Rose Legal Costing (RLC) has successfully set aside the determination of a costs assessor, through the Review Application process, due to a law firm’s failure to comply with their disclosure requirements.
RLC received instructions from a lay client who had previously instructed the Review Respondent law firm to act on his behalf in respect of a Worker’s Compensation matter.
The client had originally instructed another firm of Costs Consultants in respect of the assessment, whereby the assessor concluded that there had adequate disclosure was provided, including in compliance with s 174(1)(a) of the Legal Profession Uniform Law (LPUL). RLC prepared and filed an Application for Review of the determination arguing, inter alia, that an estimate of the total legal costs had not been provided by the law firm, contrary to s 174(1)(a) LPUL. In contrast, totals had been provided in respect of the professional costs and disbursements, but not a single figure for both of these items.
RLC further submitted that there was no discretion to moderate any failure to disclose: Shi v Mills Oakley  VSC 498 at  –  per Gourlay JR citing Johnston v Dimos Lawyers  VSC 462 where Wood AsJ said at :
“Any failure to comply with any of the provisions in relation to disclosure in Part
4.3 of the Act renders the costs agreement void. Non-compliance therefore equals void. There is no discretion to be exercised around ‘substantial’ compliance”
The Costs Assessor had originally determined that the separate totals provided for professional costs and disbursements meant that there had been compliance with the rules.
Further submissions were prepared by both parties on this issue, as well as others, and the Review Panel made their determination in favor of the client.
RLC further submitted that the result of the failure to disclose was that the law firm had not properly contracted out of the maximum costs awarded in Workers Compensation matters, under r 93 of the Workers Compensation Regulation 2016. The result of this determination was reduced by approximately $20,000.00, or by 31% of the original determination. As a result of the difference, the Review Respondent was ordered to pay the costs of the review.
Key comments from the panel:
“The Respondent’s submission misconstrues the Applicant’s contention. Section 174(1)(a) LPUL requires the law practice to provide an estimate of the “total legal costs” There is no discretion to moderate any failure to disclose.”
“Provision of two figures one for fees and the other for disbursements and internal expenses without providing a total of those two figures does not comply with the requirements of section 174 LPUL. Accordingly, the Respondent did not meet the requirements of Section 174.”
This is a reminder to all legal practitioners to ensure that every element of the requirements under the Uniform Law should be satisfied. If a law firm falls foul of this, their cost recovery will be affected. While this was a Worker’s Compensation matter, if there had been a failure to disclose in any other matter, the costs agreement would have been regarded as void, and the costs would have been assessed on a ‘quantum meruit’, or fair and reasonable, basis.
As a result of the failure, the Review Respondent was also ordered to meet the costs of the assessment, pursuant to s 204(2)(a) LPUL.
We advise many law firms on how to ensure compliance with their disclosure requirements and to avoid pitfalls like the above. If you require assistance or advice on cost disclosure, or any other cost issue, please do not hesitate to get in touch.
Note- Costs Assessment determinations, and Review Panel Determinations, should not be used as a precedent as the two processes work outside the Court system. It is for this reason that specific references to the Review Panel determination have been omitted from the above article. The information outlined above is provided solely to give insight for law firms on the workings of review applications, and assessments, and to assist in ensuring that they comply with their disclosure requirements.