These notes gives a bullet-point guide to the main regulatory provisions of New South Wales law affecting barristers’ fees. A more detailed guide is available from the Bar Library.
These are the most important items of current legislation:
Legal Profession Uniform Law (NSW) — the Uniform Law or UL
Legal Profession Uniform Law Application Act 2014 (NSW) — the Application Act or AA
Legal Profession Uniform General Rules 2015 — the Uniform General Rules or UGR
Legal Profession Uniform Law Application Regulation 2015 (NSW) — the Application Regulation or AR
The Uniform Law Part 4.3 (ss 169 – 208) and UGR Part 4.3 (rr 70 – 76) and Sch 1 deal with costs between clients and their own lawyers, including costs between barrister and instructing solicitor and costs involving third-party payers.
The Application Act Part 7 (ss 63 – 93G) and Application Regulation Part 6 (cll 31 – 59) deal with costs assessment. They apply to ‘Uniform law costs’ (costs between practitioner and client and analogous cases) and ‘ordered costs’ (costs ordered by a court or tribunal, which are outside the scope of this note). The Application Regulation covers matters which will ultimately be dealt with by Costs Assessment Rules.
Cases in which the client first retained instructing solicitors or a direct-access barrister before 1 July 2015 are governed by repealed legislation, the Legal Profession Act 2004 (NSW) (LPA 2004) and the Legal Profession Regulation 2005 (NSW) (LPR 2005). See the transitional rule in UL Schedule 4 cl 18.
Most of the reforms recommended by the report of the Chief Justice’s Review of the Costs Assessment Scheme ‘remain under consideration, to be progressed at a later time’ (Attorney-General’s second reading speech, Legal Profession Uniform Legislation Amendment Bill, Legislative Assembly, 27/5/2015).
The Application Act Part 6 (ss 59 – 62) and Application Regulation Part 5 (cll 24 – 30) and Schedules 1, 2 and 3 deal with particular costs regimes (fixed costs, personal injury damages, workers’ compensation, etc). Other relevant legislation includes the Motor Accidents Compensation Regulation 2015 (NSW) under the Motor Accidents Compensation Act 1999 (NSW) s 149, the Workplace Injury Management and Workers Compensation Act 1998 (NSW), particularly Part 2 Division 6, and the Workers Compensation Regulation 2016 (NSW), particularly Part 17.
This note does not address the particular rules applicable to personal injuries, workers compensation, motor accidents or other special subject areas.
2. DISCLOSURE OBLIGATIONS
The main disclosure provisions are in UL Part 4.3 Division 3 (ss 174 – 178).
2.1 Solicitor to client
A solicitor’s main disclosure obligations under the Uniform Law are summarised below:
- Basis of charging – s 174(1)(a) – ‘as soon as practicable’ (asap) after instructions
- Estimate of total legal costs – s 174(1)(a) – includes barristers’ fees and other disbursements; GST inclusive – asap after instructions
- Client’s rights – s 174(2)(a) – asap after instructions
- Significant changes to any of the above – ss 174(1)(b), 174(2)(b) – asap after change
- Obligation to take ‘all reasonable steps’ re understanding and consent – s 174(3)
- Basis of charging in relation to barrister – s 175(1) – time limit implied (none express)
- Estimate of total legal costs in relation to barrister – s 175(1) – time limit implied
- Significant changes in relation to a barrister – s 175(1), 174(1)(b) – time limit implied
- Form: in writing – s 174(6) (no express time limit in s 175(1))
- Modified re own professional fees below lower threshold, higher threshold – s 174(4), (5), (7), (8); UGR 72 (NB – not applicable to a conventionally retained barrister)
- Not required for ‘commercial or government clients’ – s 170; UGR 71
2.2 Barrister to instructing solicitor
If there is an instructing solicitor, the barrister must disclose to the solicitor. This is so, even if the barrister has a costs agreement with the client. The obligations are summarised below:
- ‘Information necessary’ re basis of charging – s 175(2) – timing implied
- ‘Information necessary’ re estimate of total legal costs – s 175(2) – timing implied
- Significant changes re either of above – s 175(2) – timing implied
2.3 Barrister to direct-access client
If the client retains the barrister directly, the barrister has the same disclosure obligations as a solicitor (above).
2.4 Barrister or solicitor to associated third-party payer
See UL ss 171, 176. (An associated third-party payer is one who owes a payment obligation directly to the barrister or solicitor in question.)
2.5 Barrister or solicitor who 'negotiates' a settlement
A law practice that ‘negotiates the settlement’ of a litigious matter has additional pre-settlement disclosure obligations:
- Estimate of Client’s own ‘legal costs payable’ – s 177(1)(a)
- Estimate of Client’s party/party costs liability – s 177(1)(a)
- Estimate of other-party contribution to either of the above – s 177(1)(b)
- All must be disclosed to the client and before the deal is ‘executed’
- Qualified barrister let-out – s 177(2)
Non-compliance with disclosure obligations in ss 174 – 177 avoids any related costs agreement, disentitles the defaulting party to costs without going to assessment, and has disciplinary consequences: s 178.
3. COSTS AGREEMENTS
The main costs agreement provisions are in UL Part 4.3 Division 4 (ss 179 – 185). In summary:
- ‘Costs agreement’ is not defined
- Parties – s 180(1) – including (c), conventional barrister–solicitor agreement
- Client’s right to ‘require’ a ‘negotiated costs agreement’ with ‘the law practice’ – s 179 – What does this mean? What is the impact on barristers?
- No contracting out of assessment (except for a ‘commercial or government client’ or equivalent third-party payer) – ss 180(4), 170
- Contingency fees are forbidden – s 183
- Interest – s 195(1), (4), (5), UGR 75, AA s 81 – rate cap: cash rate target + 2 at the date of issue of the bill (rate changes before or after that date have no effect)
- ‘Conditional costs agreement’ is semi-defined and regulated
- Terms – s 181(1), (6) – ‘some or all’ of the costs may be conditional
- The success condition must be defined
- Cooling-off period – s 181(4), (5) – n/a between law practices
- Exclusions – s 181(7) – crime, family
- Uplifts are permitted (s 182(1)) and capped (s 182(2)); the basis, estimate and explanation of major variables must be in the agreement (s 182(3)). There is no longer a prohibition on uplifts in relation to damages claims (contrast LPA 2004 s 324(1)).
- Generally – s 180(2), (3) - writing, etc
- Conditional – s 181(2), (3) – must be ‘signed by the client’ and include a rights statement, even if there is no uplift – consider what this means for barristers
- Effect – s 184, s 172(1), (4), 178, 207 – assuming compliance, there is a rebuttable presumption of fair and reasonable charge; only fair and reasonable charges are recoverable; subject to that, the agreement is contractually enforceable. Contrast LPA 2004 s 319 etc. Consider what might be the effect of a post-contract contravention of s 174(1)(b), s 177; note the passive voice in s 174(4)(a).
Consequences of non-compliance with Division 4:
- Disciplinary consequences – s 181(8), 182(4), 183
- Agreement is void – s 185(1)
- Defaulting law practice can’t recover, must repay the relevant excess, uplift, or (in case of a contingency fee contrary to s 183) the whole fee – s 185(2)–(5).
4. PAYMENTS IN ADVANCE
Payments in advance are (still) ‘trust money’ (UL s 129). The Uniform Law does not directly prohibit a barrister from receiving trust money (contrast LPA 2004 s 252), but that prohibition is imposed by a condition endorsed on every NSW barrister’s practising certificate (UL s 150).
Exception: UL s 133; AR cl 16. A barrister is permitted to receive fees in advance on specified conditions and in limited circumstances.
- The exception is only available in direct access situations – it does not apply if there is an instructing (solicitor) law practice, even one without a trust account.
The barrister must:
- Maintain a sole-purpose ‘trust money account’ with no overdraft, offset or credit linkage, deposit promptly, and keep the payment in the account until billed etc;
- Notify the account to Bar Association;
- Issue detailed receipts and keep copies;
- Appoint a qualified examiner, undergo annual examinations and submit examination reports to Bar Council.
An overview of fees in advance, including notification and approved external examination forms, instruction notes and a trust money account receipt template is available here.
A Barrister must maintain a ‘register of financial interests’ if a ‘legal practitioner associate’ (including the Barrister him/herself) has a financial interest in an entity (listed companies excepted) that engages in any dealing with trust money received by the barrister, but only to the extent that the interest ‘is relevant to the legal services provided by the barrister’ or the dealing ‘occurs in the course of the work of a barrister’ – UGR 95.
These rules are outside UL Part 4.3 and are not governed by the transitional provisions in Schedule 4 cl 18. The date of original instructions is immaterial.
5. BILLING, ASSESSMENT AND RECOVERY
See UL Part 4.3 Division 5 (ss 186 – 193)
- Itemised vs lump sum bill – a bill must be one or the other (s 186). The concept of an itemised bill is not defined in UL. UGR 5(1) defines an itemised bill as ‘a bill that specifies in detail how the legal costs are made up in a way so as to allow costs to be assessed’ (whatever that means) in contrast to ‘a bill that describes the legal services to which it relates and specifies the total amount of the legal costs’. Most barristers’ bills have traditionally been itemised, at least within the useful definition previously set out in LPR 2005 cl 111B(2).
- The recipient of a lump sum bill may request itemised bill within 30 days of the bill becoming payable, in which case the biller must comply within 21 days (s 187).
- Signature (or certain alternatives) is required – s 188
- A bill must contain a statement of client’s rights – s 192 – suggested ‘boilerplate’ wording is included in the Billing Checklist
- Interest – s 195(3) – if interest is to be claimed on unpaid fees under s 195, the bill must say so and include ‘a statement … of the rate of interest’
- Service on client – s 189; UGR 73 – the manner of service between law practices (a conventional bill from barrister to solicitor) is not regulated
- Progress reports (for unbilled work-in-progress) may be required – s 190 – this applies to a barrister on request of the instructing solicitor.
See UL s 194 – requirements before action:
- There must be a compliant bill.
- Any ‘costs dispute’ process before the designated local regulatory authority (DLRA) (in NSW, the Legal Services Commissioner) must be closed or resolved.
- 30 days must have elapsed post service of bill / properly requested itemised bill.
- See also s 195 re interest.
- See also UL s 178, which is a complete defence, and s 185, which is a defence to a contractual claim.
5.3 Costs assessment
- Applies to costs ‘payable on a solicitor-client basis’ – s 196 – undefined, but obviously not the technical meaning of that term – see also AA Pt 7 with respect to ‘Uniform Law costs’ (AA ss 63, 65).
- The time limit for a solicitor to or direct access client to seek assessment of a barrister’s costs or for a barrister to seek assessment of his or her own costs instead of suing is 12 months from the giving of a bill or from payment without bill (s 198). There is no ability for a billing solicitor or barrister as applicant to obtain an extension of time: s 198(4)
- A complaint to the DLRA (LSC) under UL Pt 5.2 involving a ‘costs dispute’ (s 269(2)) can side-track or delay assessment (s 197). The DLRA must reject a costs dispute if the total bill is under $100K or the amount in dispute is under $10K (figures indexed, ex GST): ss 291, 294. Within those limits, the DLRA may make a binding determination (s 292) or decline to do so (s 293). If the DLRA rejects or declines a costs dispute, the impediment to assessment disappears. Separately from the above, the DLRA has power (as at present) to institute a costs assessment ancillary to a disciplinary investigation (s 284).
- A costs assessor’s certificate of determination in relation to unpaid fees can be filed in a court of competent jurisdiction and enforced as if it were a judgment (AA s 70(5)).
- Interest on costs is to be assessed and certified – AA ss 70(1)(c), (4), (5), 75, 81
- AA Part 7 and AR Part 6 mostly reproduce the previous structure under LPA 2004 Part 3.2 Division 11.
- Not all of the recommendations of the Chief Justice’s Review have been implemented to date. Among those which have been implemented is the removal of appeal rights from a determination of a costs assessor. A dissatisfied party may still seek review by a review panel. An appeal lies from a review panel to the District Court or to the Supreme Court, subject to leave if the amount in dispute is below a threshold ($25K or $100K).
- AA Part 7 provides for Costs Assessment Rules to be made by the Costs Assessment Rules Committee and laid before Parliament as a disallowable instrument. Rules have not yet been promulgated; in the meantime, AR Part 6 provides coverage.