Lawcovernotes December 2017

Suing a client for outstanding fees – a double edged sword Practical guidance for recovering unpaid fees without suing the client. We all want to get paid for the work that we do, but solicitors should be mindful that suing a client for outstanding fees involves significant risk. In a recent Lawcover claim the solicitor acted for a client in District Court proceedings. After the retainer was terminated the solicitor issued an invoice, which was disputed by the client and not paid. The solicitor subsequently issued a statement of claim in the Local Court seeking to recover the unpaid fees and disbursements. The client filed a defence and a cross claim against the solicitor, alleging, amongst other things, that the acts or omissions by the solicitor resulted in a pleading in the District Court proceedings being struck out, with costs awarded against the client. The solicitor’s statement of claim was withdrawn by consent. However, the cross claim seeking relief including damages was pursued by the client. The matter was settled by Lawcover subject to the costs and disbursements exclusion under the policy. Very often suing a client for unpaid fees will result in a cross claim for professional negligence. Rather than commencing proceedings against a client, consider having the bill assessed by the Costs Assessment Scheme, administered by the Supreme Court. A costs assessor will assess a bill of costs in accordance with the costs agreement and costs disclosure, unless the requirements for providing the costs disclosure and entering into the costs agreement were not otherwise complied with (see s.172(4) of the Legal Profession Uniform Law ). At the end of the assessment process, the costs assessor will issue a certificate of determination that either confirms the bill of costs or substitutes an amount that in the costs assessor’s opinion is fair and reasonable. The certificate can be filed as a judgment. When making a costs assessment application solicitors should ensure that: ^ ^ At the commencement of a retainer, the client is informed (in writing) how they will be charged before the solicitor has begun the work ^ ^ They provide an estimate to the client and the basis on which costs are to be calculated ^ ^ They have identified and used the correct names of the parties in the application ^ ^ The application complies with the time limits (a law practice has 12 months after the bill was given, or a request for payment was made to the client or third party payer, to lodge a costs assessment application pursuant to s.198 of the Legal Profession Uniform Law ) Milica Milutinovic Claims Solicitor 15.