Practice Management

Yes.  The information that must be disclosed to a client is detailed in ss3.4.9 and 3.4.10 of the Legal Profession Act 2004.  The consequences for failure to do so are severe, including the right of the client not to pay costs. Also, the costs agreement may be set aside if the practitioner fails to provide the information. (s3.4.17).

Yes, practitioners can uplift fees up to 25 per cent in litigation matters but no uplift is allowed on unpaid disbursements. Practitioners are not limited to 25 per cent in non-litigious matters as long as the uplift is reasonable. (s3.4.28).

Yes, in a conditional costs agreement the client must be informed that he/she has a right to independent legal advice before entering into the agreement and there is a 5 day cooling off period. (s3.4.27).

Yes, a costs agreement may be conditional upon a successful outcome in any matter except criminal or family law matters. (s3.4.27).

It can be set aside on application by the client to the Victorian Civil and Administrative Tribunal (VCAT). (s3.4.32)

If a lump sum bill was provided and the client requests an itemised bill, proceedings to recover costs cannot be commenced until at least 35 days after the itemised bill has been provided, notwithstanding 65 days has not run. (s3.4.36).

(a) A law practice must disclose certain information (s3.4.9) before or as soon as practicable after being retained in a matter. (s3.4.11).

A client and specified third persons may apply to the Taxing Master for a review of the whole or any part of a bill. (s3.4.38).

The Taxing Master will deal with applications out of time. (s3.4.38).

The Taxing Master must refer the matter to the Legal Services Commissioner for investigation. (s3.4.46).

There are no exceptions in the Act in relation to Costs Agreement, but exemptions exist for Disclosure Statements s.3.4.12

There is no requirement in the Act to provide a copy of the practitioner remuneration order. The basis on which costs are calculated is the disclosure required by Section 3.4.9(1).

An application to VCAT pursuant to section 3.4.32 to set aside a costs agreement is separate to making an complaint under Chapter 4. The Act does not require the client to make a complaint to the Legal Services Commissioner prior to applying to VCAT to set aside a costs agreement.

Section 3.4.32 does not specify a time limit for an application to VCAT to set aside a costs agreement.

Section 3.4.12 exempts solicitors from the need to provide disclosures under section 3.4.9 and 3.4.10(1) to holders of a financial service licence. You can still enter into a costs agreement with the client, but there is no need to provide disclosures.

Yes, Section 3.4.12 applies at the commencement of a retainer to providing disclosure in relation to costs. However the requirement to provide section 3.4.35 information applies at the time of billing the client and is not excluded by the disclosures in section 3.4.9 and 3.4.10.

The LPA requires disclosure to be given as soon as practicable after the law practice is retained. Therefore disclosures relating to non-litigious matters should be used.

However once there is a substantial change in the matter s3.4.16 requires the law firm to provide ongoing disclosure as soon as practicable after the law practice becomes aware of a substantial change to anything included in the disclosure given.
Note that litigious is defined in s3.4.2 as a matter that involves, or is likely to involve, the issue of proceedings in a court or tribunal.

If the firm was first instructed in Sydney (so their LPA applies) and disclosures/costs agreements given under the N.S.W. Act, does the Vic Act have to be complied with (ie disclosures/costs agrOur firm has offices in Melbourne and eement sent under the Vic Act) if a member of the Melbourne office is subsequently instructed (often by our staff, rather than the client directly) to work on the matter? It is the same matter, not a new one. I believe not, on the basis that the client was "first instructed" in relation to the matter in N.S.W. - s. 3.4.6 and its N.S.W. equivalent and therefore the Vic Act does not apply. Do sections 3.4.4 or 3.4.8 apply in these circumstances? Does the client or firm have to give any sort of notice?

S3.4.3 provides that Part 3.4 applies only to costs disclosure and review when the client first instructs the firm in this jurisdiction. As instructions are received first in N.S.W. the part does not apply.

s3.4.10 would not apply as another law firm is not retained.

However your firm may judge it necessary to give ongoing disclosure under the N.S.W. equivalent of 3.4.16 to provide disclosure as soon as practicable after the law practice becomes aware of a substantial change to anything included in the disclosure given.

Yes, should the client challenge a bill that is not on scale then on assessment scale will be applied if there is no costs agreement. The agreement is in addition to the disclosures required by 3.4.9.

The transition provisions provide that where instructions are received prior to the commencement of the Legal Profession Act (i.e. prior to 12/12/2005) the current Act will apply in relation to all costs issues. That is the old provisions in relation to assessment, bills and complaints relating to costs will apply.

The 2004 Act will apply to matters where instructions are received on or after 12/12/2005.

S.3.4.12 does not however refer to the additional disclosure sections 3.4.13 and 3.4.14. Does that mean that we still have to make the disclosure referred to in 3.4.13 (in particular) & 3.4.14? Do you think that was intended in the case of such professional litigants?

Section 3.4.12 refers only to disclosure not being required in relation to s3.4.9 and 3.4.10(1). It appears that the Act does not provide a dispensation from giving additional disclosures in the form of 3.4.13 and 3.4.14 (settlement of litigious matters and uplift fees).

S3.4.11 provides that a law practice must give disclosure to the client in writing before, or as soon as practicable after, the law practice is retained.

S3.4.26 provides that a costs agreement may be made with the client. The Act does not provide a time for entering a costs agreement.

There is nothing in the Act that requires disclosure to be given prior to entering a costs agreement, however the law practice must disclose that the client has the right to negotiate a costs agreement.

The notice is required on all bills regardless of the amount. The issue of costs of $750 (exc. GST) applies only to providing disclosure.

It appears that to comply with 3.4.12(1)(b) that annual disclosure is required.

Can this costs agreement relate to all work by the firm for the client or must the costs agreement be matter related?
In the same vein, we have interpreted the act to mean that firms must provide a costs agreement and disclosure statement to clients for each matter. Is this correct?

A new costs agreement is required each time the firm changes its rate of charge. It appears that disclosure and costs agreements do not need to be matter related.

It appears that 3.4.13 requires disclosure of the costs payable to the law practice, not of all the costs paid and payable.

It appears that there is no impediment to acting in this way.

It appears that there is no impediment to acting in this way.

Is a client precluded from agreeing to pay interest at a higher rate than provided for in Section 3.4.21? Is a client precluded from agreeing to pay interest from a period commencing earlier than 30 days after payment is demanded?
Yes. Section 3.4.21 prohibits the charging of interest in excess of the Cash Rate Target (plus 2%) fixed by Reserve Bank of Australia from a period 30 days after payment is demanded.

As a client is defined in the act as a person to or for whom legal services are provided disclosure is required unless there is an exemption under 3.4.12. If legal costs are not likely to exceed $750.00 (exc. GST) then disclosure is not required.

Disclosure is required unless exempted. You must remember that party/party costs belong to the client and that the law practice is not entitled to take them without the client's agreement. They are intended as a partial indemnity for the client to recover solicitor client costs incurred.

Disclosure of costs pursuant to 3.4.9 and 10 is required where the law practice is first instructed on or after 12 December 2005 by a client. A "client" is defined for the purpose of disclosure as "a person to or for whom legal costs are provided, and includes a prospective client". Therefore the requirement is to disclose to the receiver of the legal service regardless of where the payment of the legal costs comes from.

Section 3.4.21 of the Legal Profession Act 2004 provides that a law practice may charge interest on legal costs, at a rate not exceeding the rate of the Cash Rate Target (plus 2%) fixed by the Reserve Bank of Australia from the period beginning 30 days after payment is demanded until legal costs are paid. It is therefore not possible to reduce the period prior to claiming interest.

Section 3.4.17 provides that a client need not pay the legal costs unless they are reviewed by the Taxing Master and that the Law Practice may not maintain an action against the client to recover the costs until the costs have been reviewed. However, assuming the client is aware of the avenues available to them, including the Taxing Master, and then agrees to pay the costs, it appears that this is not prevented by the Act.

Regulation 3.3.34 sets out 2 alternative methods where money that is already held in trust can be withdrawn for legal costs. One alternative does use the terminology "Give or send....a written notice of withdrawal".

If money is not held in trust and a bill is sent for professional costs, then the terminology "written notice of withdrawal" does not apply.

However if disbursements are included on the bill, and they have not been paid from office, then the client payment is trust money and must be deposited into trust. Under billing regulation 3.3.34 (3) (b) you should give "a request for payment, referring to the proposed withdrawal".

s3.4.12(1)(a) exempts a practitioner from disclosure if the total legal costs in a matter, excluding disbursements, are not likely to exceed $750.00. If the charge is over $750.00 (exc. GST) then you must provide disclosure.

If the charge to be made is not to be calculated on scale, and you do not want your costs assessed on scale, in the event of a dispute, then you must have a costs agreement.

Section 3.4.33 (1) provides that a law practice must not commence legal proceedings to recover costs until 65 days after a bill is given that complies with s3.4.34 and 3.4.35. This in effect means that the Law practice can never sue if it does not provide these disclosures as the bill is not a bill that complies with s3.4.33.

If proceedings are brought in contravention of S3.4.33 (1) the Court must stay the proceedings.
The failure to make disclosure is a criteria that the Taxing Master may take into account on an assessemnt of the solicitors costs and the Taxing Master may refer to the Commissioner the failure if he deems it unsatisfactory professional conduct.

In addition the client can make a civil complaint in relation to conduct to the Commissioner for all costs. This would not be restricted to costs up to $25,000. The effect of a civil complaint is that the law practice cannot sue for its costs nor can it apply for a review of its costs.