New Professional Standards and Costs Legislation

Michael Slattery QC - Bar Association of Queensland Annual Conference 2008 30 April 2020

Professional Standards Act 2004

• • • • Outline and Brief History Advantages of the Schemes Some Common Questions Issues still to be resolved 2

Outline and Brief History

• • • • • • Liability capping Legislation for Professionals The litigation from the last recession Not originally driven by the bars Introduced N.S.W. (1994) - W.A.(1997) Queensland (2004) – Bar Scheme now under development.

Early resistance 3

Advantages

• • • For individual barristers – a liability cap – no recourse to personal assets For the bar as a whole – better information about risk – guidance for structuring legal education For the community – guarantee of at least limited recovery up to scheme limit ($1 million in NSW) – most cases covered 4

Some Common Questions

• • • Obligations – Disclosure Statements on all promotional material – Attendance at CPD programmes Scheme Coverage – Extra territorial operation – Negligent Acts prior to the Scheme Relations with Solicitors and Clients – Pressure to uncap in NSW – Universal and “opt out” schemes 5

More Common Questions

• • • Application for a Scheme – Bar Association not individual barristers – 5 yearly scheme renewal – Risk Management Reports Setting the Cap – Liability history – Options and relationship with PII – Defence costs and policy wordings Capping - the bar and other professionals – The solicitors’ and engineers’ experience 6

Issues Still to be resolved

• • General Exemptions – personal injuries, fraud and breach of trust.

Personal Injuries Practice – s.6(1)(b) – No application to lawyer fault “in acting for a client in a personal injuries case” – The NSW experience 7

Legal Profession Act 2007

• • • • • Based on SCAG Model Bill Intended to resolve choice of law issues Part 3.4 deals with costs – Does not cover all costs (e.g. Family Law) Basic concepts: – ‘Law practice’ – ‘Client’ – ‘Third party payer’ Disclosure ≠ Retainer ≠ Costs Agreement 8

Legal Profession Act 2007 Part 3.4 costs materials

• • • Papers – The Hon Justice Hugh Fraser – Mark Brabazon Precedents – Websites – Cautions Thanks to Mark Brabazon 9

Main Issues

• • • • General Concepts of Part 3.4 LPA 2004 Disclosure Costs Agreements Assessment 10

‘Law practice’

• • Includes – barristers in conventional private practice – solicitors in conventional private practice – ‘multi-disciplinary partnership’, ‘incorporated legal practice’, ‘complying community legal centre’ May not include – employee solicitor, even with current practising certificate – government solicitor 11

‘Client’

• • Client just means client, and includes ‘a person to or for whom legal services are provided’ Does not include a law practice that pays or incurs liability to pay another law practice which it retains on behalf of a client 12

‘Third party payer’

• • • a non-client who is liable for or, being liable, has paid legal costs liability may be to law practice (‘associated’) does not include a law practice that retains another on behalf of a client 13

Retainer

• • • General law meaning Retainer ≠ costs agreement Act differentiates between two cases: – client retains law practice (direct) – one law practice retains another on behalf of a client of the first (indirect: the conventional barrister’s retainer) 14

Disclosure

• • • Disclosure is unilateral communication of information Disclosure ≠ costs agreement Separate disclosure has advantages over using a costs agreement as a means of disclosure.

– puts the onus to ask for more information on the solicitor who is dealing directly with the client.

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Initial disclosure obligations

• • Depend on nature of retainer (direct vs indirect) – direct – indirect: • • Solicitor to client Barrister to solicitor (or agent solicitor to principal solicitor) May be negated by characteristics of client 16

Direct retainer initial disclosure

• • • Solicitor/ client disclosure re: indirectly retained law practice • Content – basis on which costs will be calculated – whether any ‘fixed costs provision’ applies – estimate of total costs/ range of estimates + explanation of major variables – billing intervals Time: before indirect retainer or directly after Form: in writing Section 308(1) is onerous and the risk of non compliance is high – consider an indirect retainer.

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Indirect retainer disclosure

• • • • • • Made to retaining/ principal law practice Content: ‘the information necessary for the other law practice to comply’ Time implied, form unstated Importance of the “top-up” function of s309(2) Inference that a silent solicitor has enough information Importance of good communication with solicitor 18

Effect of deficient disclosure

• • If direct retainer – no recovery without assessment – but costs agreement still applies unless set aside/modified under s328 If indirect retainer • costs agreement with client/TPP: straightforward • Usual case - costs agreement with retaining solicitor – Costs agreement must be applied by the assessor (s340) – Unless set aside (s328) or there has been a failure to disclose (in compliance with Division 3) or a failure to meet the form or substance requirements for costs agreements (Division 5) 19

Costs agreements

• • • • ‘An agreement about the payment of legal costs’ Agreement ≠ disclosure Agreement comes after disclosure Must be between qualifying parties • (a) client/ law practice retained by client; • (b) client/ law practice indirectly retained by another law practice on behalf of client; • (c) law practice/ law practice indirectly retaining other on behalf of client (conventional barrister/solicitor) • (d) law practice/ associated third party payer 20

Formal requirements of a costs agreement

• • “written or evidenced in writing” s322 – whether to insist on solicitor’s signature – what other conduct is sufficient • a mechanism for acceptance is often provided for by the solicitor giving further instructions after receipt of the costs agreement if with client, – offer and acceptance procedure should be specified – insist on compliance with the specified procedure before undertaking work 21

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Plain vanilla costs disclosure and agreement for barristers

Can you do it in one page?

Supply draft agreement – basis of billing – billing intervals – costs agreement ≠ retainer Respond appropriately if solicitor has requested more information relevant to – application of fixed costs provisions – estimate/ range of estimates of barrister’s costs – major variables affecting barrister’s costs Should you volunteer more information anyway?

Using s309(1) - expressly say you will rely on solicitor to request any further “necessary” information from you 22

• • •

Basis of charge: issues for barristers

• Lump sum – define what it covers – stipulate default basis for extra work • Daily/ hourly rate – when does each apply?

– rounding up/ down Chargeable expenses GST Cancellations & settlements 23

Interest on Unpaid Costs – s321.

• • • • • Regardless of costs agreement, if costs unpaid 30 days after giving bill (of whatever sort) Under costs agreement (implicitly may charge from earlier date) In either case – bill must claim the right to charge interest (prospective) and state the rate – maximum rate is prescribed RBA cash rate target + 2% Use software that calculates interest Use a statement of account to claim outstanding interest (retrospective) 24

Methods of fee recovery

• • • Civil debt action Assessment The Private List 25

Civil debt action

• • • • • Time before action normally 30 days - gives recipient time to apply for assessment Non-compliance with time limit is a defence Non-compliance with requirements of billing form & notice is a defence Any non disclosure ‘to a client’ is now a defence Issues raised in a civil debt action may only able to be resolved by an assessment, so consider starting with an assessment to recover your costs 26

Assessment (Division 7)

• • • • Assessor can set aside a costs agreement or provision thereof as ‘not fair or reasonable’ – only ‘on application by a client’ - not between law practices as such Paper-driven process, even for set-aside application In default of disclosure ‘to a client’, law practice bears costs of assessment NSW experience is that the assessment system works quickly and efficiently at the cost of a degree of consistency 27

The Private List

• • Advantages of the Queensland System Works with Legal Profession Act 2007 28