What do Linda Evangelista and Dale Boucher have in common?

Linda E 020916

Dale B narrow 3 020916

What do Linda Evangelista and Dale Boucher have in common?

Slightly more than you think. They are both recognized authorities within their fields on costs disclosure.

The supermodel famously said, “I don’t get out of bed for less than $10,000 a day”.

Less famously, the Commissioner for Uniform Legal Services Regulation and CEO of the Legal Services Council in March this year signed into operation (see s 407 of the Uniform Law) his pronouncements on the need for single figure costs estimates under the Uniform Law. (See the Legal Services Council’s Guideline and Direction – Costs Estimate – LSC 01/2016 and its almost identical CULSR twin, Guideline and Direction – Costs Estimate – CULSR 01/2016.)

Ms Evangelista was succinct and presumably did not need to elaborate.

Mr Boucher was less concise. And, as if the Uniform Law jigsaw needed still more pieces, he accompanied his pronouncements with three “worked examples” of how lawyers are required to provide “single figure” estimates to their clients for the purposes of the Uniform Law.

Look at the examples closely. Identifying a “single figure estimate” in any of them is like identifying a snowflake in a blizzard. Easy. And meaningless.

Nevertheless it seems that Mr Boucher considers single figure estimates are compulsory, even if they are as a consequence contrived, almost certain to be superseded, or premised upon tenuous guesses about the likely course of litigation.

Note particularly paragraph 8 of both Guidelines and Directions. Estimates may be provided as a “range of figures PROVIDED [original emphasis] that the law practice … always gives the single figure estimate of the total legal costs in the matter that section 174(1)(a) requires” [my underlining].

My copy of the Uniform Law contains the following version of s 174(1)(a):

A law practice—

(a)       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…

I will give a prize to the first reader who can find in s174(1)(a) the requirement for a “single figure estimate” to which Mr Boucher is referring in his Guidelines and Directions. And not just any prize. It will be a colour, A4-sized photo portrait of either Ms Evangelista or Mr Boucher – your choice.

I have blogged about this silliness before but I was reminded of it at a seminar yesterday on the Uniform Law. Three speakers. Engaged audience. Useful discussion. But beyond the single slide of Linda Evangelista on display, not much clarity.

 

Client complaints – a tool kit for solicitors

Some lawyers have never received a complaint from a client.

Or so they say.

Such prodigies, liars and recent arrivals to the profession are vastly outnumbered by the rest of us.

This might explain the big audience of solicitors who turned out this week at a seminar Gordon & Jackson hosted on the twin topics of client complaints and recent cases dealing with the Civil Procedure Act.

I delivered a paper on the first topic. The paper’s section headings will give you the flavour of its content:

  1. Complaints are inevitable;
  2. Try not to take complaints personally (and get help, of whatever variety);
  3. Categories of complaint under the Uniform Law;
  4. Categories of complaint beyond the Uniform Law;
  5. Your LPLC insurance – the good news and the bad;
  6. Avoiding complaints in the first place; and
  7. Professional standards scheme – you are a participant, aren’t you?

My colleague Monika Paszkiewicz spoke on the Civil Procedure Act. Her paper includes reference to Judd J’s recent observations (in ACN 005 490 540 Pty Ltd v Robert Frederick James Pty Ltd [2016] VSC 217 at paras 18 -19) that solicitors who threaten each other too willingly with personal costs applications under the Civil Procedure Act might themselves be breaching the very statute they are invoking.

Client complaints and the Civil Procedure Act have obvious potential overlap for litigation solicitors. Download the two papers (combined as a single document) here and file them away with your Civil Procedure Act resources.

Enough already? The LSC’s new guidelines on estimating legal costs for disclosure purposes

Precisely what costs estimate does the Uniform Law require of lawyers? The Legal Services Council’s first official guideline and direction attempts to answer this question.

It has an almost identical twin (here) issued the same day by the Commissioner for Uniform Legal Services Regulation. The two guidelines and directions are accompanied on the Legal Services Council website by a document containing three “worked examples” of what our regulators consider to be acceptable costs disclosure.

Together these three documents are intended to give guidance to the costs disclosure obligations imposed on Victorian and NSW lawyers by s 174(1) of the Uniform Law. The documents might improve your estimates but they are unlikely to improve your estimation of the new Uniform Law regime.

First, a quick refresher on the Uniform Law itself. It requires lawyers’ costs to be fair and reasonable (s 172) and voids lawyers’ costs agreements wherever, inter alia, costs have not been properly disclosed to the client (s 178(1)). The starting point for that requirement is the much-maligned s 174 –

174  Disclosure obligations of law practice regarding clients

(1)  Main disclosure requirement

A law practice—

(a)  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

(b)  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 —

together with the information referred to in subsection (2).

The two new guidelines and directions are substantively identical with the effect that their shortcomings and the demands on the reader’s time are duplicated but their meaning is not.

Both guidelines and directions state that –

  • the estimate required by s 174 “is a reasonable approximation of the total costs a client is likely to have to pay in the matter for which instructions have been given, expressed as a single figure, from time to time…”[emphasis added]
  • the provision of additional information to clients beyond that required by s 174 “should be encouraged” and that further information about likely costs might be “expressed as a single figure or as a range of figures, PROVIDED [original emphasis] the law practice always gives the single figure estimate of the total legal costs in the matter that s 174(1)(a) requires.”
  • “It is permissible and may be desirable to preface a single figure estimate with the word ‘about’ to reflect the fact that the figure is an estimate and is not a fixed fee.”

Note the brave but dubious assertion that s 174(1)(a) of the Uniform Law requires “a single figure estimate.” Now turn to the “worked examples” which accompany the guidelines and see how the three examples illustrate how the “single figure estimate” concept can (and it seems should) be routinely subverted.

The first example is a debt recovery matter. It begins with instructions to the lawyer only to issue a letter of demand (for which a single figure estimate is given) and culminates (after a series of presumably ascending single figure estimates) in litigation including a crossclaim whereupon the “lawyer indicates that the [most recent] estimated figure might vary by +/- 10 per cent”.

This is surely incongruous. It seems that the Legal Services Council believes that the pro-active lawyer who advised her client on day one that a debt claim might resolve quickly after a letter of demand or might run all the way to the conclusion of complex litigation and therefore cost in the range of, say, $500 – $15,000 depending on those variables will have comprehensively breached her disclosure obligations under s 174 of the Uniform Law. On the other hand, the dullard solicitor who plods blindly down the road towards litigation,giving his client only a series of single-figure cost estimates to the conclusion of the very next step, is supposedly satisfying the obligations of s 174.

There is more. Each of the three “worked examples” published with the guidelines and directions includes an estimate with a stated percentage deviation range. There is something ridiculous about lawyers being prohibited from estimating costs to clients as a range (e.g. $850 to $1150) while being simultaneously encouraged to provide precisely the same information expressed as a mathematical formula (e.g. $1000 +/- 15 per cent).

There is a warning that the percentage deviation figures are “an illustration only and do not alter the obligation to provide a single figure estimate nor is it intended to encourage an unreasonably broad estimate”. This invites the question of what percentage deviation is “unreasonably broad.” It seems from one of the examples that “plus or minus 15 per cent” might be reasonable. What about plus or minus 30 per cent? Or 50 per cent?  Or 100 per cent? As judged by whom? When?

Alas, for the moment we can only guess.

Finally, a word about the legal status of these official pronouncements. Under s 407 of the Uniform Law, the Legal Services Council and the Commissioner for Uniform Legal Services may each issue “guidelines or directions”. Local regulatory authorities (eg the Victorian Legal Services Commissioner and Victorian Legal Services Board) must comply with such directions (s 407(1)) and hence the directions have the status of subordinate legislation. But the status of the guidelines incorporated in the same documents is less clear. Presumably the guidelines and the worked examples will have persuasive effect at least with the various costs assessors required to adjudicate on the adequacy of lawyers’ costs disclosure.

For more on the costs provisions of the Uniform Law see this introductory paper and these blog posts:

 

 

Waiter! There’s a Chinese restaurant in my easement!

The lawyer who acts for himself is commonly thought to have a fool for a client. But what about the lawyer who acts for the company of which he is a director and shareholder?

A Melbourne solicitor who acted in several capacities for a private company must now be pondering this question following the non-party indemnity costs order made against him personally in 1165 Stud Road Pty Ltd v Power & Ors (no 2) [2015] VSC 735. (The case was decided just before Christmas but somehow was published on Jade only this week).

The solicitor was (indirectly) one of the main shareholders in 1165 Stud Road Pty Ltd (“Stud Rd”). He was also its company secretary and one of its two directors. He dealt on its behalf in several controversial transactions and also acted as its solicitor in both litigation and conveyancing contexts.

In 2007, Stud Rd bought a block of land in Rowville. The block’s only road access was via an easement. But two years earlier a neighbour had built a Chinese restaurant on that easement.

In 2012, Stud Rd sold its landlocked block for $2.3 million. Its s 32 statement neglected to mention the slight issue of the obstructed easement. That sale then fell over before settlement and Stud Rd sued the purchaser and also the owner of the offending restaurant (“Palms”).

Early in the litigation, Palms demanded security for costs from Stud Rd. Stud Rd’s solicitor/company director/company secretary/etc. wrote back refusing and saying that Stud Rd had ample equity in the Rowville land and could afford to meet any likely costs order against it. That much was true.

But things changed when Stud Rd subsequently sold the land afresh. The new sale wasn’t disclosed to the other litigants nor was the new contract of sale discovered pursuant to Stud Rd’s continuing discovery obligations. Stud Rd also omitted to mention to the other parties its distribution of the net sale proceeds to various of its own related interests.

As the trial loomed closer, Stud Rd went into voluntary liquidation. The proceeding was discontinued before trial as a consequence.Palms had nevertheless spent over $300,000 preparing for the trial. There being no prospect of recovering those costs from the liquidated company, Palms applied instead for non-party costs orders against Stud Rd’s solicitors and its two directors personally.

Palms succeeded – but only against the director who had also acted as the company’s solicitor. His multi-faceted role as the company’s director, shareholder AND external solicitor was said by Vickery J to constitute “exceptional circumstances”.
Here is a taste:

138. It is clear that [the solicitor], in conducting the Proceeding as a solicitor on behalf of the Plaintiff, in respect of which he was not only a director but also, through a corporate vehicle, a shareholder, was in breach of paragraphs 9.2 and 13.4 of the Professional Conduct and Practice Rules 2005 and placed himself at serious risk of being in breach of paragraph 13.1 of the rules. As a solicitor in active practice, [the solicitor] ought to have been aware of the effect of these Rules.
139. This placed [the solicitor] in a conflict of interest and rendered his conduct of the litigation on behalf of the Plaintiff improper.
140. This was so despite the fact that, during the life of the Proceeding, neither Palms nor its solicitors … ever once raised the issue of conflict of interest or demand that [the solicitor], or any of the firms at which he worked, cease to act in the Proceeding due to his conflict.
141. Reference is made to paragraphs 9.2, 13.1 and 13.4 of the Professional Conduct and Practice Rules 2005 published by the Law Institute of Victoria, which was tendered in evidence:
9.2 A practitioner must not accept instructions to act or continue to act for a person in any matter when the practitioner is, or becomes, aware that the person’s interest in the matter is, or would be, in conflict with the practitioner’s own interest or the interest of an associate.
….
13.1 A practitioner must not act as the mere mouthpiece of the client or of the instructing practitioner and must exercise the forensic judgments called for during the case independently, after appropriate consideration of the client’s and any instructing practitioner’s wishes where practicable.
13.4 A practitioner must not unless exceptional circumstances warrant otherwise in the practitioner’s considered opinion:
13.4.1 appear for a client at any hearing, or
13.4.2 continue to act for a client,
in a case in which it is known, or becomes apparent, that the practitioner will be required to give evidence material to the determination of contested issues before the court.

142. It is likely that [the solicitor] was not able to bring an independent mind to decisions made on behalf of the Plaintiff in the conduct of the Proceeding by reason of his conflict of interest and it is likely that a number of the decisions he made were infected with this conflict.
143. An order for costs against a non-party is not dependent upon, but can take into account, any improper conduct by the non-party….

The upshot was that the solicitor personally [cf the firm that employed him] was ordered to pay Palms’ cost of the proceeding on a standard basis until the date of the undisclosed sale and on an indemnity basis thereafter.
A final point is worth noting. Palms’ application was brought partly in reliance upon s 29 of the Civil Procedure Act [as discussed in Yara v Oswal blogged here] but that limb of the application was held to be statute-barred as it had not been made before the proceeding was “finalised” as required by s 30. However, this missed deadline did not matter for Palms as the Court held that it had power to order the costs against the solicitor under s 24 of the Supreme Court Act and/or in its inherent jurisdiction.

The lessons from this case? Four occur to me.

  • Acting for yourself and/or interests close to you is perilous.
  • A lawyer and client with apparently aligned commercial interests might still have a conflict of interest if the lawyer’s forensic judgment is thought to be compromised as a result of that close association.
  • Lawyers should not act in matters in which they are likely to be material witnesses.
  • And finally, never be too reassured by the fact that no conflict of interest is suggested by your opponents.

A Christmas present buried deep in the Civil Procedure Rules?

Christmas prezzies sorted? Self-executing orders complied with? Default judgment averted? Holiday booked?

Maybe some of your Christmas deadlines are less pressing than they appear.

Civil litigators should remember at this time of year that the Civil Procedure Rules allow them a bonus 16 days over the Christmas / New Year break to comply with most orders and Court rules containing time limits.

In each of the Supreme, County and Magistrates’ Court rules, time stops running because of Rule 3.04(1). The two alternative formulations of Rule 3.04(1) have identical effect. The Supreme and County Court version provides:

In calculating time fixed by these Rules or by any order fixing, extending or abridging time, the period from 24 December to 9 January next following shall be excluded, unless the Court otherwise orders.

An example. A defendant who files an appearance today (Friday, 11 December 2015) would normally as a consequence be required (by Rule 14.02) to serve a defence within 30 days thereafter (ie by Monday, 11 January 2016). But at this time of year that 30 days actually expires in 46 days’ time on Wednesday, 27 January 2016 after allowance is made for the end-of-year suspension of time under Rule 3.04(1) and also the Australia Day holiday on 26 January 2016. (See Rule 3.01(5) as to the effect of public holidays and other days when the courts’ offices are closed).

The Federal Court is even more generous. Its equivalent is Rule 1.61(5) which provides:

If the time fixed by [these Rules or by an order of the Court] includes a day in the period starting on 24 December in a year and ending on 14 January in the next year, the day is not to be counted.

That was that good news. Now the bad news.

Time pauses for some litigation purposes over the break but not for others.

In Kuek v Victoria Legal Aid [1999] VSC 158 the plaintiff sought to rely upon Rule 3.04(1) to commence an appeal which was otherwise out of time under the Magistrates’ Court Act. He failed. Beach J held that Rule 3.04(1) as a rule of Court could not have the effect of extending a statutory deadline unless the statute concerned (or some other) gave the Court express power to vary that deadline.

So if you have a statutory demand or a potential appeal quietly ticking away on your desk as Christmas approaches, Rule 3.04(1) offers no yuletide peace and goodwill.

But if you have no such time bombs on your desk – Merry Christmas, Happy Chanukah, a Splendid Silly Season and a very happy new year to you.

Uniform Law on costs

Are you a lawyer who likes getting paid?

Then if you are in Victoria or New South Wales you should know the provisions of the new Uniform Law as it relates to lawyers’ costs.

Here is a paper I have prepared on the subject.

I have also done two earlier blogs on the Uniform Law:

Estimating the costs of an impending litigation for disclosure purposes

You are a solicitor about to open a new potential litigation file. It might go all the way to the High Court. But it also might settle in response to your very first letter of demand.

The only real certainty about it is that the new Uniform Law requires you to give your client a written disclosure “as soon as practicable after instructions are initially given” which  must include “an estimate of total legal costs.”  You must then promptly update that disclosure ever thereafter when there is a “significant change to anything previously disclosed” (see s 174 of the Uniform Act).

What does that all mean? This early in the life of the Uniform Law, nobody can be certain but if you get your disclosure wrong (initially and/or subsequently) your costs agreement is likely to be rendered void as a consequence (see s 178(a) of the Uniform Act) and collecting payment will become slow and problematic as a consequence.

So get your costs disclosure right.

Here are some suggestions (but no promises) as to how to go about it.

  1.  Start with one of the Law Institute of Victoria’s disclosure template documents available here. By all means modify the LIV’s wheels to suit your particular situation but don’t reinvent them altogether.
  2. Make your costs estimate sensible. Your client might be dismayed with the bottom line estimate but everyone will be happier to see that figure upfront in an estimate than to be ambushed by something similar in the final bill.
  3. Make the costs estimate transparent to your client. An Excel spreadsheet where you (and the client) can manipulate the variables might be a great way to start. (Help yourself to the template version below.)
  4. Be candid with your client as to the vagaries of both litigation and your estimate. Maybe your client’s case will be quick and simple. But maybe it will become the Battle of the Somme instead, complete with counterclaims, interlocutory skirmishes, third and fourth parties and some stern appellate action to top it all off. Your guess at the very start is possibly only slightly better than your client’s. Don’t pretend otherwise.
  5. Sign the client up to a costs agreement. Again, be guided by the Law Institute precedents.
  6. Having done all of the above, test your client’s comprehension of the strategy and costs being embarked upon. File note it. (Seriously, file note it. You might need those file notes years down the track if your client suggests that language/stress/other issues impeded his/her comprehension of the costs disclosure sufficiently to constitute a breach by you of s 174(3) of the Uniform Law.)
  7. When your costs disclosure then seems complete – remind yourself that it probably isn’t. Your ongoing disclosure obligations endure until the file is actually closed.

Some thoughts on the accompanying spreadsheet
I have drawn the spreadsheet below as an aide-memoire for solicitors attempting to estimate future solicitor/own client costs for Uniform Law disclosure purposes. Inevitably, it will need modification for each actual case.

For template purposes, I have done it for a hypothetical commercial case in the Victorian County Court. The rates I have utilized are derived from the County Court scale (which is, of course, 80 per cent of the Supreme Court scale – see this blog.)

I have made the following viable (but not inevitable) assumptions which might or might not apply to your case. (Change the variables and add or delete new row items to suit your particular client’s anticipated case.)

  • The spreadsheet is for a prospective plaintiff;
  • There is no conditional costs agreement (eg no win/no fee) arrangement proposed;
  • There will be a single claim against a single defendant;
  • There will be no counterclaim, third party claim or similar;
  • There will be no pleading amendments by either side;
  • All directions will be made ‘on the papers’ and by consent;
  • There will be a single contested interlocutory application;
  • There will be a single mediation;
  • There will be a four-day trial with a reserved judgment handed down on an eventual fifth day with short argument that day as to costs, interest and the final form of the Court’s orders;
  • There will be two expert witnesses, (eg an accountant and an engineer) for the plaintiff and no lay witnesses for the plaintiff requiring payment for their attendance;
  • Everything will happen in Melbourne without anyone claiming circuit fees, travel expenses or similar;
  • The barrister will do an initial advice as to merits, draw the statement of claim, do an advice as to evidence, remain involved incidentally throughout the matter and will charge the equivalent of 10 hours’ preparation for each anticipated full day in Court;
  • The solicitor and the single (senior) junior barrister will each charge the client the maximum County Court scale rates applicable to them as of November 2015 (ie solicitor $302.40 per hour and the barrister $432 per hour / $4316 per day in Court) (plus GST in both cases); and
  • There will be no appeal.

Note that because of the technical limitations of WordPress (which hosts this blog) the Excel / Numbers functions formerly embedded in the table below have been lost in posting it here. You can resurrect the table and its functions for your own use by –

  • copying and pasting the table from this blog back into your own Excel / Numbers spreadsheet;
  • restoring the functions manually (eg in Excel you make the formula in D2 read “=PRODUCT(B2:C2)” and then replicate it for the remaining rows;
  • insert/delete rows and increase/decrease the rates and duration estimates to suit the circumstances; and
  • use “AutoSum” to calculate the total.

You might even email a version of your spreadsheet to your client so he/she can also manipulate some of the variables. Emphasize to your client that you are providing an estimate – not a quote and that the defining characteristic of commercial litigation is that it never goes entirely according to the script.

Some parting cautions
Three final issues occur to me that might be prudently flagged as part of your disclosure to your client. (Neither is apparent in the Uniform Law or my spreadsheet.)

  • Most litigation settles well before trial. Some settles during the running of the trial. Of the relatively few cases that run to judgment, some are appealed but most are not. The combined effect of these disparate possibilities is that your initial estimate might legitimately undershoot or overshoot the eventual total that you charge your client drastically.
  • Losers will usually be ordered to pay the winner’s costs. This means that the figure in your compulsory Uniform Law estimate is likely to be substantially wrong in practical net terms. The final, post-trial, net figure your client pays for lawyers’ involvement in the litigation is likely to be much higher or lower than your Uniform Law estimate, depending on whether your client is on the right or wrong end of a substantial costs order.
  • Once embarked upon, litigation can seldom be unilaterally abandoned without adverse costs consequences – see for example Victorian Supreme Court Rule 63.15 and County Court Rule 63.15 about the cost presumptions upon the filing of a notice of discontinuance. This makes dangerous the widely-held view that costs can and should be estimated to prospective litigants as a sequence of distinct figures. Lay clients might reason from an overly segmented disclosure that if they are not enjoying the litigation ride, they might easily and cheaply, unilaterally quit along the way as if alighting from a bus at one of its usual stops. Alas, life and litigation just isn’t as simple as the authors of the Uniform Law apparently believe.

What guarantees do I offer about the spreadsheet? None but any bouquets or brickbats about it are welcome all the same.

Category of legal work estimated time estimate in hours (assume 1 day =10 hours) hourly /unit charge approx total charge
Pre-litigation investigation & negotiation (solicitor) 20 $302 $6,048
Brief to advise (barrister) 10 $432 $4,320
Writ & statement of claim (barrister) 10 $432 $4,320
Filing fee $814 $814
Brief as to evidence (barrister) 10 $432 $4,320
Preparation for and attendance at mediation (solicitor) 6 $302 $1,814
Preparation for and attendance at mediation (barrister) 10 $432 $4,320
Mediator’s fee (half share) $2,000 $2,000
Mediation venue hire (half share) $300 $300
Interlocutory application (solicitor) 10 $432 $4,320
Interlocutory application (barrister) 10 $432 $4,320
Fees for Expert # 1 – report and appearance as expert witness 30 $362 $10,860
Fees for Expert # 2 – report and appearance as expert witness 30 $362 $10,860
Solicitor’s general preparation (including attendances on client, experts, counsel and court, correspondence, offers of compromise, discovery, notices to admit, expert witness notices, preparation of court book etc) 100 $302 $30,200
Trial preparation (barrister) 45 $432 $19,440
Setting down fee $962 $962
Hearing fee (per day of trial from day 2) 3 days $500 $1,500
Solicitor instructing in Court 45 $302 $13,590
Barrister – appearance at trial 40 $432 $17,280
Barrister – taking judgment 5 $432 $2,160
Misc disbursements (eg process servers, company searches, couriers, subpoenas etc) $2,000 $2,000
Trial transcript (4 days @$2250 per day) $10,000 $10,000
TOTAL ESTIMATE $155,748 (plus GST)