Your Law Firm and You Costs, Disclosure and Fixed Legal Fees Cate Dealehr Accredited Costs Law Specialist Principal ALCG - The Australian Legal Costing Group 11/ 313 La Trobe Street Melbourne 3000 cate@alcg.com.au
OBJECTI VES Ensure you are familiar and comfortable with your legal obligations as to legal fees when dealing with your clients. The why’s and how’s will be dealt in the following 4 sessions: Session 1: Examine the nature of the legal requirements under the Uniform Law re costs Session 2: Become familiar with the YLF fixed fee costs agreement S ession 3: Identify the issues around the importance of communicating with your clients about costs S ession 4: Provide a framework for you to budget and otherwise calculate the amount for fixed professional fees
SESSI ON 1 - LEGAL REQUI REMENTS Legal Profession Uniform Law - LPUL LPUL applies to all Victorian and NSW lawyers from 1 July 2015 Part 4.3 – Legal Costs Consumer focused legislation
CRI TERI A FOR CHARGI NG Costs to be proportionate and reasonable s 172(1)&(2) (1) A law practice must, in charging legal costs, charge costs that are no more than fair and reasonable in all the circumstances and that in particular are— (a) proportionately and reasonably incurred; and (b) proportionate and reasonable in amount. (2) In considering whether legal costs satisfy subsection (1), regard must be had to whether the legal costs reasonably reflect— (a) the level of skill, experience, specialisation and seniority of the lawyers concerned; and (b) the level of complexity, novelty or difficulty of the issues involved, and the extent to which the matter involved a matter of public interest; and (c) the labour and responsibility involved; and (d) the circumstances in acting on the matter, including (for example) any or all of the following— (i) the urgency of the matter; (ii) the time spent on the matter; (iii) the time when business was transacted in the matter; (iv) the place where business was transacted in the matter; (v) the number and importance of any documents involved; and (e) the quality of the work done; and (f) the retainer and the instructions (express or implied) given in the matter. Compliance tip: Although the Civil Procedure Act 2010 could be used as a guide, there is an important distinction that the amount in dispute is not a factor under LPUL but it is under CPA!
CRI TERI A FOR CHARGI NG Costs to be Fair & reasonable s 172(3)&(4) (3) In considering whether legal costs are fair & reasonable, regard must also be had to whether the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions. * (4) A costs agreement is prima facie evidence that legal costs disclosed in the agreement are fair & reasonable if: (a) the provisions of Div 3 relating to costs disclosure have been complied (costs disclosure); and (b) the costs agreement does not contravene, and was not entered into in contravention of, any provision of Div 4 (costs agreements). LPUL: Fair and reasonable now applicable to all costs reviews and not just those not covered by costs agreements. Issue of proportionality new and expanded factors to include the level of skill, experience, specialisation and seniority of lawyers and whether matter of public interest. Compliance tip: each and every disclosure statement needs to be customised to the particular circumstances of the case as it is presented at the time; write to client about risks with reference to costs consequences and the quantum/importance of claim and keep the client updated as the circumstances change *(see definition of fixed costs legislative provisions at Section 6 of LPUL – includes determination, scale, arrangement or other provision, fixing the costs or max costs of any legal services that is made by or under the UR or any other legislation)
CRI TERI A FOR CHARGI NG Avoidance of increased legal costs s 173 A law practice 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. LPUL: Explicit reference to obligations of practitioner to avoid delay and to not act in a way to increase costs. Compliance tip: using the Civil Procedure Act 2010 as a guide: 1. direct clients towards taking reasonable action that results in efficient & timely resolution of the matter; 2. use reasonable endeavours to act properly and minimise delays
DI SCLOSURE Main disclosure obligations s 174(1) Identification of most important disclosures – These are: → Basis on which legal costs will be calculated → Estimate of total legal costs → Where significant change to earlier disclosure made under 174(1) then as soon as practicable, info about any significant change to legal costs to be paid by client (174(1)(b)) Law practice must take all reasonable steps to satisfy itself that client has understood and given consent to proposed course of action for conduct of matter and proposed costs (174(3)) Additional disclosures s 174(2) Identification of additional disclosures – These are the client’s rights to: → Negotiate a costs agreement → Negotiate a billing method (e.g. reference to timing or task) → Receive a bill → Request an itemised bill → Seek assistance of Legal Services Commissioner in event of costs dispute
DI SCLOSURE Ongoing disclosure obligations s 174(1)(b) On-going disclosure in a fixed fee regime where professional fees are fixed would include where the costs increase significantly due to an increase in disbursements and therefore the total legal costs. LPUL: Information under 174(1)(b) must include sufficient and reasonable amount of information about impact of the change on the legal costs that will be payable as to allow client to make informed decision about future conduct of matter (174(2)(b)); Law practice must take all reasonable steps to satisfy itself that client has understood and given consent to proposed course of action for conduct of matter and proposed costs (174(3))
DI SCLOSURE Consent & Understanding s 174(2)(b) Information under 174(1)(b) (re any significant change) must include sufficient and reasonable amount of information about the impact the change will have on the legal costs that will be payable as to allow client to make an informed decision about the future conduct of the matter s 174(3) Law practice must take all reasonable steps to satisfy itself that the client has understood AND given consent to the proposed course of action for conduct of the matter and proposed costs as disclosed under 174(1)(a) (basis for charging and estimate of total legal costs) LPUL: need for steps to be taken to ensure informed consent obtained Compliance tip: explain costs implications of proposed course of action to client, ensure the client signs to signify they understand and agree to the course of action; not a ‘set and forget’ consent but requirement for constant information flow from the law practice regarding costs; recommend also seeking signature to signify understanding and consent to costs implications of next steps when significant change triggers update
DI SCLOSURE Written disclosure s 174(6) A disclosure under this section must be made in writing, but the requirement for writing does not affect the law practice's obligations under subsection (3) (i.e. client’s consent & understanding) LPUL: Disclosure must be in writing but this does not affect obligations under s 174(3) that client needs to understand and to consent Compliance tip: written disclosure of itself is not enough, still need client to understand and accept; if client does not have sufficient command of the English language, use interpreter or give disclosure in the appropriate language Disclosure obligations where another law practice retained s 175 (1) If a law practice (the first law practice) intends to retain another law practice (the second law practice ) on behalf of a client, the first law practice must disclose to the client the details specified in section 174(1) in relation to the second law practice, in addition to any information required to be disclosed to the client under section 174. LPUL: Need to disclose all matters under s 174(1) (basis for charging, total legal costs) Compliance tip: take initiative and send barrister (i.e. 2 nd law practice) a pro forma disclosure document to fill out and return (see YLF precedent); discuss costs upfront and manage workload by limiting retainer, if appropriate; discussing a budget is another option with the barrister. Should be in writing
Recommend
More recommend
