Abraham, Romaine --- "Costs column: Ongoing obligation to disclose in the COVID-19 era" [2021] PrecedentAULA 23; (2021) 163 Precedent 44

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ONGOING OBLIGATION TO DISCLOSE IN THE COVID-19 ERA

By Romaine Abraham

Informed consumer decision-making and strict consumer protection mechanisms are at the heart of the various legal profession rules that regulate legal practice across Australia.

One of a practitioner’s fundamental obligations under the legal profession regulations is to make disclosure to their client regarding the legal costs of a retainer. The consequences of not meeting disclosure obligations are severe, and contravention of disclosure obligations can even render the subject costs agreement void.^[1] Critically, costs disclosure is not just required at the outset of a retainer agreement but throughout the life of a retainer, to the extent that is mandated by legislation in each jurisdiction.^[2] Accordingly, it is imperative that legal practitioners are conscious of the legal costs incurred as a retainer progresses to ensure that further disclosures are made to the client if required.

Over the past year, we have had to come to terms with the impact of COVID-19 restrictions and adapt to alternative work arrangements. In this context, it is important to consider how sudden and unpredictable disruptions to the workplace and court system can affect how legal costs are incurred.

WORKING FROM HOME ARRANGEMENTS

Ongoing disclosure obligations are triggered by a substantial or significant change to anything previously disclosed, including information regarding total legal costs payable by the client.^[3] Work-from-home arrangements may impact a legal practitioner’s ability to manage matters effectively and produce work in a cost-efficient manner. Without immediate and proximate administrative or paralegal support, many tasks that would have ordinarily been delegated to colleagues may now be undertaken by the legal practitioner who has carriage of the file. Further, not being able to freely engage with a client or other people involved in a matter face-to-face may result in an increase in the use of alternative communication methods such as video conferencing, telephone calls and written correspondence.

DISRUPTION TO THE COURT SYSTEM

The costs implications of court processes, such as hearings and mediations, moving to a telephone or video conference format can also be significant. Problems encountered by practitioners as a result of this online shift include the time-consuming prospect of scanning in stacks of documents and material that might otherwise have been handed up in court in the course of the hearing of a matter. Technical issues can also interrupt or increase the length of court proceedings. The resultant delay or lengthening of court proceedings by moving away from in-person appearances has the potential to inflate costs substantially and accordingly, such costs should be closely monitored.

Importantly, in the Queensland Court of Appeal decision of Farrar v Julian-Armitage & Anor,^[4] the Court decided that s315 of the Legal Profession Act 2007 (Qld) applied only to solicitors and not to counsel retained by the solicitor for their client. While it is clear that, if retained in a matter, counsel’s fees will be increased by the delay or lengthening of court proceedings, the onus is on the solicitor to ensure that ongoing costs disclosure obligations are complied with and costs disclosures to the client are up-to-date.

AN OPPORTUNITY?

Although the regulatory mechanisms regarding costs disclosure can seem onerous, keeping up-to-date with disclosures is beneficial for legal practitioners. Consumer protection measures such as the ongoing duty to disclose costs are designed to reduce ‘bill shock’ and in turn avoid circumstances that often give rise to solicitor-client disputes, or complaints to and disciplinary action by the practitioner’s regulatory authority.

A legal practitioner’s costs disclosure obligations can be seen as an opportunity to foster trust and communication between the lawyer and their client, and gives the practitioner an opportunity to explain the work required to be undertaken pursuant to the terms of the retainer in order to pre-emptively provide the client with an understanding of the necessity of the work.^[5] The client’s recognition of the work’s purpose and value to their matter is useful in countering perceptions of overcharging and ultimately avoiding disputes as to legal costs.^[6]

While workplaces affected by COVID-19 restrictions are slowly returning to normal, this is a timely reminder to consider what impact, if any, alternative work arrangements have had on your legal fees, and to compare the fees already incurred to the most recent estimate of total legal costs provided to your client in order to determine if a further costs disclosure update is required.

Romaine Abraham is the Manager of LIV Costs Lawyers, a department of the Law Institute of Victoria.

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^[1] Legal Profession Uniform Law 2014 (NSW), s178(1)(a); Legal Profession Uniform Law Application Act 2014 (Vic), sch 1; Legal Profession Act 2007 (Qld), s316(3); Legal Profession Act 2007 (Tas), s300(3); Legal Profession Act 2008 (WA), s268(3); Legal Profession Act 2006 (NT), s311(3); Legal Practitioners Act 1981 (SA), sch 3, s18.

^[2] Legal Profession Uniform Law 2014 (NSW), s174(1)(b); Legal Profession Uniform Law Application Act 2014 (Vic), sch 1; Legal Profession Act 2007 (Qld), s315; Legal Profession Act 2007 (Tas), s299; Legal Profession Act 2008 (WA), s267; Legal Profession Act 2006 (NT), s310; Legal Practitioners Act 1981 (SA), sch 3, s17.

^[3] Ibid.

^[4] [2015] QCA 289.

^[5] Queensland Law Society, Ethics Centre, ‘Involve your client directly in the costs-setting process’ (Practice note, February 2016) <https://www.qls.com.au/Knowledge_centre/Ethics/Resources/Costs/Disclosure/Involve_your_client_directly_in_the_costs-setting_process>.

^[6] Ibid.