1. Barristers’ Cost Disclosure Obligations

1. 1. Barristers’ Cost Disclosure Obligations • “Law practices” (including barristers) must make costs disclosures under division 3 of part 3.4 of LPA . • These provisions have been force since LPA commenced on 1 July 2007. • Non-compliance by a barrister may have very significant adverse consequences .

2. 2. To Whom Must Disclosure be Made? • The primary obligation is to make disclosure to the “ client” . • “Client” probably means the person who has retained the barrister’s instructing solicitor. • Disclosures must also be made to any “associated third party payer”. • A barrister retained by a “law practice” has only limited disclosure obligations.

3. Comprehends sole practitioners and partnerships of solicitors who in each case hold a current practising certificate and practise on their own account . Does not comprehend a solicitor who is not carrying on practice on the solicitor’s own account, whether or not the solicitor holds an unrestricted practising certificate . 3. What is a “law practice”?

4. 4. A Barrister Retained by a “Law Practice” • Need only give limited initial disclosure to the law practice: s 309(2), 308, 313. • Need only give limited progress reports where requested by the law practice: s 317(3). • May have to give “the client” costs information if the barrister negotiates settlement of litigation: s 312(1), r 81 . • May have to make ongoing disclosure to “the client”: s. 315.

5. Initial DisclosureThe solicitor must disclosure to the client the barrister’s costs under s 309(1): • s 308 (1)(a): Whether any scale of costs applies to any of the costs . • s 308(1)(a): The basis on which legal costs will be calculated (including details of any uplift fee: s 313(1) . • s 308(1) (c): An estimate of the total legal costs if reasonably practicable.…

6. Initial DisclosureThe Solicitor must disclosure to the client the barrister’s costs under s 309(1) • s 308(1)(c): If an estimate of the total legal costs is not reasonably practicable a range of estimates of the total legal costs, and an explanation of the major variables . • s 308(1)(d): Details of the intervals, if any, at which the client will be billed.

7. 7. Initial Disclosure • Under s 309(2), the barrister must disclose to the instructing solicitor only the information “necessary” to enable the solicitor to disclose that s 309(1) information about the barrister’s costs.

8. 8. Initial Disclosure • In some cases, the only details required of the barrister by s 309(2) may be the barrister’s rates or standard fees (including any uplift fee), terms relevant to costs (e.g., any cancellation fee or disbursements), and billing intervals .

9. 9. Initial Disclosure • But barristers generally should give their solicitors more rather than less information about their costs .

10. s 317(1)(a): A written report of the progress of the matter; and s 317(1)(b): A written report of the legal costs incurred by the client since the last bill . Progress ReportsThe barrister must respond to the instructing solicitor’s request for information necessary to enable the solicitor to comply with the client’s request for:

11. 11. Disclosure on Settlement of Litigious Matters Under s 312, the lawyer who negotiates the settlement must disclose: • A reasonable estimate of the legal costs payable by the client, including those of another party payable by the client • A reasonable estimate of any contributions towards those costs likely to be received from another party

12. 12. Disclosure on Settlement of Litigous Matters • The barrister must disclose his or her costs, and the instructing solicitor must respond to the barrister’s request for the other necessary information: LPR, s 81(2) –(3). • Section 312 literally obliges the barrister to disclose “to the client” all of the information. • The barrister should at least ensure that the instructing solicitor provides all the information to the client on the barrister’s behalf .

13. 13. Ongoing Obligation to Disclose • Section 315 obliges a “law practice” to disclose in writing “to the client” any substantial change to anything included in a previous disclosure. • It is unclear whether this applies to a barrister retained by a law practice. • The barrister should disclose in writing to the instructing solicitor any such change.

14. A barrister retained on behalf of a “sophisticated client” by a law practice is not required to give initial disclosure, progress reports, or (if there was no initial disclosure) any ongoing disclosure. But if the barrister negotiates a settlement of a litigious matter for a “sophisticated client”, the barrister must provide the s 312 costs disclosure. 14. Exceptions for “Sophisticated Clients”

15. 15. Exceptions for “Sophisticated Clients” • A large range of “sophisticated clients” is identified in ss 311(1)(c). • A “law practice” and an “Australian legal practitioner” are “sophisticated clients”: s 311(1)(c)(i). • But a barrister’s instructing solicitor is probably not a “client” and therefore not a “sophisticated client”.

16. 16. Barristers’ Cost Agreements Costs agreements may be made between: • s 322(1)(a): “ a client and a law practice retained by the client; or” • s 322(1)(b): “a client and a law practice retained on behalf of the client by another law practice; or” …

17. 17. Barristers’ Cost Agreements • s 322(1)(c): “a law practice and another law practice that retained that law practice on behalf of a client; or”. • s 322(1)(d): “ a law practice and an associated third party payer” .

18. 18. Barristers’ Cost Agreements • Barristers retained by a law practice ordinarily should enter into a costs agreement with the instructing solicitor under s 322(1)(c). • First, barristers will need to enter into a costs agreement to become entitled to recover the barrister’s agreed costs, instead of being relegated to an assessor’s decision. • Secondly, barristers ordinarily need to ensure that the instructing solicitor is personally liable to pay the barrister’s costs.

19. Barristers’ Cost AgreementsThe costs agreement should include at least: • The information the barrister is obliged to disclose: s 309(2). • A provision rendering the instructing solicitor personally liable for the fees, regardless whether the client has put the instructing solicitor in funds. • Terms of payment.

20. Barristers’ Cost AgreementsOther possible provisions include: • s 321 and regulation 82: Provision for interest on unpaid costs • s 303(1)(c)(i) and (2)(a), (3): A choice of law clause – but these provisions contemplate such clauses in agreements with “the client”. • s 344: A “sophisticated client” may contract out of division 7, which concerns costs assessment, including possible referral for disciplinary action for excessive costs: s 343. It is unclear whether such a clause in a barrister’s costs agreement with a solicitor is effective.

21. 21. Barristers’ Cost Agreements Some clauses are ineffective • s 322(5): Contracting out of costs assessment under division 7, otherwise than by sophisticated clients . • s 323(2): Conditional costs agreements about criminal law or family law matters …

22. 22. Barristers’ Cost Agreements • s 324(4):Uplift fees exceeding 25% of the legal costs excluding disbursements. • s 325: Contingency fees and the like. • s 347: (Ordinarily) provisions exceeding the prescribed maximum payment for speculative personal injury claims.

23. 23. Form • A costs agreement must be either written or evidenced in writing: s 322 (2). • That requirement is fulfilled (except for a “conditional costs agreement”) by a written offer that is accepted either in writing or by other conduct, so long as the offer complies with s 322(4) . • A conditional costs agreement ordinarily must comply with the more detailed requirements of s 323 (but see s 323(4)).

24. 24. Void Costs Agreements • A costs agreement made in contravention of division 5 is void. • Costs are then limited to the applicable scale of costs or assessment: s 327. • If a costs agreement includes a prohibited contingency fee no costs are recoverable: s 327(5).

25. 25. Setting Aside Costs Agreements and Assessments of Costs • On application “by a client” or “associated third party”, the Supreme Court may order that a costs agreement be set aside if satisfied the agreement is not fair or reasonable: ss 328(1), 322(6). • But a law practice which retained and made a costs agreement with a barrister is not given any right to apply for that agreement to be set aside. • Therefore, a barrister’s costs calculated pursuant to a costs agreement made in conformity with LPA after proper disclosure should be assessed by reference to the costs agreement: ss 336, 340.