Cost agreements and paying your barrister

Unsuccessful claim by solicitors that a costs agreements with a barrister is unenforceable ... Legal Profession Act allows fees to be recovered by a barrister from a solicitor even where there is no legal services contract 

Background

Three costs agreements were made by Bell Lawyers and barrister Janet Pentelow, retained to act for the firm's client Ms Borazio.

Pentelow, from Frederick Jordan Chambers, represented Borazio in an appeal, yet two of her bills were not paid.

Bell Lawyers raised concerns about Pentelow's conduct of the appeal and offered to pay half the second bill, of $22,000.

The barrister commenced proceedings to recover the full amount.

Local Court Magistrate Jennifer Atkinson had found there was a contract for the provision of legal services between Pentelow and Bell Lawyers.

Bell claimed there was no legal services contract and Pentelow could pursue payment of costs only by way of an assessment process under s.351 of the Legal Profession Act (2004) and not by means of enforcement under s.326 because there was no such contract.

Since s.38I of the Legal Profession Act (1987) barristers have been allowed to sue solicitors in relation to contracts the solicitor had entered on behalf of their client, despite the common law rule that there was no contract between barrister and solicitor. 

Section28I(3) said: 

Contracts

A barrister or solicitor may enter into a contract for the provision of services with a client or with another legal practitioner. The barrister or solicitor may accordingly sue and be sued in relation to the contract. 

Barristers now have a choice to render services on the conventional non-contractual basis, or under a contract. Costs agreements are not contracts for legal services but may be included in legal service contracts.

Construction of Legal Profession Act

Justice Monika Schmidt held that enforcement of a costs agreement under s.326 of the 2004 Act does not depend upon the existence of a legal services contract.

Bell sought to argue that s.326 must be read down, to apply only to those costs agreements where parties have also agreed to a legal services contract.

Schmidt held it was not necessary to read s.326 down in this way and that "its ordinary meaning and grammatical sense appears to coincide with the legislative intent" in s.301 that the 2004 Act to regulate the cost of the provision of legal services, which includes those provided on the conventional non-contractual basis.

The definition of costs included amounts that a person "has been or may be charged ... [or] is or may become liable to pay", which could encompass costs for services on the conventional basis.

The judge found reading down s.326 would produce the unreasonable result that a costs agreement entered to settle a dispute would not be enforceable if services were provided on a conventional basis, even though the parties had expressly agreed upon the price to be paid.

Legal service contract

The parties disputed whether they had entered a legal services contract in addition to the three costs agreements.

Bell Lawyers claimed the costs agreements showed the parties intended services be provided on the conventional basis.

Schmidt J held the fact the parties did not make the costs agreement a part of a legal service contract did not evince an intention not to enter such a contract.

The Act allows stand-alone costs agreements and the terms of the costs agreements could be consistent with a separate contract for legal services.

Whether a question of law

Pentelow argued that the issue as to whether the parties had entered a contract for legal services was a question of fact, not a question of law which could be appealed under s.39(1) of the Local Court Act.

Schmidt held that Atkinson LCM had decided whether a legal service contract existed on the basis of evidence of the parties' conduct.

The existence of the contract was therefore a question of fact "conclusions from which no appeal is available".

Result and order

Bell Lawyers' cross-appeal was rejected, because it could not establish an error of law. Justice Schmidt refused to give Pentelow an order for interest, and remitted the matter to the Local Court.

Paul Karp

See Pentelow v Bell Lawyers