Lawyer’s professional fees and Lawyer’s professional ethics

One may dream that seeking justice should not be commercialised but in today’s world it is.

Personal friends question lawyer’s ethical values because the lawyers are often criticised for their bills of costs.

The critics mostly ignore that in this world the education, the health and the hunger of fellow human being is also commercialised.

In this brief article I would like to introduce very briefly the regulatory ethics checks applicable to an Australian Victorian lawyer when they charge their clients.

The parent legislation to regulate the legal profession is Legal Profession Uniform Law and this Uniform Law is made applicable in Victoria as schedule 1 annexed to the Legal Profession Law Application Act 2014.

Part 4.3 of the Uniform Law deals with legal costs.

At every stage of the costing process the lawyers are made responsible to follow ethical professional conduct strictly.

The objective of the Uniform Law as provided in section 169 are;

  1. to ensure that clients of law practices are able to make informed choices
  2. the law practices must not charge more than fair and reasonable amounts
  3. to provide a framework for assessment of legal costs.

A common individual client has better consumer protection than to Commercial or government clients and this part of the Uniform Law is not applicable to Commercial or government clients subject to exceptions.

Section 172 of the Uniform Law provides a comprehensive scheme to achieve the objective that the legal cost must be fair and reasonable.

To particularise the fair and reasonable the law provides that legal cost must be proportionately and reasonably incurred, and the amount should also be proportionately and reasonably incurred.

Another yardstick the law provides to measure the fair and reasonable and proportionate is level of skill, experience, specialisation, and seniority of the lawyers concerned and the level of complexity, novelty or difficulty of the issues involved in the matter.

Naturally, the urgency of the matter and the time spent on the matter are also related to workout that the legal fee claimed by the lawyer is fair and reasonable.

Most important aspect of the legal cost is level of responsibility. The time spent on a matter is no doubt relevant to bill the client, but the responsibility comes first. Some files take very little time but may make the lawyer more responsible. For example, loan agreement of a same kind could be of same size, but the terms of loan, security and refund could be different and terms of one loan agreement could be more complicated with some potential hazard for the client.

In considering whether legal costs are fair and reasonable, regard must also be had to whether the legal costs conform to any applicable requirements the Uniform Rules, and any fixed costs legislative provisions.

The lawyers will breach their professional ethical obligation if they do not take care to avoid increase of the legal cost.

Section 173 of the Uniform Law provides that a law practice must not act in a way that unnecessarily results in increased legal costs payable by a client, and must act reasonably to avoid unnecessary delay resulting in increased legal costs.

Hidden cost is a common customer’s complaint against different professionals and service providers. Almost all consumer protection legislation across the world addresses this issue. The tense is between commercial interests and the ethical responsibility. But very often a professional does not know the actual cost on a service because the things depend upon the conduct of all the parties. Nobody can predict the future accurately.

Cost disclosure is a very strict legislative requirement for the lawyers and lawyers may lose their all the work done if the client was not made aware of the estimate of the legal cost well before sending bill of cost rather working on the file.

Division 3 of part 4.3 of the Uniform Law specifically deals with the cost disclosure.

Main disclosure requirements are provided in section 174(1) of the Uniform Law.

It provides that a law practice at the time of accepting the matter, must, when or as soon as practicable after instructions are initially given in a matter, provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs; and

must include information about the client’s rights—

  1. to negotiate a costs agreement with the law practice; and
  2. to negotiate the billing method (for example, by reference to timing or task); and
  3. to receive a bill from the law practice and to request an itemised bill after receiving a bill that is not itemised or is only partially itemised; and
  4. to seek the assistance of the designated local regulatory authority in the event of a dispute about legal costs.

After commencement of the work if things change the law practice, must, when or as soon as practicable after there is any significant change to anything previously disclosed under this subsection, provide the client with information disclosing the change, including information about any significant change to the legal costs that will be payable by the client and the subsequent information must include a sufficient and reasonable amount of information about the impact of the change on the legal costs that will be payable to allow the client to make informed decisions about the future conduct of the matter.

It is also legal and ethical responsibility of a law practice to make sure that the client has understood the bill of cost he will have to pay, the basis of the bill of costs and his/her rights to get the bill of costs reviewed.

There are some exceptions to the cost disclosure requirements. There is no disclosure duty if legal cost does not increase to $750 and if the legal cost is expected to be less than $3000 a standard disclosure on a prescribe form may be sufficient to disclose the estimate of costs.

The law mandates that the cost disclosure must be in writing but just written disclosure will not satisfy the disclosure obligations until the law practice has explained to the client at the level of understanding of a particular client.

If a law practice contravenes the disclosure obligations the consequences for the law practice are serious. The professional conduct of a law practice and/or lawyer may become answerable to their regulators.

On the other hand, from the customer perspective:

  1. the costs agreement concerned would be void; and
  2. the client is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and
  3. the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation.

Disclaimer: This article is just introduction for community awareness and is not a legal advice.

Originally published on 31 March 2021 at LinkedIn.

Basharat Ahmad Jatt

Barrister & Solicitor

Principal

Jatt Lawyers

Melbourne, Australia


Disclaimer

This article is general information for the community and not legal advice. For legal advice please contact with particular facts of your case.

The author is an Australian Lawyer of Pakistani origin. Anyone looking for an Urdu, Punjabi, or Hindi speaking lawyer in Australia can confidently contact Jatt Lawyers.

Legal support for Australian Muslims for inheritance and family law issues in Australia is the common practice area of Jatt Lawyers.

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