Legal Practitioner Fees and Costs (EPR VidLec12) PDF

00:02 We\'ve talked about client\'s money. Now we will examine the topic of professional fees and costs. That is, fees that are legal practitioner charges and receives for services provided to the client. 00:19 Rule 17 of the PCR sets out the ethical obligations of a legal practitioner in relatio...

00:02 We\'ve talked about client\'s money. Now we will examine the topic of professional fees and costs. That is, fees that are legal practitioner charges and receives for services provided to the client. 00:19 Rule 17 of the PCR sets out the ethical obligations of a legal practitioner in relation to professional fees and costs. 00:30 The guiding principle in the interpretation of this rule is that a legal practitioner must act in the best interest of the client and must charge the client early for work done. 00:45 Under Rule 17.2, a legal practitioner must not undertake work in a manner that unnecessarily or improperly increases costs, must use best endeavours to complete work for the client as soon as reasonably possible, and must explain to the client a proposal of settlement for any other position taken by the other party. 01:13 If the client does not understand English, he must ensure that any offer of settlement is explained to the client in a language or dialect that the client understands. 01:27 Rule 17.2 also explicitly states that a legal practitioner must evaluate with the client whether any consequence justifies the expense of and risk involved in pursuing a matter. He must advise clients such that the client may make informed decisions. In Singapore Shooting Association and Singapore Rifle Association, the appellant\'s SSA and 01:57 then-Council members succeeded in two significant aspects of the appeal. The Court of Appeal held that SRA\'s conspiracy claim failed and SRA\'s application for a Declaratory Relief failed. The appellants, however, failed in respect of the Account to Claim. In considering the issue of cost to be awarded, the Court of Appeal observed that the litigation was run in a disproportionate manner by SRA, having regard to the amount at stake. 02:27 The court reiterated that lawyers had to ensure that a proper risk-benefit evaluation is undertaken at each stage of the proceedings. The court noted the following, SRA\'s conspiracy claim took up a large proportion of trial and appeal and should not have been part of the proceedings in the first place. Even if SRA believed that it was securing the proper governance by SSA, which is a charity, 02:54 It had to further consider whether this should be achieved through litigation in a high court given the cost involved. Even if SRA brought the case on principle to defend itself against SSA\'s alleged bullying, it had to be asked whether this principle should be defended at any price, especially given the quantum of laws that it ultimately claimed. 03:21 We will now examine what information on fees Eagle Practitioner must give the client. 03:29 The legal practitioner must tell the client the basis on which fees will be charged, as well as the manner in which fees are to be paid. He must also tell the client whether he will have to make any other reasonably foreseeable payments and when he will have to make these payments. In addition, a reasonably practicable and if requested, legal practitioner must also 03:56 must provide the climate estimate of fees in other payments. 04:02 The Legal Practitioner must also ensure that the actual amount of the fees do not vary substantially from the estimates. As you can see, the Legal Practitioner has to be very transparent with the client. 04:18 Rule 17.4 of the PCR sets out rules for fees in contentious matters. A legal practitioner must explain to the client that the client is responsible for paying his fees, regardless of any cost order. In addition, in the event the client loses the case, the client may have to pay his own cost as well as the cost of other parties. 04:47 Further, Rule 17.4 sets out when such explanation must be given to the client. 04:55 It must not only be given at the beginning of the matter, but at other appropriate stages. 05:05 Next, client has to be informed of his right to have the bill taxed or to have any fee arrangement reviewed. The client disputes or raises a query about a bill. Again, the solicitor must be very transparent with the client. 05:28 solicitor who fails to advise the client of his right to have his bill taxed, thus so, this peril, as illustrated in the case of Law Society of Singapore and André Ravindran Arul. 05:45 Note also that the client must not only be informed of his right to taxation, but the consequences of taxation. When the client consents to a taxation or the court orders a taxation, the legal practitioner must inform the client that he is not precluded from presenting a bill for a larger amount for taxation. In addition, 06:12 A client must be informed that the legal practitioner is entitled to any amount or allowed by the registrar, even if that amount is more than that claimed in the bill. 06:27 Lastly, a legal practitioner must not overcharge, even if a fee arrangement permits the charging of such amount. 06:38 Rule 17-8 lists the factors to take into account to determine whether there is overcharging. 06:46 There is overcharging if a reasonable legal practitioner cannot in good faith charge the fee, disbursement or amount taking into account the legal practitioner\'s standing and experience, the nature of the legal work concern, the time necessary to undertake the legal work, instructions and requirements of the client, and any other relevant circumstances. 07:14 In a conflict of interest situation, where the solicitor recommends the client to seek alternative legal representation, Rule 79 states that a solicitor may only charge for those items which clearly need not be duplicated by the alternative lawyer. 07:34 The Council of Law Society has issued four relevant practice directions. The first is Practice Direction 5.2.2, which deals with the issue of a non-refundable deposit or retainer. The Council has cautioned that a legal practitioner\'s insistence on non-refundable deposits or the 08:03 amount of professional misconduct. Furthermore, the Council noted that the Court may set aside agreements between solicitors and their client if they are deemed unfair or unreasonable and commented that such non-refundable deposits may be characterised as such. 08:24 The second practice direction, 5.2.1, pertains to fee arrangements with clients. The Council considers the ethical propriety of solicitors agreeing under certain scenarios to only charge client costs at an amount fixed as party-and-party cost, or to charge less than the fixed party-and-party cost if clients do not recover. 08:54 legal costs from the judgment debtor. It was noted that where solicitors\' fees are dependent on the recovery of party-in-party costs, this can be a breach of Section 107 of the LPA, which prohibits purchasing an interest in a suit or entering into an agreement where payment is only received in the event of success of the suit. The Council reiterated that in any contentious matter, 09:24 It is improper for solicitors to have an interest in the subject matter of the litigation, or to purchase an interest of a client. However, the Council noted the decision of the Law Society of Singapore and Kurubalan son of Manikam Ranggaraju regarding impercunious clients. I will discuss this in the next talk. 09:49 In practice direction 5.2.3, the Council of the Law Society stated that it has never enforced in Singapore the English rule of practice and etiquette known as the Two-Thirds Rule, whereby a junior barrister is paid a fee equivalent to two-thirds of that paid to his leader, Queen\'s Council. 10:13 Finally, can a law practice receive shares as payment for work done? In Practice Direction 5.1.1, the Council states that it has no objection to this arrangement, subject to certain ethical consideration. The ethical consideration includes the following. Whether the arrangement offends the prohibition against contingency fees for non-contentious work. 10:41 or the law of maintenance and jamity? Second, is the fee arrangement reasonable or does it constitute overcharging? 10:52 Third, whether arrangement would affect the law practice\'s ability to provide impartial advice or representation. Fourth, whether due to its fiduciary relationship with the client, there is a risk that any profits which the law firm receives under this arrangement would be construed as secret profits. Fifth, if the shares are held in a holding company, whether this will constitute sharing of profits with unauthorized persons. 11:22 Do note that I will explore this topic further towards the end of this lecture. The final consideration is whether there are any income tax or GST related issues. 11:35 We\'ll now move on to the last two subtopics. 11:40 Contingency fees are prohibited by Section 107 of the Legal Profession Act in of the PCR. 11:50 A recent case of Law Society of Singapore and Krupalan Sanam Manikam Rangaraju illustrates this rule very clearly. 12:01 In that case, the solicitor was engaged by his client to assist in respect of a claim for personal injuries to be brought in Australia. Now, the solicitor entered into an agreement such that he would bear the cost of the action if it was not successful. If the claim was successful, he would be paid a percentage of the sum recovered. 12:26 The solicitor was charged under sections 1071 and 1073 of the Legal Profession Act, which prohibits champetus arrangements. A charge under Rule 37 of the old PCR was not proceeded with. A court of three judges nonetheless observed that Rule 37 had been breached. The agreement entered into by the solicitor was a champetus one. 12:55 in that one party was agreeing to help another, to bring a claim on the basis that he would receive a share of what may be recovered. The rationale behind the rule was that such arrangements would tempt the solicitor to subvert the course of justice. Further, a lawyer must maintain a sufficient sense of detachment so as to discharge his duty to the court. A lawyer not only owes a duty to the client, but to the court. 13:27 There is an exception to the rule against chapity. The court was of the opinion that it is permissible for a solicitor to attack for an impercunious client in the knowledge that he would likely only be able to recover his appropriate fees if the client was successful in the claim, and could pay him out of those proceeds, or if there was a cost order obtained against the other side. 13:53 However, this exception is conditional on solicitors examining a client\'s case, including in all honesty that there is a good cause of action or defence, which, not for the client\'s imprecunacity, will likely be litigated. The court was of the opinion that in such a situation, ultimately, a solicitor is not acquiring an interest in the fruits of the litigation. In this case, 14:20 The complainant alleged that the respondent solicitor had entered into an oral contingency fee agreement that pursued a claim in medical negligence against the complainant\'s doctors. The solicitor would receive 20% of damages awarded, and this could rise to 25% if damages exceed \$5 million. On the other hand, the respondent denied the existence of a contingency fee. 14:47 and claim that a reference of 20% and 25% were merely parameters to estimate its potential legal fees. 14:57 The court of three judges found it impossible to believe the respondents\' account or even to hold that it raises a reasonable doubt as to the existence of a contingency agreement. This was because the complainant earlier raised concerns on legal costs and would never have agreed to commence the engagement and be exposed to potential legal costs of \$1 million. The court also dismissed the suggestion that sole proprietors of small law firms 15:27 be held to lower standards of acceptable conduct, reiterating that all laws are subject to the same professional duties and obligations. 15:39 In this case, the law firm agreed with the client to cap any charges in the matter other than disbursements at the level of party and party costs. The parties failed to come to an agreement on the correct interpretation of the fee agreement. 15:57 The client\'s position was that she would only have to pay \$28,000, being the party-and-party cost. However, the law firm submitted that the fee arrangement meant that it would only bill her based on a standard basis rather than on an indemnity basis. It submitted a number of supporting reasons, including the argument that the client\'s interpretation would result in the 16:25 fee agreement being a contingent fee agreement, and therefore improper under the law society\'s practice directions and fee arrangement. 16:35 The court found that as the client had to pay regardless of a success or failure, and regardless of whether the cost was recovered by her or payable by her, this did not contravene the wording or spirit of the Legal Profession Act or Rule 18 of the Professional Conduct. 16:55 Lastly, Rule 19 of the PCR prohibits the sharing of fees with unauthorised persons. Definition of unauthorised persons can be found in Section 32-2 of the Legal Profession Act. 17:13 This case involves the sharing of legal fees with an unauthorized person, such as a person with an expired practising certificate, who held himself out as a legal practitioner. The paralegal had informed the respondent before commencing work that he could not renew his practising certificate. However, a fee arrangement was entered into between the paralegal and the respondent. 17:41 where the paralegal would receive 50% of the respondent\'s legal fees for work done by the paralegal. The respondent was charged for firstly, his failure to exercise adequate supervision, and secondly, sharing his legal fees. In relation to the sharing of legal fees, the court of three judges held that there was serious misconduct. The respondent has a duty not to share his fees with an unauthorized person for any legal work performed. 18:11 It is an offence for an unauthorised person to hold himself out as an advocate and solicitor. He is not entitled to and cannot recover any fees done in relation to any legal work he performs. The fee agreement facilitated the commission of the offences. The court of three judges stated that such unethical and unprofessional conduct cannot be condoned as it undermines the integrity and dignity of the legal profession. The fact that the paralegal was a lawyer but 18:41 not renew his practising certificate did not make the respondents conduct any less serious. The law did not make any distinction between the various types of unauthorised persons. 18:53 Moving on to the last slide, the Council of the Law Society has taken the position in practice direction 5.4.1 that legal practitioners and law practices are not to engage directly or indirectly the services of debt collectors to recover outstanding legal fees and expenses. This arises from several concerns such as, one, the potential for the use of abuses, deceptive and unfair debt collection practices by a debt collector. 19:23 2\. The possibility for the legal practitioner to breach client confidentiality and derogate from the dignity of the profession. 3. The likelihood that renumeration arrangements for debt collectors may breach the existing rules relating to fee sharing and the payment of commission. Lastly, the courts are the ultimate arbiters of legal fees and expenses and it would be improper to recover fees by utilizing a method 19:51 utilized by some creditors in ordinary creditor-debtor relationships. 20:04 Thank you.