Lawcovernotes March 2019

You could facemore than a significant debt if your legal fees are not paid Getting paid for the work that you do is fundamental in a successful legal practice, but it can be frustrating, demoralising and time consuming when it doesn’t occur or is unnecessarily difficult. When payment is not forthcoming the client can become the claimant in a professional negligence claimwhen an overdue demand for payment ismade. Claims can arise through cost issues when a client: ^ ^ Makes a professional indemnity claim alleging (often for the first time) that the solicitor was negligent in the conduct of the matter ^ ^ Makes a complaint to the Office of the Legal Services Commissioner ^ ^ Makes an allegation of negligence in the costs assessment process ^ ^ Files a cross-claim to proceedings taken by the law practice to enforce the debt Through claims analysis, Lawcover has identified that there is a strong link between risk and financial management. Irregular billing, communication regarding fees and poor debtor management can expose solicitors to allegations of professional negligence when fees remain unpaid. Indeed, Lawcover has experienced a number of recent notifications which appear to have been made purely as a result of the law practice being owed (in some cases) considerable sums in legal fees. What can you do? If your law practice has an unpaid account – do something about it quickly. A lack of clear communication and poor practice systems are often an underlying cause of accounts remaining unpaid. Establishing clear communication with the client from the outset can help prevent disputes or misunderstanding down the track. ^ ^ Start managing your clients’ expectations at an early stage ^ ^ Make your retainer agreements clear and set out the basis on which the client will be charged and when you expect your accounts to be paid – make it easy for clients to pay ^ ^ Clearly explain the cost of disbursements ^ ^ Bill regularly throughout the matter ^ ^ If an account remains unpaid and the amount owing starts to escalate, consider whether the client can afford your legal services and whether your law practice can afford to continue to act for the client. Make early attempts at collection and determine whether or not to expend further time and energy pursuing the debt Embedd i ng r obu s t deb t o r management into everyday processes can also help you to get paid as quickly as possible. ^ ^ Review and implement debtor tracking systems which will alert you to outstanding accounts and to action late payers ^ ^ Be clear about when you are collecting – 7 days, 30 days, 60 days? ^ ^ Communicate with your client promptly when an account is in arrears If your legal fees are not paid you could face more than a significant debt. A claim or conduct complaint can have a lasting effect on a law practice and a solicitor personally. Ensuring you have the right systems and processes in place can help you get paid on time and prevent a potential claim emerging from a costs issue. Note: The Lawcover policy does not provide cover for costs or disbursements incurred in disputes with clients over fees. Also note obligations under Rule 13 of the Australian Solicitors’ Conduct Rules. Jennifer Baker Claims Solicitor 13.