Introduction to Costs under the Legal Profession Uniform Law
What comprises the Uniform Law as relevant to Costs
1. The raft of NSW legislation arising from the adoption of the Legal Profession Uniform Law (as first adopted in Victoria), and relevant to costs, is –
- Legal Profession Uniform Law (NSW) No 16a 2014 (the “Uniform Law” or LPUL) (described as a “Note” to the Application Act No 16)
- Legal Profession Uniform Law Application Act 2014 No 16
- Legal Profession Uniform General Rules 2015 under the Legal Profession Uniform Law
- Legal Profession Uniform Law Application Regulation 2015 under the Legal Profession Uniform Law Application Act 2014
- Rules from the Costs Assessors Rules Committee. The main reforms expected to be introduced after the Chief Justice’s Review of the NSW Costs Assessment Scheme completed in 2014 will be implemented in due course (mostly through these Rules).
2. Otherwise the Legal Profession Act 2004 (“the old legislation”) (LPA 2004) and the Legal Profession Regulations 2005 continue to apply.
3. Much of the UL as it relates to costs has its origins deep in the prior NSW Legal Profession legislation arising from the Model Laws impetus since 2000.
4. The Uniform Law (UL) only applies to-
(a) retainers first entered into on and from 1 July 2015 (“first instructions”) (requires complying costs disclosures and regulates the making of costs agreements); (“UL matters”). [NOTE: Both the 2004 and the 1987 Legal Profession Acts (repealed) have continuing relevance for the practitioner still conducting matters where instructions were given prior to 1 July 2015 The 1987 Act and standards of performance apply to matters where first instructions were given before 1 October 2005.]
(b) party party costs in proceedings commenced on and after 1 July 2015 (“ordered costs” being costs ordered by a court or tribunal): see LPUL Application Regulation 2015, Reg 59.
5. The Uniform Law is predominantly concerned with regulation of the profession and hence substantially concerned with solicitor and client/practitioner and client costs – but only in respect of protecting the “consumer client”. The Uniform Law is clearly consumer oriented.
6. The “Consumer Client” is any client who is not a “commercial or government client”. These definitions replace the LPA 2004 concepts of clients as either “vulnerable” or “sophisticated”. Small business (the ordinary proprietary company”) IS NOT A COMMERCIAL CLIENT. Such clients are consumer clients and must be disclosed to and billed with appropriate notification of rights. They have all the protections of the NSW Costs Assessment Scheme.
7. Whereas the “commercial” and the “government” client (as defined in Section 170 (2) LPUL) have no recourse to Part 4.3 of the Uniform Law (Costs Assessment) save for particular sections relating to conditional fee agreements and uplift fees, namely sections 181(1), (7) and (8), 182, 183 and 185(3), (4) and (5). They have neither the protections of the process of engagement nor practitioner/client Costs Assessment: s 170(1)LPUL.
8. Part 4.3 of the Uniform Law has the following objectives –
(a) to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options; and
(b) to provide that law practices must not charge more than fair and reasonable amounts for legal costs; and
(c) to provide a framework for assessment of legal costs.
Compliance with the Uniform Law throughout the Retainer
9. Compliance with the requirements for engagement (disclosure and (for best practice) a costs agreement); ongoing disclosure; disclosure before settlement) require lawyers to take all reasonable steps to ensure clients understand and agree to the course their matter will take. Charging “fair and reasonable and proportionate” costs are more likely where the scope of the work is clearly defined and instructions to carry out that work are specifically given.
10. Providing full and compliant estimates and updating them is essential to fulfilling Objectives (a) and (b).
11. An important change in retainers from LPA 2004 is that UL Matters for damages and conducted on a “no win no fee” basis can charge an “Uplift” (proscribed for “old act matters”). Care must be taken not to confuse the documents used for speculative work under the new and old legislation – especially in this area of litigation where cases often have longevity.
12. Objective (c) in New South Wales is provided through the NSW Costs Assessment Scheme. That framework will be further developed by the Costs Assessors Rule Committee.
Available for Subscribers
Alyson has presented papers on the UL at the 2015 Law Society of NSW Annual Specialist Accreditation Conference at Wollongong; the City of Sydney Law Society and the Southern Tablelands Law Society (at Goulburn). An updated copy of “Getting the Most Out of Costs Assessment in 2015 (now that the Uniform Law is operational)” can be obtained by Subscribers.