BARRISTERS FEES: Cost disclosure, retainers, assessment, the private list and the right to sue. Michael Amerena

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1 BARRISTERS FEES: Cost disclosure, retainers, assessment, the private list and the right to sue Michael Amerena 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 circumstances Contingency fees (as opposed to speculative fees) are prohibited The uplift factor in any speculative fee must not exceed 50% 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 See rr. 118 and 119 of the Barristers Rules 2007 See r. 120 of the Barristers Rules 2007 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 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 warranted 6 ; 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 costs 7 ; details of the intervals, if any, at which the client will be billed 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 see s.323(2) of the Act See s. 308(1)(a) of the Act 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 See (1)(c) of the Act See s. 308(1)(d) of the Act

3 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 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 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 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 retainer 10. 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 3 rd 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 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 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 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 socalled Bechara Principle ; as to which see Bechara v Legal Services

10 10 Commissioner 11. 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 NSWCA 369

11 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 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 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) ; see Rule 743A(3), (4) and (5). 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. 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 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 Ltd 12 and Turner v Mitchells Solicitors and Business Advisers Qld 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 [2010] QDC 508 per Reid DCJ at para [31] [2011] QDC 61 per McGill DCJ at para [24]

15 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) (b) (c) (my underlining) whether or not it was reasonable to carry out the work to which the legal costs relate; and whether or not the work was carried out in a reasonable way; and 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. 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 16 (ii) whether any costs agreement relied on by the lawyer concerned is void; and (iii) whether the lawyer concerned was negligent; and (iv) (v) whether the lawyer concerned was in breach of the contract of retainer; and 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) (b) 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 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 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 18 a note to this effect: This tax invoice is a lump sum bill within the meaning of the Legal Profession Act 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 19 (b) (i) (ii) the legal costs in dispute are reduced by 15% or more on the costs assessment; or the costs assessor is satisfied the law practice failed to comply with division 3; and 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 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 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 practitioners 14 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 exceptions 15. Barristers may not price themselves out of the acceptance of such briefs 16. 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 fees 17. One of the exceptions to the cab rank rule arises where a barrister has: see Rules 85 to 88 see Rule 89 see Rule 90 see Rules 118 and 119

21 21 reasonable grounds to doubt that the fee will be paid reasonably promptly or in accordance with the costs agreement; 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 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 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 s 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 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 fees 19. 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 conduct 20. 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 fees 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 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 (Supra) per Wilson J. at 565 See para [4.70] of Professional Liability in Australia (2 nd 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