DUTIES TO THE CLIENT

Question 1

SOURCES OF DUTY TO CLIENT

Answer 1

• Legal practitioner and client relationship is fiduciary in nature
  › Therefore duties arise because of this relationship.
• Contract of retainer
  › Legal practitioner assumes contractual obligations in favour of their client.
  › These are both express and implied.
   The duty to act competently and diligently = example of implied.
• Tort – legal practitioners owe a duty of care to their client
  › Liable in negligence.
  › Example = duty to act competently and diligently.
• Statutory formulations of the duties, e.g. Legal Profession Uniform Laws
• The common law – still applies, not replaced by the uniform laws (common law cases used to determine whether the conduct falls within) – look at rule 2.2 of Legal Uniform Law Australian Solicitors Conduct Rules 2015.

Question 2

DUTIES UNDER LEGAL UNIFORM LAW

Answer 2

› Duty to be competent
› Duty of loyalty
› Duty of confidence

Question 3

RELATIONS WITH CLIENT UNDER UNIFORM LAWS

Answer 3

• Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015
  › Relations with clients
  7. Communication of advice
  8. Client instructions
  9. Confidentiality
  10. Conflicts concerning former clients
  11. Conflicts of duties concerning current clients
  11A. Short-term legal assistance services
  12. Conflict concerning a solicitor’s own interests
  13. Completion or termination of engagement
  14. Client documents
  15. Lien over documents
  16. Charging for document storage
• Legal Profession Uniform Conduct (Barristers) Rules 2015
  › 35. Duty to the client
  › 36. A barrister must inform the client or the instructing solicitor about the alternatives to fully contested adjudication of the case…
  › 37. A barrister must seek to assist the client to understand the issues in the case and the client’s possible rights and obligations,…
  › 38. A barrister must (unless circumstances warrant otherwise in the barrister’s considered opinion) advise a client who is charged with a criminal offence about any law, procedure or practice which in substance holds out the prospect of some advantage (including diminution of penalty), if the client pleads guilty …

Question 4

WHAT IS LAWYER COMPETENCE

Answer 4

• Not generally accepted meaning of what constitutes ‘lawyer competence’, as it is highly subjective depending on eyes of observer.
  › i.e. client will determine based on outcome, judiciary will base it on their conduct during proceedings etc.

Question 5

DUTY TO BE COMPETENT

Answer 5

• Hawkins v Clayton (1988) 164 CLR 539 at 580:
  › The question must be answered by reference to the standard or measure of care which was reasonable in the circumstances. In the present case, that standard or measure of care was that indicated by Windeyer J. in Voli (4), namely, the care and skill to be expected of a qualified and ordinarily competent and careful solicitor in the exercise of his profession.

Question 6

WORKING OUTSIDE CAPACITY, SKILL OR EXPERIENCE

Answer 6

• Legal practitioners should not accept work outside their capacity, skill or experience.
  › Decline work you cannot competently perform.

Question 7

OPTIONS WHEN RECEIVING WORK OUTSIDE SKILL, KNOWLEDGE OR EXPERIENCE

Answer 7

• A diligent practitioner who lacks knowledge or experience in a particular practice area should either:
  › refer the client to another practitioner who does possess the relevant knowledge or experience (see Un v Schroter [2002] NTSC 2);
  › with the client’s content, engage a specialist with the relevant knowledge or experience to advise the practitioner (LM v K Lawyers [2015] WASC 244); or
  › obtain such the requisite knowledge through private study, research or collaboration with a practitioner who is competent in that practice area (provided it does not cause undue delay or cost to the client).
   Client can consent to delay and additional costs if they only want that lawyer. But consent is essential.
• Zandas and Zandas [2014] FCCA 1184 at [92]-[94]:
  › … If a solicitor without experience in this jurisdiction is asked by a client to act, the proper course to adopt would be to brief a barrister who is an expert in the jurisdiction

Question 8

WORK THAT CANT BE COMPLETED IN A TIMELY MANNER

Answer 8

• Legal practitioners should not accept work if they cannot reasonably complete the work in a timely manner.
  › Legal Profession Board of Tasmania v Barclay [2022] TASSC 14 at [9]- [12]:
   Delay and neglect will always constitute conduct capable of amounting to either unsatisfactory professional conduct or professional misconduct. … [The] length of the delay and the persistent failure to take any meaningful action over that period can only result in a finding that the conduct “involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence”

Question 9

COMPLETING IN TIMELY MANNER UNDER UNIFORM LAWS

Answer 9

• Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015
  › 4. Other fundamental ethical duties
  4.1 A solicitor must also – …
  4.1.3 deliver legal services competently, diligently and as promptly as reasonably possible
  › 7. Communication of advice
   7.1 A solicitor must provide clear and timely advice to assist a client to understand relevant legal issues and to make informed choices about action to be taken during the course of a matter, consistent with the terms of the engagement
• Legal Profession Uniform Conduct (Barristers) Rules 2015
  › 4. Principles These Rules are made in the belief that: …
  (c) barristers as specialist advocates in the administration of justice, must act honestly, fairly, skilfully, bravely and with competence and diligence

Question 10

WHAT IS THE DUTY OF LOYALTY

Answer 10

• The lawyer-client relationship is recognised as attracting fiduciary obligations and duties.
  › Good faith and loyalty.
• Breen v Williams (1996) 186 CLR 71 at 113 per Gaudron and McHugh JJ:
  › In this country, fiduciary obligations arise because a person has come under an obligation to act in another’s interests. As a result, equity imposes on the fiduciary proscriptive obligations - not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict. … But the law of this country does not otherwise impose positive legal duties on the fiduciary to act in the interests of the person to whom the duty is owed.
   Things they cant do, not what they must do.

Question 11

WHAT ARE TWO THINGS THE DUTY OF LOYALTY ENCOMPASSES

Answer 11

• The duty of loyalty encompasses the duty “not to profit” and the duty of “no conflict”.
  › The duty “not to profit” requires a legal practitioner to avoid conflicts of interest with respect to the practitioner obtaining an unauthorised benefit.
  › The duty of “no conflict” requires a legal practitioner to avoid conflicts of interest with respect to former clients, current clients and practitioner’s own interests.

Question 12

AVOIDING CONFLICT OF INTEREST WITH PRACTITIONERS OWN INTEREST

Answer 12

• A legal practitioner who engages in financial dealings with clients, beyond what is specified within the retainer, puts themselves in a position of conflict between their duty to the client and their own personal interest.
  › EXCEPTION: Full disclosure to the client, and a prudent practitioner would advise and facilitate the provision of independent legal advice to ensure that informed consent is given by the client.
   AKA needing consent.
• Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 at 170:
  › …Where a solicitor discovers that continuing to act for his client will, or may, bring the interests of his client and his own interests into conflict, it will be a rare case where he should not, at least, advise his client to take independent legal advice.

Question 13

EXAMPLES OF CONFLICTS WITH PRACTITIONERS OWN INTERESTS

Answer 13

› Borrowing money from a client
 See Law Society of New South Wales v Harvey [1976] 2 NSWLR 154
 See Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, Rule 12.3
› Lending to client
 See Maguire v Makaronis (1997) 188 CLR 449
› Buying or selling from the client
 See Re a Barrister and Solicitor (1979) 40 FLR 26
› Referral fees and commissions
 See Maher v Millennium Markets Pty Ltd [2004] VSC 174
› Receiving a substantial benefit under a will

Question 14

RECEIVING A SUBSTANTIAL BENEFIT UNDER A WILL

Answer 14

• An example of conflicts with practitioners own interests
   A legal practitioner should not draw up a will for a client in which the practitioner, practitioner’s law practice or associate will or may receive a substantial benefit.
   EXCEPTION: Provided the person instructing the practitioner is a member of the practitioner’s immediate family, spouse, a solicitor or an immediate family member of a solicitor.
   Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 12. Conflict concerning a solicitor’s own interests Specifically see Rule 12.4.2.

Question 15

INTERMATE RELATIONSHIP WITH CLIENT

Answer 15

› There is no prohibition on legal practitioners having a personal or intermate relationship with their client.
 See Bar Association (Qld) v Lamb (1972) 45 ALJR 71
› Although it is not prohibited, it is generally advised that legal practitioners should not engage in intermate relationships with their client as it can be perceived as an abuse of power due to the power imbalance and dependency nature of the lawyer-client relationship.

Question 16

EXCEPTIONS TO NO CONFLICT WITH OWN INTERESTS

Answer 16

› Full disclosure
› Informed consent – really to give this they need to be getting independent legal advice from someone who doesn’t stand to gain anything from it.

Question 17

NO CONFLICT WITH OWN INTERESTS UNDER UNIFORM LAWS

Answer 17

• Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015
  › 12. Conflict concerning a solicitor’s own interests
   12.1 A solicitor must not act for a client where there is a conflict between the duty to serve the best interests of a client and the interests of the solicitor or an associate of the solicitor, except as permitted by this Rule.
• Legal Profession Uniform Conduct (Barristers) Rules 2015
  › 101. Briefs which must be refused or must be returned A barrister must refuse to accept or retain a brief or instructions to appear before a court if:
  … (b) the client’s interest in the matter or otherwise is or would be in conflict with the barrister’s own interest or the interest of an associate
  … (g) the barrister has a material financial or property interest in the outcome of the case, apart from the prospect of a fee

Question 18

AVOIDING CONFLICT WITH FORMER CLIENTS

Answer 18

• Upon termination of retainer the fiduciary relationship between a legal practitioner and client, including the practitioner’s duty of loyalty to client, comes to an end. But the practitioner’s duty of confidentiality continues.
  › Even after death, duty of confidentiality continues.
• Dilemma of conflicting interests arises where a legal practitioner is retained by Party A to act against Party B, a former client of the practitioner or firm. The risk is that practitioner or firm may use confidential information obtained from Party B in new matter against the latter, thus breaching duty of confidentiality.
• General rule is that legal practitioner should not accept instructions from a client, if the opposing party is a former client of the practitioner or their firm.
• If legal practitioner proceeds to act for a client against a former client, the latter can apply to the court to disqualify the practitioner from acting for their new client.
  › This DQ applies to the whole firm, even if they haven’t had info on the case.

Question 19

WHO IS A FORMER CLIENT UNDER UNIFORM LAW

Answer 19

› Glossary of terms
… former client for the purposes of Rule 10.1, may include a person or entity that has previously instructed—
(a) the solicitor,
(b) the solicitor’s current law practice,
(c) the solicitor’s former law practice, while the solicitor was at the former law practice,
(d) the former law practice of a partner, co-director or employee of the solicitor, while the partner, co-director or employee was at the former law practice,
or, has provided confidential information to a solicitor, notwithstanding that the solicitor was not formally retained and did not render an account.

Question 20

Prince Jefri Bolkiah v KPMG (a firm) [1992] 2 AC 222 at 369 per Lord Millett

Answer 20

› [To set the threshold at the level of probability] imposes an unfair burden on a former client, exposes him to a potential and avoidable risk to which he has not consented, and fails to give him a sufficient assurance that his confidence will be respected.
 Threshold = Possibility not probability
* Possibility of misuse (this is UK). Australia has taken it futher (next case)

Question 21

Wyndham City Council v CSR Ltd [1998] VSC 156 at [32] per Chernov J

Answer 21

› [The] Court does not act on the basis of mere possibilities … the possibilities must have a degree of reality and a degree of reasonableness and sense.
 Need a real possibility that a misuse of info might arise.

Question 22

TEST IN AUSTRALIA TO DETERMINE CONFLICT WITH CLIENTS

Answer 22

• Test in Australia: Is there a real possibility in the mind of the reasonable observer that confidential information given to the lawyer by the former client might be used by the lawyer to advance the interests of a new client to the detriment of the former client?

Question 23

CONFLICTS WITH FORMER CLIENTS UNDER ASCR

Answer 23

› 10. Conflicts concerning former clients
10.1 A solicitor and law practice must avoid conflicts between the duties owed to current and former clients.
10.2 A solicitor or law practice who or which is in possession of information which is confidential to a former client where that information might reasonably be concluded to be material to the matter of another client and detrimental to the interests of the former client if disclosed, must not act for the current client in that matter UNLESS —
10.2.1 the former client has given informed consent to the disclosure and use of that information, or
10.2.2 an effective information barrier has been established.

Question 24

Mintel International Group Ltd v Mintel (Australia) Pty Ltd (2000) 181 ALR 78 at [44] per Heerey J:

Answer 24

› Indeed it is a feature of an independent Bar that counsel might appear one day on behalf of such a body and the next day against it. While perhaps strange to observers from countries where the legal profession is organised differently, this freedom enhances the independence of counsel and their capacity to give objective and sometimes unwelcome advice. The cab rank rule works both ways. The driver is obliged to accept the fare, but the face does not buy the service of the deliver beyond the stipulated journey.
 This rule applies more strictly to the solicitor, not barrister.

Question 25

AVOIDING CONFLICT WITH CURRENT CLIENTS

Answer 25

• There is no general rule prohibiting a legal practitioner from acting for more than one client at the same time. However, a practitioner owes fiduciary duties of loyalty and confidence to each client.
• Difficulty arises if there is a real or potential conflict of interests between two or more clients. This would adversely affect the practitioner’s ability to represent each client effectively.
  › Obvious: Vender and purchaser, lessor and lessee, etc.
  › More difficult: two co-accused. High potential for conflict
   If interests conflict may need to withdraw from case (costs already incurred)
   Extends to the firm they are employed by.
• If no conflict of interests is apparent and a practitioner acts for both clients, they must be fully apprised of the situation and advised that if a conflict of interests does arise at some stage, the practitioner may have to withdraw from the case.
• Eiszele v Hurburgh [2011] TASSC 65 at [37] per Blow J:
  › [The defendant] was in a position where is had a duty to the plaintiffs to reveal what he knew about [T’s] financial position where he had a duty to [T] not to do so.

Question 26

AVOIDING CONFLICT WITH CURRENT CLIENTS UNDER ASCR

Answer 26

Summarised:
11. Conflict of duties concerning current clients.
11.1 solicitor must avoid conflicts between 2 or more current clients.
11.2 Duty of loyalty: no adverse interests or conflict/potential for conflict to act in best interests of each client, not to act unless permitted by 11.3 and 11.4
11.3 seeking to act in circumstances under 11.2 can act if each client is aware solicitor acting for other, and has given informed consent.
11.4 Duty of confidentiality: if acting for two or more clients in related or same matter, and comes into information confidential to one client, which might be concluded as determental to the first clients case if disclosed, the solicitor may not act or continue to act unless the client permits the disclosure of that information or some effective information barrier is imposed.
11.5 Actual conflict arising between current clients: an actual conflict arises between the duties owed to two or more of those clients, the solicitor or law practice may only continue to act for one of those clients in the following circumstances:
11.5.1 any client for whom the solicitor or law practice ceases to act has given informed consent to the solicitor or law practice continuing to act for the remaining clients, and
11.5.2 the duty of confidentiality owed to all of the clients, both those for whom the solicitor or law practice ceases to act and those for whom the solicitor or law practice continues to act, is not put at risk.

Question 27

WHAT IS AN INFORMATION BARRIER

Answer 27

• Information barriers, sometimes referred to as ‘Chinese walls’, are used within law firms to overcome conflicts of interests between clients.
  › Usually only large firms.
• Courts prefer situation where barriers were already in place when potential conflict of interests arose but an effective ad hoc arrangement may also be sufficient to address the conflict.
• The body of Australian case law regarding information barriers suggests that the courts have generally taken a strict approach to information barriers. See:
  › Mallesons Stephen Jacques v KPMG Peat Marwick (1990) 4 WAR 357;
  › D&J Constructions Pty Ltd v Head (1987) 9 NSWLR 118.

Question 28

FACTORS TO CONSIDER IN EST. AN INFORMATION BARRIER

Answer 28

• What factors do the courts take into account when considering if there are sufficient protections in place? (for duty to avoid conflict with former and current clients)
  › The nature of the two cases.
  › The length of time between the two matters.
  › The nature of the barriers put in place:
   physical separation of departments and personnel involved
   education of personnel concerned as to the protocols to be adopted
   strict and carefully defined procedures for handling confidential information
   on-going compliance oversight to ensure that the information barrier operates effectively
   disciplinary sanctions are imposed for any breaches of the information protocols
• See Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd [2002] FCA 588 for examples of how a firm successfully demonstrated an effective information barrier. [12].

Question 29

WHAT IS THE DUTY OF CONFIDENCE

Answer 29

• The duty of confidentiality is a fundamental duty owed by a legal practitioner to their client.
  › Designed to encourage full and frank disclosure/conversation.
• Confidentiality exists in relation to all documents and communications between the legal practitioner and client.
• Note: not extinguished by termination of retainer or death of the client.
• See generally: Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, rule 9; and Legal Profession Uniform Conduct (Barristers) Rules 2015, rules 76 and 114
• THIS IS DIFFERENT FROM LEGAL PROFESSIONAL PRIVILEGE.

Question 30

WHEN MUST A SOLICITOR NOT DISCLOSE ANY INFORMATION

Answer 30

• Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015
  › 9. Confidentiality
  9.1 A solicitor must not disclose any information which is confidential to a client and acquired by the solicitor during the client’s engagement to any person who is not—
  9.1.1 a solicitor who is a partner, principal, director, or employee of the solicitor’s law practice, or
  9.1.2 a barrister or an employee of, or person otherwise engaged by, the solicitor’s law practice or by an associated entity for the purposes of delivering or administering legal services in relation to the client, EXCEPT as permitted in Rule 9.2.
• 114 UCBR

Question 31

WHEN CAN A SOLICITOR DISCLOSE CLIENT CONFIDENTIAL INFORMATION

Answer 31

• Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015
  › 9. Confidentiality
  9.2 A solicitor may disclose information which is confidential to a client if—
  9.2.1 the client expressly or impliedly authorises disclosure,
  9.2.2 the solicitor is permitted or is compelled by law to disclose,
  9.2.3 the solicitor discloses the information in a confidential setting, for the sole purpose of obtaining advice in connection with the solicitor’s legal or ethical obligations,
  9.2.4 the solicitor discloses the information for the sole purpose of avoiding the probable commission of a serious criminal offence,
• UCBR 115

Question 32

WHAT IS LEGAL PRIVILEGE

Answer 32

• The doctrine of legal professional privilege protects certain documents and information, so that they do not have to be disclosed.
• Privilege communication applies to confidential communications between lawyer and client for the purpose of legal advice or for the use in existing or anticipated litigation.
  › ‘In its ordinary meaning, dominant indicates that purpose which was the ruling, prevailing, or most influential purpose’ (Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404).

Question 33

EXCEPTIONS TO LEGAL PRIVILEGE

Answer 33

› Legal privilege belongs to the client, so only the client may waive privilege.
› Illegal purposes, see Aucare Dairy Pty Ltd v Huang [2017] FCA 746.
 Preventing legal activity.
› Statutory exclusions, see Australian Securities and Investments Act 2001 (Cth)

Question 34

WHAT IS A RETAINER

Answer 34

• A retainer is essentially a contract between a lawyer and client for the provision of legal service.
  › Who the client is and legal services expected (at a minimum).
  › Lawyer not obliged to provide advice on things outside the retainer.
• Importantly, the scope of the retainer determines whether the lawyer’s conduct is covered by professional indemnity insurance. See Legal Profession Uniform Law, Part 4.4.
• NOTE: There is no statutory requirement for retainers to be in writing.

Question 35

PROVING THE EXISTENCE OF A RETAINER

Answer 35

• In circumstances where there is no written retainer, a retainer can be inferred or implied in the circumstances.
  › Courts assess whether on the BoP is can be implied that the parties entered into a retainer contract (objective test).
• The party alleging the existence of a retainer bears the onus of proof.
• Griffiths v Evans [1953] 1 WLR 1424 at 1428 per Denning LJ: [T]he word of the client is to be preferred to the word of the solicitor…

Question 36

EXAMPLE OF CASE WHERE IMPLIED RETAINER FOUND

Answer 36

• Pegrum v Fatharly (1996) 14 WAR 92

Question 37

TYPES OF AUTHORITY UNDER A RETAINER

Answer 37

• The authority arising out of the lawyer-client relationship determines the extent to which the lawyer can represent the client’s interest.
• There are two forms of authority:
  › Actual authority – ‘a legal relationship between principal and agent created by a consensual agreement to which they alone are parties’ (Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 502).
  › Apparent authority – where an agent appears to have authority by virtue of being “held out” by the principal as being authorised to act in that position.

Question 38

WHAT IS A COST DISCLOSURE

Answer 38

• Costs disclosure is an obligation on lawyers to disclose to their client how they will charge for their legal services, and an overall estimation of the likely total legal cost of the matter.
• There are two types of costs:
  › Professional costs – fees charged for the lawyer’s legal services; and
  › Disbursements – costs the lawyer must pay third parties on behalf of the client.
• See Gino Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 7th ed, 2021) [14.20] for an outline of what must be disclosed.
• In Western Australia, costs disclosure requirements have changed since the enactment of the Legal Profession Uniform Law

Question 39

DISCLOSURE OBLIGATIONS RELATING TO COST AGREEMENTS

Answer 39

• S 174(4) – exception for legal costs below lower threshold (below $750, s 18(3)) – cost disclosure not required.
• S 174(5) – Total cost below higher threshold (therefore between $750 - $3000, s 18(4)) – full cost disclosure not required. Uniform standard disclosure form can be provided to the client instead or cost disclosure.
• S 174(1) – main cost disclosure requirement – costs above higher threshold ($3000, s 18(4)) – cost disclosure required.
  › Total costs excludes GST and Disbursements.
  (SIMPLIFIED VERSION OF R 174(1)-174(5).

Question 40

Legal Profession Uniform Law 174(6)

Answer 40

• 6) Disclosure to be written
  A disclosure under this section must be made in writing, but the requirement for writing does not affect the law practice’s obligations under subsection (3).

Question 41

WHAT HAPPENS IF CHANGE IN COST DISCLOSURE

Answer 41

Legal Profession Uniform Law 174
- 7) Change in amount of total costs—where previously below lower threshold
If the law practice has not made a disclosure, whether under subsection (1) or (5), because the total legal costs in the matter are not likely to exceed the lower threshold, the law practice must, when or as soon as practicable after the law practice becomes aware (or ought reasonably become aware) that the total legal costs (excluding GST and disbursements) are likely to exceed the lower threshold—
(a) inform the client in writing of that expectation; and
(b) make the disclosure required by subsection (1) or (if applicable) subsection (5).
- 8) Change in amount of total costs—where previously below higher threshold If the law practice has not made a disclosure under subsection (1) but has made a disclosure under subsection (5) because the total legal costs in the matter are not likely to exceed the higher threshold, the law practice must, when or as soon as practicable after the law practice becomes aware (or ought reasonably become aware) that the total legal costs (excluding GST and disbursements) are likely to exceed the higher threshold—
(a) inform the client in writing of that expectation; and
(b) make the disclosure required by subsection (1).

Question 42

PROVISIONS OF DISCLOURE REQUIREMENTS FOR OTHER PAYMENTS

Answer 42

• 175. Disclosure obligations if another law practice is to be retained
       › Disbursement type
• 176. Disclosure obligations of law practice regarding associated third-party payers
       › Disbursement type.
• 177. Disclosure obligations regarding settlement of litigious matters

Question 43

non compliance with cost disclosure requirements

Answer 43

• 178. Non-compliance with disclosure obligations
       1) If a law practice contravenes the disclosure obligations of this Part—
       a) the costs agreement concerned (if any) is void; and
       b) the client or an associated third party payer 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
       c) 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; and
       d) the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.

Question 44

example of untimely cost disclosure

Answer 44

Council of the Law Society of New South Wales v King [2018] NSWCATOD 157.

Question 45

what are cost agreements

Answer 45

• A cost agreement is a contract between a lawyer and client stipulating the lawyer’s entitlement for the legal work that is to be performed.
  › Can include regime for payment, and how they may enforce payment if not received.
• A ‘costs agreement may be enforced in the same way as any other contract’ (Legal Profession Uniform Law, s 184).
• ‘A client of a law practice has the right to require and to have a negotiated costs agreement with the law practice’ (Legal Profession Uniform Law, s 179).
  › Required provision of the cost agreement for clients.

Question 46

making a cost agreement

Answer 46

Legal Profession Uniform Law:
- 180. Making costs agreements
1) A costs agreement may be made —
a) between a client and a law practice retained by the client; or
b) between a client and a law practice retained on behalf of the client by another law practice; or
c) between a law practice and another law practice that retained that law practice on behalf of a client; or
d) between a law practice and an associated third party payer.
2) A costs agreement must be written or evidenced in writing.
3) A costs agreement may consist of a written offer that is accepted in writing or (except in the case of a conditional costs agreement) by other conduct.
4) A costs agreement cannot provide that the legal costs to which it relates are not subject to a costs assessment

Question 47

making a cost agreement

Answer 47

Legal Profession Uniform Law:
- 180. Making costs agreements
1) A costs agreement may be made —
a) between a client and a law practice retained by the client; or
b) between a client and a law practice retained on behalf of the client by another law practice; or
c) between a law practice and another law practice that retained that law practice on behalf of a client; or
d) between a law practice and an associated third party payer.
2) A costs agreement must be written or evidenced in writing.
3) A costs agreement may consist of a written offer that is accepted in writing or (except in the case of a conditional costs agreement) by other conduct.
4) A costs agreement cannot provide that the legal costs to which it relates are not subject to a costs assessment

Question 48

CONDITIONAL COST AGREEMENTS

Answer 48

Legal Profession Uniform Law:
1) A costs agreement (a conditional costs agreement) may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate.
2) A conditional costs agreement must—
a) be in writing and in plain language; and
b) set out the circumstances that constitute the successful outcome of the matter to which it relates.
3) A conditional costs agreement must—
a) be signed by the client; and
b) include a statement that the client has been informed of the client’s rights to seek independent legal advice before entering into the agreement.
…
7) A conditional costs agreement may relate to any matter, except a matter that involves—
a) criminal proceedings; or
b) proceedings under the Family Law Act 1975 of the Commonwealth; or
c) proceedings under legislation specified in the Uniform Rules for the purposes of this section.
8) A contravention of provisions of this Law or the Uniform Rules relating to conditional costs agreements by a law practice is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.

Question 49

Spence v Gerard Malouf & Partners Pty Ltd trading as Gerard Malouf & Partners ON CONDITIONAL COST AGREEMENTS.

Answer 49

…These types of retainers are fraught with difficulties if they are not drafted with exquisite clarity…
- be specific. ESPECIALLY with what a successful outcome is. Essential to be defined.

Question 50

WHATS A CONTINGENCY FEE

Answer 50

• Contingency fees = based on outcome (like how much they win, how much they settle for, how much it sells for).

Question 51

LAW ON CONTINGENCY COST AGREEMENTS

Answer 51

• Legal Profession Uniform Law 183.
  Contingency fees are prohibited
  1) A law practice must not enter into a costs agreement under which the amount payable to the law practice, or any part of that amount, is calculated by reference to the amount of any award or settlement or the value of any property that may be recovered in any proceedings to which the agreement relates.
  Civil penalty: 100 penalty units.
  2) Subsection (1) does not apply to the extent that the costs agreement adopts an applicable fixed costs legislative provision.
  3) A contravention of subsection (1) by a law practice is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.
• Council of the Law Society of NSW v Yoon [2019] NSWCATOD 28 at [4].

Question 52

VOID COST AGREEMENTS

Answer 52

• Legal Profession Uniform Law 185.
  Certain costs agreements are void
  1) A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.
  Note: If a costs agreement is void due to a failure to comply with the disclosure obligations of this Part, the costs must be assessed before the law practice can seek to recover them (see section 178(1)).
  2) A law practice is not entitled to recover any amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.
  3) A law practice that has entered into a costs agreement in contravention of section 182 is not entitled to recover the whole or any part of the uplift fee and must repay the amount received in respect of the uplift fee to the person from whom it was received.
  4) A law practice that has entered into a costs agreement in contravention of section 183 is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and must repay any amount received in respect of those services to the person from whom it was received.

Question 53

WHATS A TRUST ACCOUNT

Answer 53

• Trust account is defined as ‘an account maintained by a law practice with an authorised ADI to hold trust money’ (Legal Profession Uniform Law, s 128).
• Law firms generally have two types of accounts:
  › Trust account – used to hold clients’ funds in; and
  › Office account – used for the day-to-day operations of the firm’s business.
• Need to keep records, owe fiduciary relationships to the money…etc.

Question 54

REASONS MONEY CAN BE ENTRUSTED TO A LAW PRACTICE

Answer 54

• 129. Meaning of trust money
       1) For the purposes of this Law, trust money is money entrusted to a law practice in the course of or in connection with the provision of legal services by the law practice, and includes —
       a. money received by the law practice on account of legal costs in advance of providing the services; and
       b. controlled money received by the law practice; and
       c. transit money received by the law practice; and
       d. money received by the law practice, that is the subject of a power exercisable by the law practice or an associate of the law practice, to deal with the money for or on behalf of another person.

Question 55

MONEY THAT WONT BE CONSIDERED TRUST MONEY

Answer 55

• 129. Meaning of trust money
       2) However, the following money is not trust money for the purposes of this Law—
       a) money received by a law practice for legal services that have been provided and in respect of which a bill has been given to the client;
       b) money entrusted to or held by a law practice for or in connection with— i. a managed investment scheme; or ii. mortgage financing; undertaken by the law practice;
       c) money received by a law practice for or in connection with a financial service it provides in circumstances where the law practice or an associate of the law practice—
       i. is required to hold an Australian financial services licence covering the provision of the service; or
       ii. provides the financial service as a representative of another person who carries on a financial services business;
       d) money received by a law practice for investment purposes …

Question 56

obligations arising to trust money

Answer 56

› 144. Withdrawal of trust money
 Only draw when properly authorised to do so.
› 145. Protection of trust money
 Not using to satisfy their own debt.
› 146. Intermixing money
 Not mix trust money with other money unless authorised to do so by the designated local regulatory authority.
› 147. Keeping trust records
› 148. Deficiency in trust account
 Positive obligation not to overdraw trust funds.

Question 57

Reporting irregularities and suspected irregularities in trust money

Answer 57

• 154. Reporting irregularities and suspected irregularities
       1) As soon as practicable after—
       a. a legal practitioner associate of a law practice; or
       b. an ADI; or
       c. an external examiner; or another entity of a kind specified in the Uniform Rules for the purposes of this section—
       becomes aware that there is an irregularity in any of the law practice’s trust accounts or trust ledger accounts, the associate, ADI, examiner or entity must give written notice of the irregularity to the designated local regulatory authority.
       2) If an Australian legal practitioner believes on reasonable grounds that there is an irregularity in connection with the receipt, recording or disbursement of any trust money received by a law practice of which the practitioner is not a legal practitioner associate, the practitioner must, as soon as practicable after forming the belief, give written notice of it to the designated local regulatory authority.

Question 58

external examination of trust account

Answer 58

• 155. Appointment of external examiner to conduct external examination of trust records
       1) A law practice must once in each financial year have its trust records externally examined by a suitably qualified person appointed in accordance with the Uniform Rules as an external examiner.
       2) The designated local regulatory authority may examine, or may in writing appoint a suitably qualified person as an external examiner to examine, a law practice’s trust records if the designated local regulatory authority is not satisfied—
       a. that the law practice has had its trust records externally examined as required by this section; or
       b. that an external examination of the law practice’s trust records has been carried out in accordance with the Uniform Rules. …