Is a solicitor who retained in their own capacity a commercial client?

Rose Bilson (a Pseudonym) -v- Domini Esposito Solicitors S ECI 2019 03598, is a decision from the Costs Court in Victoria and is a decision of a Judicial Registrar. It does raise important thoughts about lawyers retaining another lawyer/Legal Practice, not in the capacity of doing specialised work, such as a barrister or a tax lawyer doing a discrete piece of work for a client, but, as in this case, a lawyer acting for a lady in her Family Law dispute who happened also to be a lawyer and in fact by being a sole practitioner was found to be a ‘law practice’.

Section 170 of the LPUL defines commercial or government clients and states:

(1) This Part does not apply to

(a) a commercial or government client; or

(b)…..

(2) For the purposes of this Law, a commercial or government client is a client of a law practice where the client is

(a) a law practice;

Essentially, section 170 prevents a commercial or government client, including a Law Practice, from applying, pursuant to Division 7 of Part 4.3, for a review of legal costs payable on a solicitor-client basis by the Costs Court (or in NSW having those costs assessed).

Upon the solicitors who were retained by Ms Bilson objecting to the standing of Ms Bilson having standing to challenge the Law Practices costs for acting for her in the Family Law dispute, the Registrar called for Ms Bilson to put on detailed evidence about her history as a solicitor and the status of her being a solicitor at the time of entering into the costs agreement with the Law Practice.

The Judicial Registrar found that there was evidence at the relevant times during the course of the retainer that the applicant/client was a sole practitioner and therefore a Law Practice. The Court dismissed the matter and found that the client did not have standing to apply for a review because she was a ‘commercial client’.

There seemed to be no real consideration of the facts that Ms Bilsons retained the firm in her own personal capacity in a personal matter and had nothing to do with her undertaking legal work. It does not appear that was the intention of the legislation, but after a carefully analysis of the facts this was the conclusion of the Judicial Registrar.

The path available to Ms. Bilson would have been to initiate a costs complaint to the Legal Services Commissioner pursuant to Part 5.2 of the LPUL, to which the carve out in relation to commercial clients does not apply. Of course, this may not be available in all cases due to the limit on the quantum of the dispute and timing provisions contained in the Act.

It is noted that the law practice purportedly made proper disclosure pursuant to the LPUL including the provision of an estimate. It is not stated whether such disclosure provided that the client would have certain rights in relation to assessment/taxation, although from the above proceedings it could be assumed so. If that be the case, Ms. Bilson may have had arguments in relation to false and misleading conduct on behalf of the law practice available to her in the costs recovery proceedings.

This is clearly an issue that not only sole practitioners should be aware of when instructing lawyers on their personal behalf.

s170 defines a commercial or government client as, inter alia

a) a law practice; or

(b) one of the following entities defined or referred to in the Corporations Act—

(i) ..

(ii) a liquidator, administrator or receiver;

(iii) a financial services licensee;

(iv)…

Following the reasoning of the Judicial Registrar above, it would seem that those in classes (b) (ii) and (iii) would also find themselves locked out of the assessment/taxation process.