Cost Recovery for Solicitors
Legal Practices, like all businesses, have to manage cash flow and getting paid. The timely payment of tax invoices is the lifeline of a Law Practice and unpaid tax invoices can be stressful and time consuming in chasing, resulting in lost time and money that could be better spent on building the practice or focusing on providing excellent service in your area of speciality.
We here at Pattison Hardman are experts in the areas of obtaining costs certificates, which can be converted into judgments via the Costs Assessment process, through the Supreme Court of NSW.
Legal Practices, unlike any other business, are in the unique, and we would suggest enviable, position, that instead of suing for their fees they, as an alternative, can have their costs “assessed”, to obtain a ruling on the amount of the costs that their client must pay in relation to tax invoices.
Suing for fees as a debt comes with a number of risks including:
- A defence that the costs were incurred negligently, unreasonably, or were overcharged;
- A crossclaim that the solicitor was negligent in the manner they provided the legal services (which may result in notification to your insurer);
- A motion to strike out the whole proceedings on the basis that the solicitor breached their duty of disclosure and therefore cannot commence or maintain the proceedings until costs have been assessed, which may result in an adverse cost order;
- An expensive hearing having a taxation before the judicial officer hearing the matter which could take days or weeks;
- The matter being stayed whilst the matter is referred off to assessment anyway; and
- Finally, in light of the High Court decision in Bell Lawyers Pty Ltd v Pentelow,  HCA 29, if you elect to spend your own time chasing the fees and do ultimately win, any costs order in your favour may be of little worth as you may not be able to recovery your own time expended on the matter.
None of the above is to say that, in some instances, filing a claim and suing for outstanding legal fees is not appropriate. But we suggest that you confer with Pattison Hardman before electing such course. As a general rule the Local, District and Supreme Court have little appetite to deal with a claim for unpaid legal costs and understandably as if it proceeds to a hearing will be very time consuming. The Bell Lawyers decision also makes it less attractive to act for yourselves through such debt recovery proceedings.
In contrast to suing for a debt, Costs Assessment of solicitor’s tax invoices:
- Is paper driven, no appearances are required;
- The only issue before the assessor is assessing the fair and reasonable costs.
- Compared to being bogged down in the Local Court suing for unpaid tax invoices, the assessment process is fast, with guidelines suggesting assessments under $100,000 should be finalised in three months and assessments for costs over $100,000 should be finalised in six months;
- The Costs Assessors are solicitors and barristers from private practice and as a rule they understand what amounts to fair and reasonable costs and the cut and thrust of private practice;
- If there has been compliance with aspects of disclosure and the requirements for a costs agreement, then the costs will be assessed as against the complying costs agreement; and
- Is considerably cheaper as a general rule than legal recovery proceedings.