COSTS AGREEMENTS AND COSTS AGREEMENTS AND DISCLOSURESDISCLOSURES

BAR ASSOCIATION CPD SEMINARBAR ASSOCIATION CPD SEMINAR2 AUGUST 20072 AUGUST 2007

By Roger Traves SCBy Roger Traves SC

TOPICSTOPICS

1.1. The effect of s.319 of the LPA, and The effect of s.319 of the LPA, and the “six month moratorium” on the “six month moratorium” on costs agreementscosts agreements

2.2. Barristers and “trust money”, s.246 Barristers and “trust money”, s.246 of the LPAof the LPA

3.3. Costs disclosures and direct access Costs disclosures and direct access briefsbriefs

Section 319 and the six month Section 319 and the six month “moratorium”“moratorium”

Section 319 provides for three bases Section 319 provides for three bases upon which costs may be recoveredupon which costs may be recovered

1.1. According to a costs agreement;According to a costs agreement;2.2. If there is no costs agreement, under If there is no costs agreement, under

the applicable scale of costs;the applicable scale of costs;3.3. If there is no costs agreement, and no If there is no costs agreement, and no

applicable scale, then the fair and applicable scale, then the fair and reasonable value of the services – see reasonable value of the services – see s.341(2) for criteria for assessments.341(2) for criteria for assessment

The barrister’s exceptionThe barrister’s exception

Section 319(2) provides ss.(1) does not Section 319(2) provides ss.(1) does not apply in relation to the recovery of costs apply in relation to the recovery of costs for work by a barrister retained for work by a barrister retained before before the relevant daythe relevant day to perform to perform that workthat work

• The relevant day is 1 January 2008The relevant day is 1 January 2008

• ““that work” directs attention to the that work” directs attention to the particular retainerparticular retainer, not the matter , not the matter generallygenerally

Recovery of fees where the Recovery of fees where the exception appliesexception applies

Where the exception applies, barrister may Where the exception applies, barrister may charge fees in the way done before 1 July charge fees in the way done before 1 July 2007. 2007. However:However:

• the exception relates to costs the exception relates to costs agreements, not to disclosure obligations agreements, not to disclosure obligations which commenced on 1 July 2007which commenced on 1 July 2007

• Whether or not the disclosure Whether or not the disclosure requirements have been satisfied will requirements have been satisfied will affect how much can be recoveredaffect how much can be recovered

Fees re work for which Fees re work for which barrister retained in period of barrister retained in period of moratoriummoratorium• If barrister has disclosed, then fee charged If barrister has disclosed, then fee charged

recoverable in the usual wayrecoverable in the usual way

• If barrister has not disclosed, in accordance If barrister has not disclosed, in accordance with the Act, then s.316(5)(b) may apply so as with the Act, then s.316(5)(b) may apply so as to prevent the barrister from recovering fees to prevent the barrister from recovering fees until they have been assesseduntil they have been assessed

• S.316 will apply where because of the S.316 will apply where because of the barrister’s non-disclosure the solicitor has not barrister’s non-disclosure the solicitor has not been able to disclose the relevant information been able to disclose the relevant information to the client to the client

Summary on the s.316 Summary on the s.316 exceptionexception

• Useful to the extent that if there is no Useful to the extent that if there is no dispute, fees may be charged in the dispute, fees may be charged in the usual wayusual way

• Does not remove need for disclosure Does not remove need for disclosure from 1 July 2007from 1 July 2007

• If you do not comply with disclosure If you do not comply with disclosure rules, risk fees being assessed before rules, risk fees being assessed before recovery of assessed amount – recovery of assessed amount – private list available to that extentprivate list available to that extent

BARRISTERS AND TRUST BARRISTERS AND TRUST MONEY: ss237, 246MONEY: ss237, 246

• Relevantly for barristers, “trust money” Relevantly for barristers, “trust money” includes money received by the barrister includes money received by the barrister (a law practice) on account of legal costs (a law practice) on account of legal costs in advance of providing the legal in advance of providing the legal services: s.237, definition of “trust services: s.237, definition of “trust money”money”

• S.246(1): a barrister is not in the course S.246(1): a barrister is not in the course of practising as a barrister to receive of practising as a barrister to receive trust moneytrust money

Consequences of the “trust Consequences of the “trust money” prohibition in s.246money” prohibition in s.246

• The old fee on brief can no longer be The old fee on brief can no longer be acceptedaccepted

• Retainers probably cannot be Retainers probably cannot be acceptedaccepted

• This applies to direct access briefs This applies to direct access briefs also: see the amendments to rule 84 also: see the amendments to rule 84 of the Barrister’s Rules, with s.246 of the Barrister’s Rules, with s.246

Disclosure, costs agreements Disclosure, costs agreements and direct access briefsand direct access briefs

Regulatory requirements Regulatory requirements

• Disclosure to direct access client under Disclosure to direct access client under rule 83 of the Barristers Rules eg.rule 83 of the Barristers Rules eg.– What is barristers work under rr 77 and 78What is barristers work under rr 77 and 78– Disadvantages in not having a solicitorDisadvantages in not having a solicitor

• Practice Direction 2/2006 – litigation dutiesPractice Direction 2/2006 – litigation duties

• Disclosure and costs agreements under Disclosure and costs agreements under the Legal Profession Act the Legal Profession Act

Between whom may a costs Between whom may a costs agreement be made? (s.322)agreement be made? (s.322)

• Between a client and a barrister Between a client and a barrister where the client retains the barristerwhere the client retains the barrister

• Between a client and a barrister Between a client and a barrister where the barrister is retained by a where the barrister is retained by a solicitorsolicitor

• Between a barrister and a solicitor Between a barrister and a solicitor where the solicitor retains the where the solicitor retains the barrister on behalf of the clientbarrister on behalf of the client

Client agreements between Client agreements between barrister and client – direct barrister and client – direct accessaccess• Must be in writing or evidenced by Must be in writing or evidenced by

writing (s.322)writing (s.322)

• May consist of a written offer accepted May consist of a written offer accepted in writing or by conduct (s.322)in writing or by conduct (s.322)

• Must clearly state it is an offer to enter a Must clearly state it is an offer to enter a costs agreement (s.322)costs agreement (s.322)

• And that it may be accepted in writing or And that it may be accepted in writing or by conduct, saying what conduct (s.322)by conduct, saying what conduct (s.322)

Speculative agreements are Speculative agreements are contemplated by the Act contemplated by the Act (s.323)(s.323)• An agreement may provide that payment of An agreement may provide that payment of

the fees are dependent on a successful the fees are dependent on a successful outcome, except family and criminal mattersoutcome, except family and criminal matters

• Conditions must be clearly statedConditions must be clearly stated

• Cooling off period of 5 daysCooling off period of 5 days

• Statement that client has been informed of Statement that client has been informed of right to obtain independent adviceright to obtain independent advice

• Such an agreement may include an uplift fee Such an agreement may include an uplift fee (s.324)(s.324)

Speculative agreements – Speculative agreements – uplift fee (s.324)uplift fee (s.324)

• Basis of uplift must be separately Basis of uplift must be separately identifiedidentified

• Estimate or range of estimates of Estimate or range of estimates of uplift fee must be includeduplift fee must be included

• Uplift must not be any greater than Uplift must not be any greater than 25% of the legal costs otherwise 25% of the legal costs otherwise payablepayable

• No contingency fees (s.325)No contingency fees (s.325)

Disclosure: Barrister becomes Disclosure: Barrister becomes legal practice which discloses legal practice which discloses to clientto client• Where a barrister is retained by a solicitor, Where a barrister is retained by a solicitor,

the solicitor is under the primary obligation the solicitor is under the primary obligation to disclose to client under s.308to disclose to client under s.308

• Where the barrister takes the brief directly, Where the barrister takes the brief directly, the barrister has the obligations under s.308the barrister has the obligations under s.308

• The disclosure must be before or as soon as The disclosure must be before or as soon as practicable after the barrister is retained by practicable after the barrister is retained by the client (s.310)the client (s.310)

• And it must be in writing (s.310)And it must be in writing (s.310)

Further disclosure Further disclosure obligationsobligations

• Further disclosure obligations:Further disclosure obligations:– s.312 (settlements); s.312 (settlements); – s313 (uplift fees); s313 (uplift fees); – s.315 (continuing obligation)s.315 (continuing obligation)

Failure to disclose post 1 July Failure to disclose post 1 July 20072007

• S.316 provides that where there has S.316 provides that where there has not been disclosure, the client need not been disclosure, the client need not pay the costs unless they have not pay the costs unless they have been assessed under division 7been assessed under division 7

• Failure is capable of constituting Failure is capable of constituting unsatisfactory professional conduct unsatisfactory professional conduct or professional misconductor professional misconduct

What must be disclosedWhat must be disclosed

• Read the Act, particularly s.308Read the Act, particularly s.308• The basis upon which the costs will be The basis upon which the costs will be

calculatedcalculated• Client’s rightsClient’s rights

– The right to negotiateThe right to negotiate– The right to receive an itemized billThe right to receive an itemized bill– To be notified of any changeTo be notified of any change– To progress reportsTo progress reports

• Estimate or range of estimatesEstimate or range of estimates

What must be disclosed What must be disclosed (continued)(continued)

• Details of intervals of billingDetails of intervals of billing

• Interest rate on outstanding feesInterest rate on outstanding fees

• If the matter is litigiousIf the matter is litigious– The range of costs which might be recoveredThe range of costs which might be recovered– The range of costs the client may be ordered to payThe range of costs the client may be ordered to pay

• Details of persons with whom client may Details of persons with whom client may discuss costsdiscuss costs

• Avenues to dispute the costsAvenues to dispute the costs

• Time limits for contesting billTime limits for contesting bill

Limited exceptions to Limited exceptions to disclosure obligations (s.311)disclosure obligations (s.311)

• Where total bill less likely to be less than $750Where total bill less likely to be less than $750

• Where client has received a disclosure Where client has received a disclosure statement from barrister within the last 12 statement from barrister within the last 12 monthsmonths

• Client has agreed in writing to waive Client has agreed in writing to waive requirement and barrister reasonably believes requirement and barrister reasonably believes not requirednot required

• Other exceptions unlikely to apply in direct Other exceptions unlikely to apply in direct access circumstancesaccess circumstances

Additional requirements on Additional requirements on settlement of matter (s.312 )settlement of matter (s.312 )

• The additional requirements apply where The additional requirements apply where a barrister negotiates the settlement of a barrister negotiates the settlement of a litigious matter on behalf of a clienta litigious matter on behalf of a client

• Before the settlement is executedBefore the settlement is executed– Reasonable estimate of fees payable by Reasonable estimate of fees payable by

client if matter is settledclient if matter is settled– Reasonable estimate of the contribution to Reasonable estimate of the contribution to

those costs likely to be received from those costs likely to be received from another partyanother party

Disclosure in respect of uplift Disclosure in respect of uplift fees: s.313fees: s.313

If a costs agreement involves an uplift If a costs agreement involves an uplift fee, law practice must before entering fee, law practice must before entering agreementagreement

• Disclose in writing the law practice’s Disclose in writing the law practice’s legal costslegal costs

• The uplift fee or the basis of its The uplift fee or the basis of its calculationcalculation

• The reasons why uplift fee warrantedThe reasons why uplift fee warranted

Continuing disclosure Continuing disclosure obligation: s.315obligation: s.315

A law practice must, in writing, A law practice must, in writing, disclose to a client any substantial disclose to a client any substantial change to anything included in the change to anything included in the disclosure already made under this disclosure already made under this division as soon as is reasonably division as soon as is reasonably practicable after the law practice practicable after the law practice becomes aware of that changebecomes aware of that change

Consequences of non-Consequences of non-disclosure or bad disclosure or bad disclosure(s.316)disclosure(s.316)• The client need not pay the legal costs unless The client need not pay the legal costs unless

they have been assessedthey have been assessed

• Until assessment, barrister cannot take Until assessment, barrister cannot take proceedings against the clientproceedings against the client

• Client may seek to have the agreement set Client may seek to have the agreement set aside under s.328aside under s.328

• Failure by the barrister to comply with the Failure by the barrister to comply with the division is capable of constituting division is capable of constituting unsatisfactory professional conduct or unsatisfactory professional conduct or professional misconduct professional misconduct