LSJ – April 2018

Legal updates COSTS

Legal costs: grappling with complexities in the Legal Profession Uniform Law

Michelle Castle is a barrister at Fourth Floor, Selborne Chambers, Andrew Bailey is a barrister at Frederick Jordan Chambers, and Kerrie Rosati is the principal of DGT Costs Lawyers.

BY MICHELLE CASTLE, ANDREW BAILEY AND KERRIE ROSATI

T he Legal Profession Uniform Law has been in operation for almost two years. It has introduced significant changes to some aspects of legal costs. Two are considered in this article: the concept of a ‘commercial or government client’ and time limits for applying for costs assessment. Thedifficultieswith the ‘commercial or government client’ All references in this article are to the Legal Profession Uniform Law No 16a (NSW) (‘ LPUL ‘), unless otherwise spec- ified. The costs provisions are contained within Part 4.3 of the LPUL . The objec- tives in s 169 are clear: • to ensure that clients of law practices can make informed choices about their legal options and the costs associated with pursuing those options; • to provide that law practices must not charge more than fair and reasonable amounts for legal costs; and • to provide a framework for assessment of legal costs. What is unclear is why s 170 goes on to exempt the ‘commercial or government cli- ent’ from the operation of most provisions

sole, or an unincorporated body that has legal capacity in its place of in- corporation); -- unincorporated groups of partici- pants in a joint venture in certain circumstances; • partnerships with more than 20 partners; • a body or person incorporated in a place outside Australia; • persons agreeing to the payment of costs on a basis that is a result of a ten- der process; or • a government authority in Australia or a foreign country; or • a person prescribed by the Uniform Rules (none are yet prescribed). Part 4.3 of the LPUL does not, for the most part, apply to a ‘commercial or gov- ernment client’ as a result of the operation of s 170. To the general exemption some limited exceptions are made, including certain provisions allowing conditional costs agreements, regulating uplift fees, prohibiting contingency fees and providing for the consequences of contravention of uplift fee provisions. The fact that Part 4.3 does not apply to

• The Legal Profession Uniform Law has been in operation for almost

two years. It has introduced significant changes to some

aspects of legal costs, including the concept of a ‘commercial or government client’ and time limits for applying for costs assessment. • The concept of a ‘commercial or government client’ is specifically defined. Practitioners will need to know the client they are dealing with as this informs the content of the disclosure obligations required and what remedies solicitors and clients may have in a costs dispute. • Both clients and law practices now have only 12 months in which to apply for assessment. A client can apply for an extension of time; a solicitor cannot. • There are difficulties arising in the way the law operates, and all practitioners will need to be aware of them.

of the Part, with the consequence that almost none of the stated objectives are achievable through LPUL for that class of clients. The commercial or government client includes: • a law practice; • certain Corporations Act 2001 defined entities, including: -- public companies, large proprietary companies (that meet the definition in s 45A(3) of the Corporations Act ), foreign companies and subsidiaries of each of those companies; -- liquidators, administrators, receivers and financial services licensees; -- registered Australian bodies (being a registrable Australian body that is registered, being any other body corporate that is not a company, exempt public authority or corporation

commercial or government clients (or to third party payers who would meet that description if they were the client) has numer- ous consequences. In short, most of the obligations imposed by Part 4.3 do not apply to a solicitor in relation to a commercial or government client – such as disclosure and the need to issue a bill 30 days before commencing proceedings – and, correspond- ingly, the solicitor has no rights created by the Part in relation to these clients (rights such as costs assessment). This will result in a solicitor having to sue for fees from these clients, with all the attendant risks involved. From the client’s perspective, they do not have all the protections offered by Part 4.3, such as dis- closure of costs, the right to ask for itemised bills or to apply for costs assessment. If the client wishes to establish that it has been overcharged, it will have to sue on whatever cause of action may

80 LSJ I ISSUE 43 I APRIL 2018

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