COSTS AGREEMENTS AND DISCLOSURES BAR ASSOCIATION CPD SEMINAR 2 AUGUST 2007 By Roger Traves SC

TOPICS 1. The effect of s.319 of the LPA, and the “six month moratorium” on costs agreements 2. Barristers and “trust money”, s.246 of the LPA 3. Costs disclosures and direct access briefs

Section 319 and the six month “moratorium” Section 319 provides for three bases upon which costs may be recovered 1. According to a costs agreement; 2. If there is no costs agreement, under the applicable scale of costs; 3. If there is no costs agreement, and no applicable scale, then the fair and reasonable value of the services – see s.341(2) for criteria for assessment

The barrister’s exception Section 319(2) provides ss.(1) does not apply in relation to the recovery of costs for work by a barrister retained before the relevant day to perform that work The relevant day is 1 January 2008 The relevant day is 1 January 2008 “that work” directs attention to the particular retainer, not the matter generally “that work” directs attention to the particular retainer, not the matter generally

Recovery of fees where the exception applies Where the exception applies, barrister may charge fees in the way done before 1 July However: the exception relates to costs agreements, not to disclosure obligations which commenced on 1 July 2007 the exception relates to costs agreements, not to disclosure obligations which commenced on 1 July 2007 Whether or not the disclosure requirements have been satisfied will affect how much can be recovered Whether or not the disclosure requirements have been satisfied will affect how much can be recovered

Fees re work for which barrister retained in period of moratorium If barrister has disclosed, then fee charged recoverable in the usual way If barrister has disclosed, then fee charged recoverable in the usual way If barrister has not disclosed, in accordance with the Act, then s.316(5)(b) may apply so as to prevent the barrister from recovering fees until they have been assessed If barrister has not disclosed, in accordance with the Act, then s.316(5)(b) may apply so as to prevent the barrister from recovering fees until they have been assessed S.316 will apply where because of the barrister’s non-disclosure the solicitor has not been able to disclose the relevant information to the client S.316 will apply where because of the barrister’s non-disclosure the solicitor has not been able to disclose the relevant information to the client

Summary on the s.316 exception Useful to the extent that if there is no dispute, fees may be charged in the usual way Useful to the extent that if there is no dispute, fees may be charged in the usual way Does not remove need for disclosure from 1 July 2007 Does not remove need for disclosure from 1 July 2007 If you do not comply with disclosure rules, risk fees being assessed before recovery of assessed amount – private list available to that extent If you do not comply with disclosure rules, risk fees being assessed before recovery of assessed amount – private list available to that extent

BARRISTERS AND TRUST MONEY: ss237, 246 Relevantly for barristers, “trust money” includes money received by the barrister (a law practice) on account of legal costs in advance of providing the legal services: s.237, definition of “trust money” Relevantly for barristers, “trust money” includes money received by the barrister (a law practice) on account of legal costs in advance of providing the legal services: s.237, definition of “trust money” S.246(1): a barrister is not in the course of practising as a barrister to receive trust money S.246(1): a barrister is not in the course of practising as a barrister to receive trust money

Consequences of the “trust money” prohibition in s.246 The old fee on brief can no longer be accepted The old fee on brief can no longer be accepted Retainers probably cannot be accepted Retainers probably cannot be accepted This applies to direct access briefs also: see the amendments to rule 84 of the Barrister’s Rules, with s.246 This applies to direct access briefs also: see the amendments to rule 84 of the Barrister’s Rules, with s.246

Disclosure, costs agreements and direct access briefs Regulatory requirements Disclosure to direct access client under rule 83 of the Barristers Rules eg. Disclosure to direct access client under rule 83 of the Barristers Rules eg. –What is barristers work under rr 77 and 78 –Disadvantages in not having a solicitor Practice Direction 2/2006 – litigation duties Practice Direction 2/2006 – litigation duties Disclosure and costs agreements under the Legal Profession Act Disclosure and costs agreements under the Legal Profession Act

Between whom may a costs agreement be made? (s.322) Between a client and a barrister where the client retains the barrister Between a client and a barrister where the client retains the barrister Between a client and a barrister where the barrister is retained by a solicitor Between a client and a barrister where the barrister is retained by a solicitor Between a barrister and a solicitor where the solicitor retains the barrister on behalf of the client Between a barrister and a solicitor where the solicitor retains the barrister on behalf of the client

Client agreements between barrister and client – direct access Must be in writing or evidenced by writing (s.322) Must be in writing or evidenced by writing (s.322) May consist of a written offer accepted in writing or by conduct (s.322) May consist of a written offer accepted in writing or by conduct (s.322) Must clearly state it is an offer to enter a costs agreement (s.322) Must clearly state it is an offer to enter a costs agreement (s.322) And that it may be accepted in writing or by conduct, saying what conduct (s.322) And that it may be accepted in writing or by conduct, saying what conduct (s.322)

Speculative agreements are contemplated by the Act (s.323) An agreement may provide that payment of the fees are dependent on a successful outcome, except family and criminal matters An agreement may provide that payment of the fees are dependent on a successful outcome, except family and criminal matters Conditions must be clearly stated Conditions must be clearly stated Cooling off period of 5 days Cooling off period of 5 days Statement that client has been informed of right to obtain independent advice Statement that client has been informed of right to obtain independent advice Such an agreement may include an uplift fee (s.324) Such an agreement may include an uplift fee (s.324)

Speculative agreements – uplift fee (s.324) Basis of uplift must be separately identified Basis of uplift must be separately identified Estimate or range of estimates of uplift fee must be included Estimate or range of estimates of uplift fee must be included Uplift must not be any greater than 25% of the legal costs otherwise payable Uplift must not be any greater than 25% of the legal costs otherwise payable No contingency fees (s.325) No contingency fees (s.325)

Disclosure: Barrister becomes legal practice which discloses to client Where a barrister is retained by a solicitor, the solicitor is under the primary obligation to disclose to client under s.308 Where a barrister is retained by a solicitor, the solicitor is under the primary obligation to disclose to client under s.308 Where the barrister takes the brief directly, the barrister has the obligations under s.308 Where the barrister takes the brief directly, the barrister has the obligations under s.308 The disclosure must be before or as soon as practicable after the barrister is retained by the client (s.310) The disclosure must be before or as soon as practicable after the barrister is retained by the client (s.310) And it must be in writing (s.310) And it must be in writing (s.310)

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

Failure to disclose post 1 July 2007 S.316 provides that where there has not been disclosure, the client need not pay the costs unless they have been assessed under division 7 S.316 provides that where there has not been disclosure, the client need not pay the costs unless they have been assessed under division 7 Failure is capable of constituting unsatisfactory professional conduct or professional misconduct Failure is capable of constituting unsatisfactory professional conduct or professional misconduct

What must be disclosed Read the Act, particularly s.308 Read the Act, particularly s.308 The basis upon which the costs will be calculated The basis upon which the costs will be calculated Client’s rights Client’s rights –The right to negotiate –The right to receive an itemized bill –To be notified of any change –To progress reports Estimate or range of estimates Estimate or range of estimates

What must be disclosed (continued) Details of intervals of billing Details of intervals of billing Interest rate on outstanding fees Interest rate on outstanding fees If the matter is litigious If the matter is litigious –The range of costs which might be recovered –The range of costs the client may be ordered to pay Details of persons with whom client may discuss costs Details of persons with whom client may discuss costs Avenues to dispute the costs Avenues to dispute the costs Time limits for contesting bill Time limits for contesting bill

Limited exceptions to disclosure obligations (s.311) Where total bill less likely to be less than $750 Where total bill less likely to be less than $750 Where client has received a disclosure statement from barrister within the last 12 months Where client has received a disclosure statement from barrister within the last 12 months Client has agreed in writing to waive requirement and barrister reasonably believes not required Client has agreed in writing to waive requirement and barrister reasonably believes not required Other exceptions unlikely to apply in direct access circumstances Other exceptions unlikely to apply in direct access circumstances

Additional requirements on settlement of matter (s.312 ) The additional requirements apply where a barrister negotiates the settlement of a litigious matter on behalf of a client The additional requirements apply where a barrister negotiates the settlement of a litigious matter on behalf of a client Before the settlement is executed Before the settlement is executed –Reasonable estimate of fees payable by client if matter is settled –Reasonable estimate of the contribution to those costs likely to be received from another party

Disclosure in respect of uplift fees: s.313 If a costs agreement involves an uplift fee, law practice must before entering agreement Disclose in writing the law practice’s legal costs Disclose in writing the law practice’s legal costs The uplift fee or the basis of its calculation The uplift fee or the basis of its calculation The reasons why uplift fee warranted The reasons why uplift fee warranted

Continuing disclosure obligation: s.315 A law practice must, in writing, disclose to a client any substantial change to anything included in the disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change

Consequences of non-disclosure or bad disclosure(s.316) The client need not pay the legal costs unless they have been assessed The client need not pay the legal costs unless they have been assessed Until assessment, barrister cannot take proceedings against the client Until assessment, barrister cannot take proceedings against the client Client may seek to have the agreement set aside under s.328 Client may seek to have the agreement set aside under s.328 Failure by the barrister to comply with the division is capable of constituting unsatisfactory professional conduct or professional misconduct Failure by the barrister to comply with the division is capable of constituting unsatisfactory professional conduct or professional misconduct