Costs and billing
Legal costs under the Uniform Law
An overview of the legislation, the main costs provisions, disclosure, costs agreements, barristers and trust money, recovery and assessment.
Billing checklist
The Billing Checklist for Barristers sets out some commonly encountered requirements relating to barristers’ billing practices under Part 4.3 of the Legal Profession Uniform Law (NSW) (UL), the Legal Profession Uniform General Rules 2015 (UGR), the Legal Profession Uniform Law Application Act 2014 (NSW) (AA) and the Legal Profession Uniform Law Application Regulation 2015 (NSW) (AR) applicable from 1 July 2015.
Last revised, June 2015.
Transition to Uniform Law
UL applies only to matters in which the client first instructed the barrister’s instructing solicitor after 30 June 2015 and to direct access matters where the client first instructed the barrister after that date. Old law matters – where the solicitor was first instructed before 1 July 2015 or the direct access client first instructed the barrister before that date – are still governed by the Legal Profession Act 2004 Pt 3.2 to the exclusion of UL Pt 4.3. (UL Sch 4 cl 18.) This means that a barrister instructed by a solicitor in the usual way needs to find out whether the solicitor was first instructed on or after 1 July 2015 – in which case the UL precedents should be used – or on or before 30 June 2015 – in which case the old law precedents should be used.
Bear in mind that not everything to do with costs is in UL Pt 4.3. Note that the rules relating to particular classes of costs – such as costs in personal injury damages cases – are located in AA Pt 6, not UL Pt 4.3.
NB – Fees in advance: Any barrister who ‘held’ fees in advance under the Legal Profession Regulation 2005 cl 106A is required notify the Bar Association of the account in which the money was held as soon as practicable after 1 July 2015. Such a barrister has until 1 October 2015 to comply with new rules, which are more stringent. See the new Billing Checklist for more information.
Barrister / solicitor precedents
The precedents in this section are prepared on the assumption that the barrister is retained in the normal way by a law practice acting on behalf of a client and wishes to enter into a costs agreement with the instructing law practice under UL s 180(1)(c). This reflects the usual practice and usage of the legal profession. Barristers do not take funds in trust from their clients or investigate the clients creditworthiness. Instead, they rely on the credit and professionalism of instructing solicitors. This enables barristers to provide expert and specialised professional services to solicitors' clients with relative economy because they do not have to duplicate the infrastructure of a solicitor's office. These are suggested precedents only - not statutory forms.
Under the Legal Profession Uniform Law
- Billing Boilerplate
- 1.1 Disclosure letter to solicitors
- 1.2A Basic costs agreement between barrister and solicitors
- 1.2B Conditional costs agreement between barrister and solicitors
Under the Legal Profession Act s 322(1)(c)
- 1.1 Disclosure letter from a barrister to solicitors
- 1.2 Costs agreement between a barrister and solicitors
Personal injury cases
AA Schedule 1 limits legal costs in ‘personal injury damages’ cases. Clause 2 provides that ‘if the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed’ by the imposition of statutory maximum amounts. It also says that ‘a law practice is not entitled to be paid or recover for those legal services an amount that exceeds those maximum costs’, subject to cl 4. Clause 4 provides that Schedule 1 ‘does not apply to the recovery of costs payable as between a law practice and the practice’s client to the extent that recovery of those costs is provided for by a costs agreement that complies with UL Pt4.3 Division 4.’ AR 28 imposes additional requirements for ‘the law practice’ to make disclosure to ‘the client’ as a condition for engaging the protection of AA Schedule 1 cl 4. How this applies to the normal case where the client retains and enters into a costs agreement with solicitors and the solicitors retain and enter into a costs agreement with a barrister is unclear and has not been authoritatively determined.
The first question is whether AA Schedule 1 cl 2 affects the barrister’s right to recover his or her fees from the solicitor (assuming in the case of a conditional costs agreement that any applicable condition has been satisfied). If so, there is a further question: are the barrister’s fees capable of attracting exemption under cl 4, and by what criteria? One possibility is that costs payable by a solicitor to a barrister under a costs agreement between them can attract cl 4 if they are also payable by the client to the solicitor under a complying costs agreement between the client and the solicitor in the character of disbursements, that being within the statutory definition of costs, and that the disclosure requirements of AR 28 correspondingly address themselves to the relationship between solicitor and client. If this is so, the barrister needs to ensure that the client has received requisite disclosure from the solicitor.
Where the barrister enters into a costs agreement under UL s 180(1)(c) with instructing solicitors and wishes to take advantage of exemption under AA Schedule 1 cl 4 from the limits otherwise imposed under Schedule 1 in a personal injury case, assuming that this is legally possible where the costs agreement is between barrister and solicitor (barristers should consider this question and the legal effect of the precedent for themselves), the costs agreement may include a warranty from the solicitors that they have entered into a complying costs agreement with the client and made the necessary disclosure. The solicitor’s warranty may be coupled with additional clauses added at the end of the barrister/solicitor costs agreement providing certification by the client and a collateral costs agreement between client and solicitor covering the barrister’s fees.
Under the Legal Profession Uniform Law
- 1.3.1 Personal injury: solicitor’s warranty
- 1.3.2 Personal injury client’s certification and solicitor/client agreement about barrister’s fees
Under the Legal Profession Act
Barrister / client precedents
The precedents in this section are prepared on the assumption that the barrister is retained directly by a client and wishes to enter into a costs agreement with the client under UL s 180(1)(a). The UL also permits a costs agreement between barrister and client where the barrister is retained by an instructing solicitor (s 180(1)(b)); no precedents are offered for that situation. Barristers should also be aware of the separate disclosure requirement under UL 176 if there is an associated third party payer (relevantly, one who owes a payment obligation to the barrister within s 171). Cases may differ, and no separate precedent is offered. No precedent is offered for direct access disclosure in personal injury cases under AA Sch 1 cl 4. For further notes about these provisions, see the introduction to precedent 1.3.
Legal Profession Uniform Law
- 2.1 Covering letter from barrister to direct access client
- 2.2. Direct access cost agreement
- 2.1 A disclosure letter from a barrister to a client
- 2.2 A costs disclosure notice from barrister to client, s 309
- 2.3 A costs agreement between barrister and client, s 322(1)(a)
Legal Profession Act
Basis of charging
All costs agreements and disclosure obligations must specify the barrister's basis of charging. This varies from barrister to barrister. It may also vary according to the nature of the work. Most barristers use a daily rate and an hourly rate. The relationship between these rates and the circumstances in which each applies should be made clear.
Cancellation fees can be particularly contentious. Without offering a view whether or on what basis it is proper to charge a fee where a hearing day is cancelled, barristers who wish to do so should make explicit provision to that effect. Consideration should be given to what is fair and reasonable in the circumstances (cf. Wilkie v Gordian Runoff Ltd [2005] NSWCA 873). The following are examples of a basis of charging that might be used in a costs agreement, if appropriate to the barrister’s practice and fair in the circumstances:
Example A.
$xxx per hour for all time properly spent (including waiting and travelling time, if any), with items or daily totals rounded up or down to the nearest [quarter hour / tenth of an hour], but subject to the following minimum charges:
$xxx for a short appearance in a court or tribunal; $yyy for an interlocutory hearing before a duty judicial officer not exceeding half a day; otherwise $zzz for every day or part thereof occupied by, listed or set aside for any hearing, mediation or arbitration; but if a matter is settled or de-listed more than seven and not more than 14 days before such a day, the daily fee is reduced by 50%; or if more than 14 days before, or if the barrister is subsequently briefed to appear in another case and entitled to charge a daily fee for that day, the fee is waived.
Example B.
$xxx per hour for all time properly spent (including waiting and travelling time, if any), with items or daily totals rounded up or down to the nearest [quarter hour / tenth of an hour], but subject to the following minimum charges:
$xxx for a short appearance in a court or tribunal; $yyy for an interlocutory hearing before a duty judicial officer not exceeding half a day; otherwise $zzz for every day or part thereof occupied by any hearing, mediation or arbitration.
Motor accident compensation cases
Various provisions of the Motor Accidents Compensation Act 1999 regulate legal costs. One such provision is s149, which permits regulations to fix maximum costs for certain legal services and related matters. Division 2 of the Motor Accidents Compensation Regulation 2005 is made under s149 and sets certain maxima, but clause 11 permits contracting out. Section 149 has been updated to refer to UL, but cl 11 still (at 26 June 2015) refers to the Legal Profession Act 1987.
It is not clear how the contracting-out provisions map across to the 2004 Act or to UL, given that neither requires primary disclosure by a barrister to a client where the barrister is retained by solicitors acting on behalf of the client. It is not clear whether it is (a) necessary or (b) sufficient that the solicitors have made the requisite disclosure to the client, nor whether a separate act of disclosure is required by a barrister to a client. The safest course is to ensure that both solicitors and barrister make the prescribed disclosure to the client by a separate document of the kind contemplated by the regulation, with receipt acknowledged by the client in writing to facilitate proof. The requirement does not distinguish between plaintiffs and defendants; prima facie, it applies to defendants’ work as well as plaintiffs’ work.
The content of the required disclosure is straightforward, but it must be provided ‘before entering into the costs agreement and ‘in a separate written document’. After prefatory matters and reference to the relevant claim under the Act and the proposed costs agreement, the separate, written document addressed to the client may say something like the following:
Even if costs are awarded in your favour, you will be liable to pay such amount of the costs provided for in the costs agreement as exceeds the amount that would be payable under the Motor Accidents Compensation Act 1999 in the absence of a costs agreement.