The enactment of the Legal Profession Uniform Law (NSW) in 2014 brought with it the blanket and default exclusion of Commercial and Government Clients from the protections and liabilities of the Legal Costs provisions of the Uniform Law.
It is an exclusion that, in part, streamlines the role of the solicitor with a Commercial or Government Client, but it also creates difficulty in recovering unpaid fees.
Part 4.3 of the Uniform Law regulates Legal Costs in NSW including disclosure, billing, and costs assessments. It is stated at s170 that this Part does not apply to: - a commercial or government client; or a third party payer who would be a commercial or government client if the third party payer were a client of the law practice concerned.
A Commercial or Government Client is defined in s170(2) of the Uniform Law and includes (but is not limited to) law practices (so far as they are acting in their own right as a client and not on behalf of a client that is not a commercial or government client), public companies and a government authority in Australia or in a foreign country.
Apart from the rules in respect of contingency fees and conditional costs agreements, when acting for a Commercial or Government Client, s170 of the Uniform Law means that the normal costs disclosure provisions do not apply. However, it also means that neither the law firm or the client have access to the NSW Costs Assessment scheme in respect of the legal costs billed. In other words, if your Commercial or Government Client refuses to pay your invoices you will have to commence debt recovery proceedings for the recovery of fees.
Debt recovery proceedings for the recovery of unpaid legal fees carry risks that the client will cross-claim for negligence in respect of the work undertaken and can raise insurance issues. Whilst there can be many benefits in acting for a Commercial or Government Client, you should keep in mind the difficulties in recovering fees and ensure billing is kept up to date and fees are being paid on time.
If you have any questions regarding the recovery of unpaid fees from a Commercial or Government Client we would be happy to answer them. Please call us on 02 9054 3180 to discuss your matter.
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