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BARRISTERS’FEES:
Costdisclosure,retainers,assessment,theprivatelistandtherighttosue
MichaelAmerena
1. The Bar is a profession not a business. However, the pursuit of ethical
imperatives in priority to profits does not mean that barristers ought not be
efficient and business‐like in the conduct of their practices. If barristers are
efficient and business‐like in the conduct of their practices, there is a
performance bonus for the community. Barristers who are efficient and
business‐like in their practices are better positioned to unselfishly serve the
needs of deserving but impecunious litigants and the public interest generally.
2. The prospect of unhelpful fee disputes can be lessened by transparent cost
disclosure and clear retainer agreements. Timely, principled, proactive and
pragmatic management of fee disputes can reduce their impact and enable the
barrister to resume more quickly and contentedly the more productive aspects
of his or her practice.
Ethical imperatives in respect of fees
3. Fees charged must be proper and reasonable in all the circumstances1.
4. Contingency fees (as opposed to speculative fees) are prohibited2.
5. The uplift factor in any speculative fee must not exceed 50%3.
6. If fees charged, which are not reasonable and proper, are contingency fees, or
are speculative fees involving uplift of greater than 50%, then no amount of
costs disclosure nor any term in a retainer will excuse the unprofessional or
even professional misconduct involved in such behaviour.
1 See rr. 118 and 119 of the Barristers Rules 2007 2 See r. 120 of the Barristers Rules 2007 3 See r. 121 of the Barristers Rules 2007; the better view is that the cap of 25% referred to in
s.324 of the Legal Profession Act 2007 (“the Act”) refers to the solicitor’s or direct access barrister’s legal costs in the solicitor’s conditional cost agreement with the client; see s.323(3)(c)(iii), (d) and (e) and (5) of the Act
2 7. Finally, it should be remembered that the Act does not permit conditional, ie
speculative cost agreements, in a matter that involves criminal proceedings or
proceedings under the Family Law Act, 1975 (Cth)4.
Cost disclosure
8. A barrister being offered a brief from a solicitor must make cost disclosure to
the solicitor in accordance with s.309(2) of the Act. Such a barrister is not
required to make disclosure directly to the client.
9. Section 309 of the Act generally requires the barrister to disclose to the
solicitor:
the basis upon which the barrister’s legal costs will be calculated and
perhaps whether a scale of costs applies to any of the legal costs;5 in a
conditional, ie speculative brief this will include the basis for the
calculation of the uplift fee and the reason why an uplift fee is
warranted6;
an estimate of the total legal costs if reasonably practicable or, if that is
not reasonably practicable, a range of estimates of the total legal costs
and explanation of the major variables that will affect the calculation of
those costs7;
details of the intervals, if any, at which the client will be billed8.
10. I say “generally” because the obligation on such a barrister is only to provide
“the information necessary” for the solicitor to comply with his or her
obligations under s.309(1) of the Act. Essentially, it is the solicitor who must tell
the client in writing of the matters concerning the barrister’s fees just
mentioned. Thus, for instance, there is doubt as to whether or not it is
“necessary” on the part of such a barrister to inform the solicitor whether a
scale of costs applies to the barrister’s fees. The argument proceeds that this is
4 see s.323(2) of the Act 5 See s. 308(1)(a) of the Act 6 see s.313(1), which does not apply in the case of a sophisticated client, ie a client of the type
referred to in s.311(1)(c) or (d) of the Act 7 See 2. 308(1)(c) of the Act 8 See s. 308(1)(d) of the Act
3
a matter of law which the solicitor ought be aware of without being told by the
barrister.
11. Strictly speaking, the Act does not require a barrister being offered a brief from
a solicitor to make cost disclosure in writing to the solicitor. Rather, it is the
solicitor who must in writing to his or her client, disclose in accordance with
s.309(1) before or as soon as practicable after the barrister is retained the
matters referred to in s.308(1)(a), (c) and (d) concerning the barrister’s fees.
12. This observed, it cannot be stressed enough that it is quite imprudent for a
barrister being briefed by a solicitor not to make written cost disclosure to the
solicitor. For a barrister to allow room for disputes as to the contents of
conversations about fees or having to resort to inferring matters about fees
from past dealings, invites trouble.
13. Amongst other things, a failure to make cost disclosure in writing exposes a
barrister unnecessarily to the risk of allegations that may be hard to disprove
that he or she did not make cost disclosure in accordance with the Act. This is a
circumstance which is capable of constituting unsatisfactory professional
conduct or even professional misconduct; see s.316(7) of the Act.
14. Further, a failure to make written cost disclosure, will in practice likely also
result in there being no costs agreement within the meaning of the Act as a
costs agreement must be written or evidenced in writing; see s.322(2) and (3) of
the Act. Thus, if the barrister seeks to recover his or her legal costs, the barrister
concerned will be limited to costs on the applicable scale of costs or if there is
no applicable scale of costs, the fair and reasonable value of the legal services
provided; see s.319(1) of the Act.
15. After a barrister makes the initial cost disclosure to his instructing solicitor
described above, there is some uncertainty as to the extent of further cost
disclosure which the barrister is obliged to make under the Act.
16. The better view, in my opinion, is that a barrister is only required, if a solicitor
has received a reasonable request from his or her non‐sophisticated client for a
progress report, to disclose any information necessary for the solicitor to
4
comply with that report; see s.317(3) of the Act. Correspondingly, in my
opinion, s.312 (Additional disclosure – settlement of litigious matters) and s.315
(Ongoing obligation to disclose) are confined in their operation to disclosure as
between the solicitor and the solicitor’s client.
17. These matters observed, however, whether a barrister is obliged or not to make
further disclosure, it is nonetheless prudent to do so if some event occurs which
significantly affects the reliability of the initial cost disclosure. For instance, the
initial cost disclosure may have been posited on the notion of a 2 to 3 day trial.
Later, it may become apparent that this is a significant underestimate of the
length of the trial. In those circumstances, it is my practice, not because I
believe I am obliged to, but simply for prudent management reasons, to revise
the estimate of fees I have made in my initial cost disclosure. Similarly and for
reason of prudent management only I always respond promptly to any request
by a solicitor to confirm or advise my fees in anticipation of a settlement.
18. By contrast with this comparatively benign regime, a barrister being offered a
direct access brief must make considerably more cost disclosure to the client
under ss. 308, 310, 312, 313, 314, 315, 317 and, if an associated third party
payer is involved, s. 318 of the Act.
19. The totality of consequences for a barrister in failing to make adequate or any
costs disclosure to an instructing solicitor as required under division 3 of part
3.4 of the Act is less than clear. It is sometimes said that a consequence is that a
client may seek to have the costs agreement set aside under s.328(1) and (2) of
the Act. However, it is at least arguable that those provisions do not confer
upon a solicitor the right to have the barrister’s retainer with that solicitor set
aside. Even more problematic is the effect, pursuant to s.316 of the Act of a
failure to disclose on a barrister’s right to recover fees from a solicitor which is
dealt with later in this paper.9
Avoiding problems with retainers
20. Almost universally, barristers in Queensland make cost disclosure and evidence
in writing their costs agreements with their instructing solicitor in one letter. I
9 at paras 95 to 101
5
will call such a cost agreement, as it was traditionally called, a retainer and that
type of letter, a cost disclosure/retainer letter.
21. Such letters are typically based on the BAQ cost disclosure template which is a
pro forma document initially drafted by a former President of the BAQ, now His
Honour Fraser JA. More recently, the current President of the BAQ, Richard
Douglas SC, has provided a pro forma template specifically directed to a
speculative retainer.
22. Attached are the current versions of both templates.
23. BAQ, of course, takes no responsibility for the efficacy of either of these two
pro forma cost disclosure/retainer letters. Making adequate cost disclosure and
striking appropriate retainers are always the responsibility of the individual
barrister.
24. This disclaimer made, I would strongly recommend that all barristers think long
and hard before they remove from their cost disclosure/retainer letters any
element of these templates.
25. I turn now to a miscellany of issues concerning retainers, which in my
experience as the Honorary Secretary, tend to cause problems when fee
disputes develop.
26. Firstly, poor record keeping. In some cases I have come across, it is clear that
there have been cost disclosure/retainer letters and other important
correspondence relating to the dispute, but the barrister has lost them.
Electronic record keeping generally by younger members of the Bar can be just
as deficient as the hard copy record keeping generally practised by older
members of the Bar. Whether records are kept electronically or as hard copy, I
would strongly recommend that there be a single, dedicated file arranged in
alphabetical order apropos the instructing solicitors where in respect of each
matter the cost disclosure/retainer letter and any correspondence including
accounts rendered and letters complaining of non‐payment etc. are kept.
Keeping running accounts of fees in matters whether electronically or on cards
is also convenient and helpful.
6 27. Secondly, there can be a failure to clearly identify that the retainer is between
the barrister and the solicitor as principal, albeit on behalf of the solicitor’s lay
client. Some solicitors take advantage of the poor wording in cost disclosure
retainer letters to later suggest that the contract of retainer in the letter is
between the barrister and the client only, and that they were mere agents for
their client as principal. This is particularly a problem if the retainer neglects to
include a passage equivalent to the second dot point on the first page of the
BAQ cost disclosure template. The Act does not assist a barrister in such a
dispute as s. 322(1)(b) appears to provide that a cost agreement may be made
between a barrister and a client, even though the client has a solicitor.
28. Thirdly, surprisingly, there can be a failure to adequately identify the extent and
nature of the work to be performed under the retainer. A related problem is a
failure, where the barrister has performed an earlier step; to create a new cost
disclosure/retainer letter for work involving a different and later step in the
same proceeding. Though the solicitor has, in these circumstances, some idea
(one could not put it any higher than that) of the barrister’s rates, other
elements of cost disclosure are plainly deficient. One pragmatic way to avoid
this type of problem is to seek to negotiate a retainer not just for the next step
in the proceedings, but for the conduct of all of the barrister’s work in the
specified proceedings until settlement or judgment therein, ie what in England
was called a special retainer10. One must be careful though not to have a clash
of obligations under special retainers. Such a clash can be resolved by
including, in the cost disclosure retainer letter, a discretion in appropriate
circumstances to prefer other work to that to be performed under the special
retainer.
29. Fourthly, all too often a problem is the failure to adequately identify the event
of contingency in a speculative brief and that brief’s related “conditional costs
agreement”. Section 323(1) of the Act provides that a cost agreement may
provide that payment of some or all of the legal costs is conditional on the
10 see eg “Halsbury’s Laws of England” 3rd ed, Vol 3, p.57 at para 87; the existence of special
retainers has been recognised in Queensland; see Fashion Warehouse Pty Ltd v. Polab [1984] 1 Qd R 251 per G.N. Williams J. at 252; as to special retainers more generally, see r. 112 of the Victorian Bar Inc Practice Rules, Rules of Conduct (effective 28 April 2008) reproduced in “Legal Costs Victoria” at para [1965] and “Quick on Costs” at paras [8.690] to [8.730]
7
successful outcome of the matter to which those costs relate. Section 323(3)(a)
of the Act more particularly provides that a conditional costs agreement:
“… must set out the circumstances that constitute the successful outcome of the matter to which it relates.”
Simply stating in the costs disclosure/retainer letter that your fees will be
payable upon the successful outcome of the proceedings does not satisfy s.
323(3)(a) of the Act. In a speculative brief, numerous matters require clarity in
the definition of the event of contingency. Does the judgment have to exceed
the amount to be refunded? Does the plaintiff have to receive, after paying his
costs, something in the hand? If not enough is received to pay the proper fees
of solicitor and counsel, then is that inadequate amount to be shared? And so
on.
30. Fifthly, and again related to speculative briefs are the difficulties encountered
by barristers:
in ensuring proceedings are efficiently prosecuted by the solicitor in a
timeous way; and
in being paid when the client changes solicitors.
As to the former difficulty, besides placing a positive obligation upon solicitors
to efficiently and timeously prosecute the proceeding, a barrister should also
consider requiring the solicitor to report every 3 months on the status of the
proceeding. As to the latter difficulty, a provision that the old solicitor is bound
to pay the barrister’s fees without uplift unless the new solicitor promptly briefs
that barrister on the same speculative terms is worth considering. The old
solicitor can adequately protect him or herself by a corresponding obligation in
his or her costs agreement with the client.
31. Sixthly, an estimate is not a quote. No one complains about the builder who
protects itself with a latent condition clause against subterranean site
conditions which it could not have reasonably anticipated. The best and most
reasonable estimates can be undone by matters outside of the barrister’s
control. For instance, your client or your instructing solicitor may not tell you
8
about matters which affect the estimate. Further, such estimates can also be
undone by facts and legal argument later advanced by your opponent – some
with and some without merit. To prevent the clients and sometimes their
solicitors wrongly assuming an estimate is a quote, there is much to be said for
explicitly explaining that it is not a quote in the costs disclosure/retainer letter.
32. Seventhly, charging interest. The traditional position was that the barrister
could only charge interest if he or she had an express written agreement with
the instructing solicitor to that effect. Traditionally barristers rarely charged
interest. Nowadays the matter is governed by s. 321 of the Act. I would
recommend that you make provision in your costs disclosures/retainer letters
permitting you to charge interest in the manner envisaged in the templates. It
gives the defaulting solicitor an extra motivation to meet his or her obligations.
On the other hand, I would recommend you do not increase the 10% simple
interest rate. Aside from issues about the maximum permissible rate under s.
321, 10% simple interest per annum is very easy to calculate and adequately
compensates the barrister for being kept out of his fees. In a fee dispute it is
easily defensible, even on a moral basis. Do not overlook putting on your tax
invoices a statement that:
“Interest is payable on unpaid legal costs at a rate of 10% simple interest per annum”
as required by s. 321(2) of the Act.
33. Eighthly, barristers need to be commercially alive to the changing environment
in which they practise. One change to that environment since the passage of
the Act has been the existence in ever increasing numbers of incorporated legal
practices. The insolvency of incorporated legal practices has already resulted in
some barristers not being paid their fair and reasonable fees for work
performed. Whilst on some of these occasions the mechanism of the Private
List has alleviated problems arising from insolvent incorporated legal practices,
it has become clear that on most of these occasions it will not be an adequate
remedy. Of course with an unincorporated legal practice each of the partners in
the practice at the time the retainer was entered into is personally obliged to
pay any outstanding barristers’ fees. To assist members, Bar Council recently
9
approved the introduction of a new clause into the BAQ Costs Disclosure
template, the aim of which is to bind legal practitioner directors with indemnity
obligations in the event of their incorporated legal practice becoming insolvent.
Obviously use of such a clause is optional. However, I can say that my own
recent use of this clause in my own costs disclosure/retainer letters has drawn
no adverse observations from the solicitors who instruct me.
34. Ninthly, it should not be overlooked that retainers are not only about fees. It
appears not uncommon, although not yet to be the norm, for barristers to
include, as they are entitled to, provisions in their costs disclosure/retainer
letter which prescribe the manner in which briefs are to be prepared and the
standard of the preparation of those briefs.
35. Finally, to bring this non‐exhaustive miscellany to an end I mention the
contentious issue of cancellation fees.
36. Cancellation fees are only chargeable as part of a costs agreement within the
meaning of the Act. If there is no such costs agreement permitting them, then
counsel is not entitled to recover cancellation fees by way of demand, use of
the Private List or by way of suit. Any such attempt may fall into the category of
overcharging and might expose the counsel concerned to prosecution for
unprofessional conduct or even professional misconduct.
37. On the other hand if a cancellation fee is included in your costs
disclosure/retainer letter and its terms are accepted by the solicitor, that
process itself is prima facie evidence that such fees are fair and reasonable in all
the circumstances. After all for this purpose the solicitor is an independent legal
advisor standing between the client and counsel in accepting such an
arrangement.
38. This last however has not stopped one or two solicitors campaigning
vociferously against cancellation fees as a concept. The notions developed to
support this campaign are in my view misconceived.
39. For instance it has been suggested that cancellation fees contravene the so‐
called “Bechara Principle”; as to which see Bechara v Legal Services
10
Commissioner11. In fact that case involved a solicitor overcharging because he
did not apportion at all his fees to reflect the fact that his clients, three
plaintiffs, had each of their proceedings heard together with evidence in one
being evidence in the other. The principle found to be contravened in that case
was expressed as being that “a lawyer cannot charge the same unit of time
more than once”. Bechara v Legal Services Commissioner was undoubtedly
right on its own facts. However the campaigners contend that if counsel obtains
other work from the same client or even from other solicitors and different
clients during the period of the “cancelled” trial, the cancellation fee should
somehow be rendered void or alternatively money earned from that other work
should be able to be clawed back.
40. To my mind cancellation fees are distinguishable from the situation which the
Court of Appeal dealt with in Bechara v Legal Services Commissioner.
41. Barristers are not public servants or even private employees but are in reality
self‐employed persons running their own businesses. Unlike public servants and
private employees, whose regular wages protect them against down time,
barristers must make other arrangements to protect themselves from the
prospects of down time. In this context cancellation fees are in the nature of a
genuine pre‐estimate of work lost to a barrister by committing himself or
herself, in compliance with the cab rank and sole practitioners’ rules, to hearing
dates for a particular client to the exclusion of other potential work. Most
solicitors of course overcome the economic disadvantage of clashing dates by
sharing their work with their partners and underlings or if necessary by briefing
barristers in their stead. Moreover there is a tendency to overlook the fact that
cancellation fees are simply one interdependent part of the whole of the
remuneration package constituted by the barrister’s retainer.
42. This is not to say of course that cancellation fee arrangements accepted by
solicitors are beyond challenge. If the cancellation fee arrangement is not at
least arguably proportionate and reasonable having regard to the resultant
amount charged, the barrister is at risk notwithstanding the acceptance by the
solicitor of that arrangement. For instance, the solicitor may apply for a costs
11 2010 NSWCA 369
11
assessment (and though the costs assessor will be bound by s.340(1)(a) and
341(1)(c) of the Act) the assessor might still regard the cancellation fees as
grossly excessive. Consequently the costs assessor would be obliged under
s.343(3)(a) of the Act to refer the matter to the Legal Services Commission to
consider whether disciplinary action ought to be taken. As to this point; refer
back to paragraph 3 hereof.
43. Thus, for instance, one should expect cancellation fees to progressively
decrease in amount the more notice is given of the settlement or adjournment
of the hearing concerned. Further, perhaps with the exception in some cases of
very short hearings, cancellation fees ought not reflect, save in the most
exceptional circumstances, anywhere near the whole of the appearance fees
which may have been earned if the hearing had progressed. Subject to such
considerations, the agreement of the solicitor to cancellation fees and if so, the
terms of those fees, will often legitimately turn upon idiosyncratic
considerations such as the desire of the solicitor or client concerned to retain
the services of that particular barrister, the nature of the barrister’s practice,
and unusual matters such as the barrister cancelling holidays to appear for the
client at the hearing.
Assessment
44. Division 7 of Part 3.4 of the Act deals with costs assessment.
45. An application for an assessment of the whole or any part of legal costs (“a
costs application”) may be made by:
a client or third party payer under s.335 of the Act;
a law practice retaining another law practice under s.336 of the Act;
a law practice who has given a bill under s.337 of the Act.
It is not entirely clear whether a client or third party payer’s costs application
can be made against a barrister as well as that barrister’s instructing solicitor.
The broad language of s.335 and s.339 of the Act (the latter section containing
provisions which require without apparent discrimination broad notification
and taking persons so notified to be parties to the costs application) suggests
12
this possibility. On the other hand, the structure of Division 7 expressly
permitting a solicitor to bring a costs application against a barrister and the fact
that a barrister may have a costs agreement with a solicitor pursuant to s.322
of the Act tends to suggest the contrary.
46. For present purposes s.336 is of immediate concern to barristers. A costs
application by a solicitor against a barrister proceeds under Part 4 of Chapter
17A of the UCPR; see Rule 678(2)(c). The costs application must be made to
“the relevant court” which means the court “having the lowest monetary limit
to its jurisdiction in the personal action that is not less than the costs claimed”;
see Rule 743. This means that most costs applications by solicitors against
barristers will be made to the Magistrates Court.
47. A costs application by a solicitor against a barrister is subject to a 60 day time
limit running from the day:
the bill was given or the request for payment made; or
the costs were paid if neither the bill was given nor a request made
; see s.336(4) of the Act.
48. A costs application by a solicitor against a barrister cannot be made if there is a
costs agreement between the barrister and the client; see s.336(5) of the Act.
This is a provision unlikely to have much operation in the real world of practice.
In that world, barristers rarely deal with both the client and the solicitor as
principals or simply with the client as a principal notwithstanding the
intervention of the solicitor; see generally s.322(1)(b) of the Act. The cost
disclosure consequences of such arrangements are less than clear. The last style
of arrangement would rarely, in my view, be in the interests of the barrister.
49. The principal purpose of the costs application is to obtain orders facilitating a
costs assessment by a costs assessor. If practicable, the applicant’s solicitor
must nominate a consenting costs assessor, but the selection of the costs
assessor can also be agreed or determined by court direction; see Rules 743A,
743E and 743F.
13 50. An affidavit must accompany a solicitor’s costs application and deal as
appropriate with the following matters:
“(3) If the applicant has an itemised bill for all of the costs to be assessed under the application, a copy of the itemised bill must be an exhibit to the affidavit.
(4) If the applicant does not have an itemised bill for all of the costs to be assessed under the application, the best information the applicant has as to the costs to be assessed must be included in the affidavit.
(5) The affidavit must also –
(a) state whether the applicant disputes or requires assessment of all or what part of the costs; and
(b) if the applicant disputes all or part of the costs, state the grounds on which the applicant disputes the amount of the costs or liability to pay them.”
; see Rule 743A(3), (4) and (5).
51. A bill may either be in the form of a lump sum bill or an itemised bill; see
s.330(1) of the Act. A lump sum bill is defined in s.300 of the Act to mean a bill
that describes the legal services to which it relates and specifies the total
amount of the legal costs. However, the term is also subject to a note to
s.332(1) of the Act which provides that a bill in the form of a lump sum bill
includes a bill other than an itemised bill. It follows that a barrister’s bill which
gives a breakdown and not merely the total amount of the legal costs will, if it
does not have the particularity required of an itemised bill, nonetheless be a
lump sum bill within the meaning of the Act.
52. A solicitor may request of a barrister an itemised bill from the barrister who
must within 28 days comply with that request; see s.332(1)(ii) of the Act. No
specific time period is included in the Act within which such a request must be
made. However, having regard to the definition of an itemised bill in s.300 of
the Act, it may be implicit that a valid request by a solicitor of a barrister for an
itemised bill must be made within the 60 day time limit for a solicitor’s
application for costs assessment set out in s.336(4) of the Act.
53. For completeness I would note that it has been, with some apparent substance,
suggested that s.332 of the Act is inconsistent with s.101 of the Australian
Consumer Law for the purposes of s.109 of the Australian Constitution. If that
14
was so, s.101 of the Australian Consumer Law would prevail to the extent of
that inconsistency. In short compass, that inconsistency would seem to be that
the barrister would have to respond with an itemised bill within 7 days as
opposed to 28 days, albeit the request for an itemised bill could only be made
within 30 days from the supply of the barrister’s services or the barrister’s first
tax invoice. The argument, which I think is respectable, against the existence of
such an inconsistency, is that an itemised bill for the purpose of s.101 of the
Australian Consumer Law is not the same as an itemised bill for the purpose of
the Act, as the latter requires an extra level of detail that would allow the legal
costs concerned to be assessed under division 7 of Part 3.4 of the Act.
54. As appears from the definition of “itemised bill” in s.300 of the Act, the whole
point of requiring an itemised bill is to obtain a bill stating how the costs
charged are made up in a way which allows the costs to be assessed under
Division 7 and particularly ss.340 and 341 of the Act; see Clayton Utz Lawyers v
P & W Enterprises Pty Ltd12 and Turner v Mitchells Solicitors and Business
Advisers Qld13.
55. If there is no itemised bill the relevant court may give the directions it considers
appropriate for an itemised bill to be prepared, filed and served; see Rule 743C.
56. Sections 340 and 341 of the Act, amongst other things, provide:
“340 Assessment of complying costs agreements
(1) A costs assessor for a costs application must assess any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if –
(a) a relevant provision of the costs agreement specifies the amount, or a rate or other means for calculating the amount, of the costs; and
(b) the agreement has not been set aside under section 328;
unless the costs assessor is satisfied that –
(c) the costs agreement does not comply in a material respect with any disclosure requirements of division 3; or
(d) division 5 precludes the law practice concerned from recovering the amount of the costs; or
(e) the parties otherwise agree.
12 [2010] QDC 508 per Reid DCJ at para [31] 13 [2011] QDC 61 per McGill DCJ at para [24]
15
(2) The costs assessor is not required to initiate an examination of the matters mentioned in subsection (1)(c) and (d).
341 Criteria for assessment
(1) In conducting a costs assessment, the costs assessor must consider –
(a) whether or not it was reasonable to carry out the work to which the legal costs relate; and
(b) whether or not the work was carried out in a reasonable way; and
(c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 340 applies to any disputed costs.
…”
(my underlining)
57. From a barrister’s perspective, the importance of having a valid costs
agreement is immediately obvious from the underlined words. If there is no
costs agreement, in effect, the costs assessor determines what is a fair and
reasonable amount of legal costs the barrister may charge considering the
matters enumerated in s.341(2).
58. The progress, course and consequences in an application for costs assessment
may be significantly affected by a directions hearing pursuant to Rule 743G.
Rule 743G, inter alia, provides:
“[r 743G] Directions hearing
743G …
(2) At a directions hearing, the relevant court may consider the following matters –
(a) whether the application has been properly filed and served;
(b) whether notice has been given as required under the Legal Profession Act 2007, section 339(1);
(c) whether it is appropriate to refer the application to mediation;
(d) whether it is appropriate for any question to be tried before the costs are assessed, including, for example –
(i) whether a person claimed to be liable to pay costs is liable to pay those costs; and
16
(ii) whether any costs agreement relied on by the lawyer concerned is void; and
(iii) whether the lawyer concerned was negligent; and
(iv) whether the lawyer concerned was in breach of the contract of retainer; and
(v) whether the lawyer concerned acted without the instructions of, or contrary to the instructions of, the client;
(e) whether anything else should be done before the costs are assessed.
(3) Also, the relevant court may –
(a) if the grounds of dispute relate only to the amount of costs – order that a particular costs assessor be appointed to carry out the costs assessment; or
(b) otherwise – order that the application be heard by the relevant court.”
59. It follows there is scope for a costs assessment to transmogrify, rightly or
wrongly, into a public trial of, amongst other things, whether a barrister has
negligently discharged his retainer or acted without or contrary to his or her
instructions. It follows any barrister receiving a costs application should
therefore not be blasé in responding to it. Amongst other things, professional
indemnity considerations may have to be borne in mind.
60. There is obviously much to be said in seeking a direction referring a solicitor’s
costs application to mediation. In accordance with the protocol governing the
Private List, the BAQ in effect maintains, though the Queensland Law Society no
longer does, a cadre of barristers who act as mediators in fee disputes between
solicitors and barristers. These mediators, out of a desire to advance harmony
between both branches of the profession, mediate without charge in such fee
disputes. If a member wished to have a mediator appointed pursuant to a
direction of the relevant court under Rule 743G, I am confident that the
Honorary Secretary of the Bar Association would likely secure a panel from that
cadre of mediators who would, in the best interests of the profession, consent
to mediate without charge.
61. More subtly, consideration should be given by any barrister who receives a
costs application from a solicitor to the power to be invested in the costs
17
assessor by the relevant court at the directions hearing; see Rules 743G(2)(e),
743I and 714 and 715. This consideration should take place in the context of
Rule 720 which by reason of Rule 743I governs the procedure on assessment to
be followed by the costs assessor.
62. For instance, in my view, a barrister should generally be wary of and agitate
against a costs assessor deciding to carry out the costs assessment on the
papers without an oral hearing. This is because of what is likely to be the typical
subject matter of the contest in any such costs assessment. Dominating
arguments based upon the criteria specified in s.341(1)(a) and (b) is likely to be
the contention that the barrister took “too long”, that is, spent too much time
in the drafting, research and preparation which attends the production of
documents, advices and a barrister’s performance in hearings. In my
experience, costs assessors tend to badly underestimate the volume of the
material the barrister must consider and the complexity, novelty and difficulty
of some matters. Confronting costs assessors with the sheer volume of many
modern briefs and a detailed account of justifiable research referenced back to
photocopies of cases researched or Westlaw tracking to justify the hours of
work is likely to be forensically advantageous. It is easy on the part of an
applicant solicitor to advance the allegation that the barrister was involved in
some unworthy effort of self‐education. Often, the applicant solicitor will
actually believe this because of the level of his or her legal ignorance of the
issues their brief has thrown up. The problem becomes particularly acute if all
that is before the costs assessor is the barrister’s short form tax invoice, ie lump
sum bill.
63. Because of the uncertainties attending procedure in the cost assessment
process, I would strongly recommend that barristers ensure an itemised bill is
before the costs assessor in case the matter is heard on the papers.
64. This is not to suggest that as a matter of course in preparing every bill, a
barrister should prepare an itemised bill. On the contrary, without suggesting
that the short form bill ought not contain some commercially appropriate level
of detail, I would recommend that barristers put on their tax invoices invariably
18
a note to this effect: “This tax invoice is a lump sum bill within the meaning of
the Legal Profession Act 2007”.
65. Until that bill is paid or the 60 day time limit expires in respect of a costs
application, I would recommend that a barrister retain the brief and the
barrister’s working notes, photocopied cases and Westlaw tracking records etc.
If a costs application is received from the solicitor, the barrister should then
seek an order under Rule 743C directing the preparation of an itemised bill. If
the order is granted, the barrister assisted by the retained brief and other
records, can then prepare a detailed bill fully justifying how the costs charged
have been made up.
66. A law practice, including a barrister, is not entitled to charge a person for the
preparation of an itemised bill if a solicitor requests such a bill under s.332 of
the Act. There is, however, no prohibition against a retainer providing that legal
costs may be charged for the preparation of an itemised bill in other
circumstances; see generally, s.322 of the Act. On the other hand, I have never
seen a cost disclosure/retainer letter contain such a term. Whilst this does not
mean the inclusion of such a term in a cost disclosure/retainer letter might not
be desirable, perhaps it ought not be crafted in such a way as to alert a solicitor
to their right of costs assessment against a barrister. It certainly ought not
purport to charge for the preparation of a mere lump sum bill.
67. Not all rules applying in a party and party costs assessment apply in an
assessment under Part 4 of Chapter 17A of the UCPR; see Rule 743I.
Importantly, it should be noted that rules relating to offers to settle costs and
the 15% reduction rule for costs paid out of a fund appear to have no
application.
68. In fact, s.342 of the Act governs costs of assessment in a costs application by a
solicitor against a barrister. Section 342 provides:
“342 Costs of assessment
Unless a costs assessor otherwise decides –
(a) the law practice to which the costs of the costs assessment are payable or were paid must pay the costs if –
19
(i) the legal costs in dispute are reduced by 15% or more on the costs assessment; or
(ii) the costs assessor is satisfied the law practice failed to comply with division 3; and
(b) if not, the applicant or applicants must pay the costs of the costs assessment as stated by the costs assessor in the costs assessment.”
The disadvantaged position as to costs referred to in s.342(a)(ii) is yet another
consequence of failing to make cost disclosure as required by the Act. It should
also be noted that s.342 of the Act comprehends merely the costs of
assessment not all of the costs of a solicitor’s costs application against a
barrister.
69. However, Rule 743H is expressly predicated on a costs assessor filing a
certificate of assessment under Rule 737 upon completing his or her
assessment. Rule 743(2) at that point empowers the Court or any party to have
the application relisted before the Court (“the final hearing”). At that final
hearing, the Court may give a direction or decide any issue between the parties
and enter a judgment making the certificate enforceable. In my view, these
powers are broad enough to permit a costs order to be made concerning the
costs application, the initial directions hearing, any review by a Court of that
assessment and the final hearing.
70. It follows that any barrister receiving a costs application would be well advised
to consider promptly making a well weighted offer to settle. Because it is
difficult to apply the conventional terms “plaintiff” and “defendant” to the
process of such a costs application, I would recommend that any such offer to
settle be cast in the terms of an offer to settle under the UCPR and,
alternatively, as a Calderbank letter. In the end, if the offer to settle is less than
the judgment having regard to the certificate or decision on review, the
barrister should be well placed to obtain a costs order, likely an indemnity
order, in his or her favour.
71. If the costs certificate is disappointing, a barrister has the right to request
written reasons from the cost assessor. Of course, a solicitor has a
corresponding right. See Rules 743I and 738. A barrister or solicitor dissatisfied
20
with a decision included in a cost assessor’s certificate may apply to the Court
to review that decision. See Rules 743I and 742. A review by the Court of a
decision by a cost assessor may occur prior to the final hearing; see Rule
743H(5).
The Private List
72. The Private List is operated in accordance with a strict Protocol, the present
version of which is dated 12 September 2011. A copy of that Protocol is
attached. This Protocol is administered by the Hon Secretary of the BAQ (an
elected member of our Council and an experienced barrister) subject to the
supervision of Council.
73. The purpose of the Private List appears sufficiently from the Protocol. It is a
reliable warning to members of the BAQ of those solicitors who have either:
failed in a timely way to pay fees owing to Counsel; or
protest the payment of such fees; or
if such fees are protested, have failed to participate in the
mediations and if need be, arbitrations there referred to.
74. The present ethical rules of barristers in Queensland are now contained in the
Barristers Rules 2007 made pursuant to the Legal Profession Act 2007 (Qld).
75. You will observe from the 2007 Barristers Rules that barristers are necessarily
sole practitioners14 who are obliged by the cab rank rule to accept briefs from
solicitors in the fields in which they practice subject to certain limited and
appropriate exceptions15. Barristers may not “price” themselves out of the
acceptance of such briefs16. Nor may barristers charge, unlike others in the
community, what they may economically or politically be able to get away with.
Their fees must at all times be proper and reasonable fees17. One of the
exceptions to the cab rank rule arises where a barrister has:
14 see Rules 85 to 88 15 see Rule 89 16 see Rule 90 17 see Rules 118 and 119
21
“… reasonable grounds to doubt that the fee will be paid reasonably promptly or in accordance with the costs agreement;”18
76. The cab rank rule makes barristers, particularly younger barristers, vulnerable
to a very small minority of solicitors who un‐meritoriously attempt to refuse to
pay barristers they have briefed. The Private List is a practical and reliable
mechanism which permits a barrister who is a member of the BAQ to, in that
barrister’s complete discretion, either accept or refuse a brief offered by a
privately listed firm. In other words, placement on the Private List constitutes a
reasonable ground to doubt that the fee will be paid promptly or in accordance
with the cost agreement.
77. The decision as to the acceptance or refusal of a brief from a solicitor on the
Private List is left entirely to the barrister concerned. There is no contract,
arrangement or understanding either formal or informal to the contrary.
78. Solicitors seek to avoid being on the Private List and pay the fees of counsel
who have listed them, just as debtors published in the Dunn and Bradstreet
likewise act.
79. The officers and Council of the BAQ are astute at all times to ensure the
operation of the Protocol does not contravene any provision concerning
restrictive trade practices laws contained in the Competition and Consumer Act,
2010 (Cth) and its statutory predecessors. As and when required with legislative
change, formal advice is sought from counsel experienced in the area. In the
past, when the position has been fully explained to the ACCC and its statutory
predecessors the result has been that the ACCC has seen fit not to take any
further action. It follows that every member of the Bar Association of
Queensland who requests assistance from the Honorary Secretary may do so
confident that he or she will not in any way thereby be contravening any
restrictive trade practices law.
80. At the heart of the Protocol is the proper notion that if the solicitor does not in
writing within 60 days protest the payment of counsel’s fees as rendered, the
fees concerned should be deemed not in dispute. If those fees are not then paid
18 see Rule 97(c)
22
within the time limit set by a letter of demand from the Honorary Secretary to
the solicitor, the solicitor is then placed on the Private List.
81. This deeming mechanism is founded on a reasonable presumption. If such a
timely protest is not made, the most likely reason for that is that no sound
reason exists justifying the non‐payment of the barrister’s fees. After all,
solicitors have their own obligations to answer correspondence in their matters
promptly. From my own experience as Honorary Secretary, I can confirm that
the application of this presumption strongly reflects what I have perceived to be
the merits of the fee disputes which I have handled in my time as Honorary
Secretary. However, I stress it is not the task of the Honorary Secretary to
decide the merits of a fee dispute. The Honorary Secretary simply administers
the Protocol according to its terms.
82. This position applies equally if a solicitor makes a timely protest. Provided that
solicitor submits to a mediation or, if that mediation fails, to an arbitration, that
solicitor will not be placed on the Private List. This is the case regardless of what
the Honorary Secretary may think of the merits of the fee dispute.
83. As you will see from the Protocol, mediators nowadays are only members of the
BAQ nominated by the President. Under previous Protocols, the Queensland
Law Society used to co‐operate by providing a co‐mediator. Unfortunately, this
arrangement has ceased and the Queensland Law Society will not nominate
mediators for this purpose. The mediators nominated by the Bar Association
charge no fees and render their services in order to facilitate harmonious
relations between both branches of the profession. I publicly acknowledge their
commendable efforts in this regard. That they do so is a powerful indication
that the Bar remains a true profession.
84. On a more prosaic level, if you are having trouble having your fees paid by a
solicitor, can I suggest the following.
85. After your first couple of account rendereds have been ignored, pick up the
telephone and try to speak directly with the partner or legal practitioner
director at the firm concerned who has the immediate responsibility for the
payment of your fees. However annoyed or irritated you may be about the non‐
23
payment of your fees, do not adopt anything other than a moderate,
reasonable albeit firm, approach. Listen to what the solicitor has to say. Make
and keep a diary note of the conversation.
86. If you cannot achieve this personal contact or you are dissatisfied with the
content of it or promises made to you are broken, write an appropriate letter
recording those matters. The letter should end with the warning that if you do
not receive appropriate satisfaction within a specified time you will, with regret,
have no alternative but to request the assistance of the Bar Association of
Queensland in this fee dispute. You would be surprised how many letters such
as this bring immediate and satisfactory responses.
87. If after such a letter you receive no satisfactory response, you should either
telephone the Honorary Secretary or contact Janette Gustafson at the BAQ
office to obtain a Request for Assistance form which you should then complete
with the relevant documentation including your cost disclosure/retainer letter,
your invoices and account rendereds and all diary notes and other
correspondence including emails relating to the fee dispute. To assist yourself
and all concerned, it would be appreciated if these could be organised in
chronological order.
88. Some other matters to note about the new Protocol.
89. Firstly, as a matter of sound policy, Council has decided that the Bar Association
of Queensland will not assist under the Protocol those members who have not
met their cost disclosure obligations in the matter in which they request
assistance.
90. Secondly, no assistance will be offered to members who request assistance in
respect to briefs accepted by them at a time when the solicitor concerned was
already on the Private List. The Private List is regularly updated and circulated
amongst our members. All members should get into the habit of regularly
checking the list so each can decide whether to accept a brief from a solicitor’s
firm which may be a credit risk.
24 The right to sue
91. The traditional position at common law was that a barrister could not sue the
solicitor who instructed him or her to recover his or her fees19. Those fees were
regarded merely as a debt of honour and not as the subject of an enforceable
contract or even a quantum meruit. In the early 1990’s the Queensland Law
Society amended the ethical rules of solicitors so as to repeal the provision
which made the non‐payment of counsel’s fees by a solicitor unprofessional
conduct20. In a rare and apparently unsolicited act of kindness by Government
towards the Bar, in 2007 barristers in Queensland gained the right to sue an
instructing solicitor for unpaid fees21.
92. In the Act the key provision is s.319 which provides that legal costs are
recoverable not only under a costs agreement including a barrister’s retainer
but also if there is not a barrister’s retainer, under the applicable scale of costs
or, if there is no applicable scale of costs, according to the fair and reasonable
value of the legal services provided. Section 326 of the Act goes on to provide
that a costs agreement which includes a barrister’s retainer may be enforced in
the same way as any other contract.
93. Thus, ss.319 and 326 of the Act altered the common law. These provisions gave
barristers a statutory right of recovery by way of a contractual or quantum
meruit claim. In this regard, for completeness, I would also further note that:
s.319 of the Act does not confine the recovery of legal costs to their
recovery from the client;
the Act does not define “legal costs” for the purpose of s.319 but having
regard to the contents of s.308(1)(a) and s.309(1) and (2) of the Act, it,
by necessary implication, seems to comprehend barrister’s fees;
that consistently “legal services” is defined for the purpose of s.319 of
the Act in Schedule 2 of the Act to mean work done or business
19 See Giannarelli v. Wraith (1988) 165 CLR 543 per Mason C.J. at 555 per Wilson J. at 565, Deane
J. at 587 and Toohey J. (with whom Gaudron J. agreed) at 601 20 (Supra) per Wilson J. at 565 21 See para [4.70] of “Professional Liability in Australia” (2nd Ed) by Walmsley et al and the cases
there cited; see also Levy v. Union Bank of Australia (1896) 21 VLR 683, In re Melbourne Parking Station Ltd (1929) VLR 5 per Mann J. at 9 and Forster James Pty Ltd v. Dalton (2010) VSC 133; and on appeal (2010) VSC 327
25
transacted in the ordinary course of legal practice, which plainly includes
barristers’ work;
and, hence, a barrister’s practice is a law practice within the meaning of
the Act.
94. It is sometimes asserted that the right to recovery is dependent on compliance
with the cost disclosure requirements in ss.308 and 309 of the Act which appear
in Division 3 of Part 3.4 of the Act. This is undoubtedly so in terms of recovering
legal costs from a client or third party payer including if a retained law practice’s
legal costs, ie the barrister’s costs, are sought to be recovered by the first law
practice, eg the solicitor, as is typically the case by way of a disbursement. The
proposition is however stated too widely, in my view, in respect to a barrister
recovering legal costs from a solicitor. The Act expressly contemplates as is also
typically the case, that a barrister may recover his or her fees from a solicitor
rather than directly from the client; see eg s.322(1)(c) of the Act.
95. Section 316 of the Act expressly deals with the effect of a failure to make
proper cost disclosure. To determine the effect as between a barrister and a
solicitor in regard to the right to recover costs pursuant to s.319 of the Act, one
must make a detailed examination of s.316’s provisions. For your convenience, I
set them out in full:
“316 Effect of failure to disclose
(1) If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, the client or associated third party payer, as the case may be, need not pay the legal costs unless they have been assessed under division 7.
Note –
Under section 341, the costs of an assessment in these circumstances are generally payable by the law practice.
(2) A law practice that does not disclose to a client or an associated third party payer anything required by this division to be disclosed may not maintain proceedings against the client or associated third party payer, as the case may be, for the recovery of legal costs unless the costs have been assessed under division 7.
(3) If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed and the client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party
26
payer may also apply under section 328 for the costs agreement to be set aside.
(4) If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose.
(5) If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to the client solely because the retained law practice failed to disclose relevant information to the first law practice as required by section 309(2), then subsections (1) to (4) –
(a) do not apply to the legal costs owing to the first law practice on account of legal services provided by it, to the extent that the non‐disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information; and
(b) do apply to the legal costs owing to the retained law practice.
(6) In a matter involving both a client and an associated third party payer if disclosure has been made to 1 of them but not the other –
(a) subsection (1) does not affect the liability of the 1 to whom disclosure was made to pay the legal costs; and
(b) subsection (2) does not prevent proceedings being maintained against the 1 to whom the disclosure was made for the recovery of those legal costs.
(7) Failure by a law practice to comply with this division is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner, or Australian‐registered foreign lawyer, involved in the failure.”
96. Firstly, one can see that independently of any other consequence, a sanction
exists applicable to a barrister if cost disclosure as required by the Act is not
made by a barrister by reason of s.316(7). Thus a barrister’s failure to make cost
disclosure is capable of constituting unsatisfactory professional conduct or
professional misconduct on the part of the barrister.
97. However, the issue at hand really rises and falls on the effect of s.316(5).
98. In construing s.316(5) of the Act, it is clear its provisions:
are not engaged at all unless the non‐disclosure by the first law practice, ie the solicitor, was caused by the failure of the retained law practice, ie the barrister, to disclose the relevant information;
27
if such failure occurs, the solicitors are not prejudiced in terms of recovering their own legal costs;
but, such failure causes s.316(1)(iv) to apply to the barrister’s legal costs.
99. What constitutes “failure” for the purpose of s.316(5)(a) will be ultimately a
matter of fact. However, that factual finding will be reached having regard to
the nature of the disclosure which a barrister is obliged to make under ss.309(2)
which is not the same as the disclosure required of a solicitor pursuant to s.308
and s.309(1). Thus, a barrister is not required to make disclosure in writing
unlike a solicitor; see s.310 of the Act. Further, the disclosure required of a
barrister is only the disclosure of “the information necessary” for the other law
practice (ie the solicitor) to comply with ss.309(1). Thus, it is fairly arguable if
the solicitor is familiar with the barrister’s fee structure and billing habits, the
solicitor is in a position in any event to comply with his or her obligations under
s.309(1) and no disclosure is necessary from the barrister.
100. In the event of such a failure, one can only determine how ss.316(1) to (4) apply
to the barrister’s legal costs by analyzing closely the meaning and effect of
these subsections. In so doing, it should be remembered that solicitors are
entitled to, and almost universally do charge the legal costs of the retained law
practice, ie the barrister, as a disbursement in the bill they render their client or
associated third party payer. In the event of non‐disclosure:
s.316(1) excuses the client or third party payer from the need to pay legal costs unless they have been assessed;
s.316(2) prohibits the solicitor (who is the only party obliged to make disclosure to a client or third party payer – see s.309(2) ) from maintaining proceedings to recover the costs unless they have been assessed;
s.316(3) permits the client or associated third party payer a further basis for applying to set aside the cost agreement; otherwise it is only the client who can set aside the cost agreement pursuant to s.328 if it satisfies the Supreme Court that the cost agreement is not fair and reasonable;
s.316(4) confers upon an assessor a discretion to reduce the amount of the costs by an amount proportionate to the seriousness of the failure to disclose.
28 101. Thus, it can be seen that there is no provision in ss.316(1) to (4) which excuses
the first law practice, ie the solicitor, from the need to pay the retained law
practice, ie the barrister’s legal costs. Nor, even more to the point, do ss.316(1)
to (4) contain a prohibition that the retained law practice, ie the barrister, may
not maintain proceedings against the first law practice, ie the solicitor, for the
recovery of his or her legal costs.
102. This is hardly a surprising result given that a main purpose of the Act is to:
“…provide for the regulation of legal practice in this jurisdiction in the interests of the administration of justice and for the protection of consumers of the services of the legal profession and the public generally”
, as to which see s.3(a) of the Act. The purpose of Part 3.4 of the Act is to:
“provide for law practices to make disclosures to clients regarding legal costs”
(my underlining)
; see s.299(a) of the Act.
103. In other words, the purpose of the cost disclosure provisions is to protect clients
and third party payers, not to protect solicitors from barristers.
104. A barrister exercising his or her right to sue to recover fees owing to them
would be well advised to engage a solicitor and if necessary, counsel, for that
purpose.
105. I have no doubt the Honorary Secretary of the BAQ will always be prepared, on
an “all care and no responsibility” basis to discuss the wisdom of the barrister
taking that course. However, at the moment, no mechanism exists whereby the
Bar Association of Queensland has any role to play in such litigation.
106. On the other hand, if a member is contemplating such litigation, Honorary
Secretaries, I am sure would be grateful to be kept informed of the progress of
such litigation.
Chambers 27 October 2011 M P Amerena
