.
The solicitor must disclose how fees are to be charged, inform the client to obtain independent advice and ensure that the client gives informed consent to the agreement before the agreement.
S 308 provides for disclosure of the following:
-The basis on which fees will be calculated and charged
-An estimate of likely total fee
-The intervals at which bills will be sent
-In litigious matters, a range of costs that could be recoverable if the action is successful or paid if unsuccessful
-Limitation periods for actions
-Right to a costs assessment when disputing a bill.
-Remember limits on advertising not being misleading as to all costs a client might need to pay
- can set aside if not 'fair and reasonable': s 328 LPA
- must give bill to recover fees: s 329 LPA
- can request itemized bill (cannot be charged for): s 332 LPA
- clients can request costs assessment within 12 months: s 335 LPA
• time charging requires full disclosure: [ASIC v Citigroup]
- one unit of time can only be charged once: [Bechara]
• if solicitor tries to change fees arrangement, need to advise client to get independent legal advice (another lawyer/firm): [Roche]
• it is not acceptable to charge for things other than legal services without a specific contract to that effect: [Roche]
• speculative & contingent fees:
- illegal to tie fees to proceeds recovered: s 325(1) LPA; ie contingency fees
- 'uplift fee' legal, but max of 25%
- 50/50 rule for personal injury actions: s 347 LPA
Overcharging is a serious ethical wrong.
• liable to professional discipline
• cannot charge grossly in excess of the norm: [Roche]; [Baker]
• fiduciary obligations in making cost agreement; need full disclosure, including who will act (eg, partners are very expensive): [Foreman]
o Failure to disclose client can refuse to pay, cost agreement can be set aside, sum charged can be reduced by cost assessor; s316
Billing and recovery- overview
-An agreement is enforceable like any other contract
-Fees are only recoverable if there is an account rendered: s 329 LPA 2007
-A costs assessor may be appointed if the client queries the bill: s 341
-Right to have an itemised bill (which cannot be charged for)
-Costs assessment (s333) within 12 months: Challen v Golder Associates Pty Ltd [2012] QCA 307
Exemptions to disclosure
There are some exceptions to the statutory requirements for written costs disclosure under s311:
-If the total legal costs are under $1500 (under Regs)
-If there have been other costs disclosures in the last 12 months and the client waives their right
-If the client is a sophisticated client like another lawyer, a public company
-If no costs are required to be paid
Section 327 LPA
-Remember a non-complying costs agreement is void under LPA
-Can recover costs as assessed as 'fair and reasonable' or scale of costs
-Cannot be more than would have been entitled to under costs agreement (s 327(3))
-Cannot recover if the costs agreement purported to take a % cut of damages
Section 328 LPA
-Can apply to the court to have the costs agreement set aside as 'not fair and reasonable'
Various grounds listed for consideration:
-Client induced by misrep. or fraud;
-If lawyer found guilty of unethical conduct in respect of legal services to which the agreement relates;
-No costs disclosure (ie s308);
-Conduct of parties before or after contract made;
-How contract addresses changes in circumstances.
Lewis Blyth & Hooper (a firm) v Smith [2015] WASCA 4
Type of bills
-Form of bill: s330LPA
---Can be lump sum or itemised bill
---Signed by lawyer on behalf of law firm
---Given in various ways, including electronically, to client (or third party payer)
-Must inform client of rights of review - s331
-Must provide itemised bill if requested, and cannot charge for this - s332
-Cannot try to get money for 30 days
Why so much regulation of this?
-High costs of retaining a lawyer a constant source of public attention and scorn
-High costs of legal services has impact on
access to justice and justice system as a whole
-Vulnerability of clients
-Temptation for lawyers
Fiduciary duties vs clients best interest
Australian Securities and Investments Commission v Citigroup Global Markets Australia Pty Limited (No. 4) [2007] FCA 963
The court pointed to the fiduciary nature of the solicitor-client relationship applying billing, particularly time-cost basis:
-The authorities which deal with time charging by solicitors reveal a special instance where a solicitor has a conflict between his or her own interest in earning fees, and the duty to the client. ...A solicitor who wishes to enter into a time charging costs agreement with the client must make full disclosure to the client of all the implications of such an agreement: see Foreman at435-437 per Mahoney JA; Re Morris Fletcher v Cross' Bill of Costs [1997] 2 Qd R 228 at 243 per Fryberg J; McNamara Business & Property Law v Kasmeridis [2007] SASC 90 at [28] - [31] per Doyle CJ. [This is because] a solicitor is in a fiduciary position vis-à-vis the client and/or in a position of influence. Hence the need for the solicitor to give the client advice that would enable a proper understanding of the operation and effect of a time based costs agreement. (at 298-304
Baker Johnson v Jorgensen [2002] QDC 205
The '50 50 rule' now applies to personal injury actions - s347 LPA ("the Qld Rule")
LSC v Dempsey [2009] LPT 020
LSC v Dempsey [2010] QCA 197
Conflict of interest to be managed
-Billing a client is always managing a small exception to a clear conflict of interest between:
---The lawyer's own interest (to earn money)
---Client's interest (to keep their money)
-This is acknowledged in the case law. The issue for the lawyer is then appropriate management of this by:
-->Only charging what is 'fair and reasonable'!!!!
ASCR
Deals with over-charging as a conflict of personal interest with client interest
Rule 12.2:
-A solicitor must not exercise any undue influence intended to dispose the client to benefit the solicitor in excess of the solicitor's fair remuneration for legal services provided to the client.
-No similar provision for barristers in BR (please correct Learning Guide)
Calculating Fees
o Cannot have a contingent fee based on a percentage of pl gain; s325
o Cannot agree with client that lawyer will be paid out of court earnings; s325
o No win-no fee is OK, but time must be charged in lump sum, court scale or time-costed See Council of the QLS v Roche
o Conditional costs agreement possible: x fee and y fee if successful
uplift cannot exceed 25% of costs; s324
o Clyne v NSW
speculative action (no win no fee) OK, but a percentage of winnings is impermissible
o Jorgensen v Baker Johnson
Excessive charge in no win no fee case was overruled by court- introduction of 50/50 rule; s347 LPA
o ASIC v Citigroup Global Markets Aust P/L
Full disclosure of time-costing required due to fiduciary relationship; client must understand full implications etc
Discipline for wrongful or excessive charging
-In addition to remedies available to the client in tort and contract, a solicitor is liable for professional discipline for:
--fees tied to the proceeds received;
--charging for fees the solicitor knows he/she has no right to recover;
--fees grossly in excess of those which a solicitor of good repute and competency would charge (ie QLS v Roche; Baker v LSC)
--> Section 420 (b) 'charging of excessive legal costs...' expressly provided as possibly constituting professional misconduct or unsatisfactory professional conduct
Discipline for charging excessive fees
o Professional misconduct at CL
Are the fees charged grossly in excess of what a solicitor of good repute and competency would charge? Roche Case
• Asking client to sign a 2nd client agreement to drastically increase paralegal rate was serious breach
• Charging unusually high rates for mundane work by paralegals was breach
Dishonest to charge for fees they have no right to recover; LSC v Dempsey
Liability extended to managing partner; NSW case Nikolaidis v LSC
Over-servicing, over-charging, work not carried out
-Legal Services Commissioner v Keddie [2012] NSWADT 106
-Scroope v Legal Services Commissioner [2013] NSWCA 178
-NSW Law Society v Foreman (1994) 34 NSWLR 408
-Queensland Law Society v Roche [2003] QCA 469
Bechara v Legal Services Commissioner [2009] NSWCA 145
---->One unit of time cannot be charged more than once!!!!!
Costs Agreements
o Legal fees recovered in accordance with cost agreement (or court scale); s319
o client sol, sol barrister on clients instruction, client bar, 3rd party paying fees lawyer; s322
o cost agreement fulfils disclosure requirements and makes disputes at later date more difficult
Billing and Recovery
o Must deliver bill to client before recovery fees; s329
o Bill must comply with s330
lump sum or itemised, signed
statement of clients right to assessment; s331
o Assessment of costs/Review
LG56
o Principle is legally responsible for billing actions under their files
LSC v Duffiled
Sol Rule 37
Barristers' 'cancellation fees'
A barrister provided a costs agreement to a solicitor for appearing in a five day trial at a daily rate. Which of the following clauses is acceptable?
a) Payment for all days when matter settled before trial;
b) Payment for all days when matter settled 3 days into the trial;
c) Daily charge for work actually performed.
"The LSC has decided that disciplinary charges are warranted in circumstances where it is alleged that a barrister had not made proper costs disclosure, had charged fees beyond the retainer, and had attempted to coerce payment of a sum which had effect as a cancellation fee.
The cases highlight the difficulties in this area. As I have said, we are continuing to hold discussions with the LSC. Hopefully in time this will produce a workable set of guidelines for the charging of cancellation fees.
Why might lawyers overcharge?
-Misunderstanding duties
-Clash of interests
-Pressures of a corporatized environment
-Personal difficulties
Justice Fryberg of the Queensland Supreme Court in Re: N (a solicitor) [2010] QSC 267 at [35] (as an 'Afterthought'):
I am left with the uncomfortable feeling that the errors on the part of both N and counsel for T would not have occurred had the matter not been funded by legal aid... It is a natural enough human reaction in such circumstances to seek to defer incurring cost; but that is a reaction that is apt to blur the sound exercise of professional judgment. Having accepted a retainer, a true professional does not let the quality of the work undertaken suffer because the available remuneration is inadequate. If lawyers are not prepared to bear the cost of all necessary steps in a legal aid matter, regardless of funding, they should not take on the work.
BILLING LPA
Print these!!!
Division 3--Costs disclosure
308. Disclosure of costs to clients
309. Disclosure if another law practice is to be retained
310. How and when must disclosure be made to a client
311. Exceptions to requirement for disclosure
312. Additional disclosure—settlement of litigious matters
313. Additional disclosure—uplift fees
314. Form of disclosure
315. Ongoing obligation to disclose
316. Effect of failure to disclose
317. Progress reports
318. Disclosure to associated third party payers
Division 4--Legal costs generally
319. On what basis are legal costs recoverable
320. Security for legal costs
321. Interest on unpaid legal costs
Division 5--Costs agreements
322. Making costs agreements
323. Conditional costs agreements
324. Conditional costs agreements involving uplift fees
325. Contingency fees are prohibited
326. Effect of costs agreement
327. Particular costs agreements are void
328. Setting aside costs agreements
Division 6--Billing
329. Legal costs can not be recovered unless bill has been served
330. Bills
331. Notification of client's rights
332. Request for itemised bill
333. Interim bills
Division 7--Costs assessment
334. Definition for div 7
335. Application by clients or third party payers for costs assessment
336. Application for costs assessment by law practice retaining another law practice
337. Application for costs assessment by law practice giving bill
338. Consequences of application
339. Persons to be notified of application
340. Assessment of complying costs agreements
341. Criteria for assessment
342. Costs of assessment
343. Referral for disciplinary action
344. Contracting out of div 7 by sophisticated clients etc.--> legal work: s 24 Legal Profession Act 2004
-Typically the firm, not the lawyer, is providing services
-Methods of charging for legal work:
---Lump sum fee
---Task-based fee
---Court scale of costs
---Time-costing
---Speculative or contingent fee (% of proceeds recovered are illegal)
Lawyers Fees
- Lawyers can receive fees despite their general duty to act in client best interest
- Despite tension between fiduciary duty (cannot profit from [Show Less]