|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Precedent (Australian Lawyers Alliance) |
The purpose of this article is to assist lawyers in drawing their own bills, or, perhaps, to prepare material to assist another lawyer to draw or finalise bills of costs in anticipation of their being taxed. The article is written from a Victorian perspective, where scales of costs (Scales) still remain. In lawyer/client (Client) bills, Scales are often ignored, with the lawyers opting for a purely, or largely, time-based agreement (TB-A). TB-A bills are often constructed by, or derived from, legal practice management software (logs). The logs are often not sufficient or suitable for a taxable (otherwise referred to as ‘itemised’) bill, but may be so, depending on their content.[1] The logs are unlikely to be fully useful when the bill must be drawn on Scale, as they tend to address time, rather than the nature of the legal service itself.
Regardless of the difference between Scales and TB-A terms, there are common decisions that must be made in drafting a bill.
Ideally, a bill should permit the relevant parties to be able to see the nature of the work undertaken, the fee for that service, when it was done, and the context in which it was done. The calculation of the fee for service would either be self-evident or calculable from the terms of the Scales or the TB-A. There are also certain formalities of the bill itself, with respect to service, signing and the like.[2]
In cases where Scales apply, the lawyer will need to have a bill on Scales if the adverse party is paying, and if there is a TB-A, a separate client bill.
Bills should be, and often are, chronological. The order in which the items appear gives a great deal of information to the reader. In some instances, work undertaken has two or more ‘streams’, which are sufficiently disconnected from each other to justify a departure from strictly chronological format in order to improve clarity. The historical structure of taxable bills distinguished between the steps for the conduct of the action, and the steps that were taken to obtain instructions and evidence for the proof of the matter at trial, that conveniently used a ‘nested’ chronology for those ‘instructions’ items.
There is a temptation, especially in Client bills, to provide an introduction, a story, to put the bill into context and highlight the important or difficult aspects. Such matters may be important, but should perhaps be put into a covering letter, rather than the bill. In any case, the bill should be dated, clearly identify the party to whom it is directed, a convenient name for the matter (which may be a file number or identification), the period of time it covers, and the basis upon which it is calculated; that is, Scales, or TB-A, or by Practitioner Remuneration Order (PRO).[3]
Not everything done on a file is properly chargeable. One must have a grasp of the ethical relationship between lawyer and client, the substantive law applicable to the matter, and the procedure that applies.
A common area where actual work is undertaken, but is not chargeable, are the attendances and documents created by the lawyer for his own commercial benefit, which includes the fee disclosures/costs agreements.
Initial instructions are likely to contain both chargeable and non-chargeable work. Care should be taken in drawing items after considering the file content and/or the logs. The drafter should have consideration of the chargeable component and, where there is doubt, render no charge or moderate the charge in line with the fiduciary obligation owed by a lawyer. This can often call for some judgement, especially when documents or letters are ‘reviewed’. Generally, if a reasonable and experienced lawyer could have produced a letter or document, without amendment or correction, subsequent amendments or corrections are potentially not ‘reasonable’. This can be a very difficult judgement to make. If the changes were due to changed instructions, the attendance would probably be allowable. If the changes were due to careful review, it may depend on the actual content, the nature of the change and the amount claimed in the bill.
A lawyer owes his or her client a primary duty to act in the client’s interest, which includes containment of the legal costs. This puts the lawyer into a different category than commercial traders or businesses. Those who refer to the ‘legal industry’ often fail to grasp this basic difference.[4]
The law may well have developed in response to the changed terms of the Scales and TB-As, which no longer include the general allowance items of ‘instructions’. Historically disallowed items, such as ‘conversational’ attendances on counsel, may now be allowable. The ‘instructions’ items previously encompassed such matters as originating process, interlocutory process, affidavits and briefs to reflect the application of the lawyer’s mind to the issue. The more the Scales or TB-A align themselves to time alone, the less likely it is that the resulting bill will not adequately recognise the skill, experience and efficiency. TB-As often seek a fee above what the Scales would allow, but they rarely seem to include allowances for skill and the like. The Victorian Supreme, County and PRO scales all make allowances for skill, commonly referred to in the profession as the ‘loading’. Depending on the Scales, and the evidence in the file, the drafter should consider ‘Review and Consideration’, ‘Delegation and Supervision’ and ‘Research’ for the lawyer’s attendances. The drafter should also be aware of the allowances for ‘Collation, Pagination and Indexing’ and ‘Redaction’ and include the appropriate items based on the lawyer’s file.
The drafter must use judgement. If there are a multitude of attendances where little importance attaches (like acknowledgement-only emails or short greetings and the like), it may be best not to claim them for risk that they may be disallowed as unreasonable and in conflict with the lawyer’s duty to minimise the client’s costs. Where there is an especially onerous, skilled or important task, consideration should be given to pointing to that matter in the bill. Scales generally allow scope for such claims in the bill.
In the ‘real world’, few files are maintained in perfect order, and one cannot draw a bill by starting at the first document, and going through to the last, (including file notes for attendances and the like) to construct a chronological or sensible bill. The logs may help to interpret and order the primary evidence of what was done, which is the file itself.
All bills commence with notations made by the drafter of what is demonstrated by the file. If a taxable bill proceeds to taxation, it will be necessary to locate those items which are subject to objection within the file. A cross-reference created by numbering each sheet of paper as the file is read may be useful. A sequential numbering stamp can be useful for this task.
Simply put, the drafter must read the lawyer’s file. Each file note, letter, document or the like will form at least one item in the drafter’s notes and in the ultimate bill. Spreadsheet software is particularly useful. In Excel, for example, fields can be defined that will allow a bill to be constructed. These fields will include (at a minimum) date, time, a description, a page count, and a count of folios and probably, the cross-reference to the physical file pages. In TB-As, an ‘operator’ field would be needed. In this regard, the following points are made:
Date should be the date of the item or event. It may be important in some instances to date both a historical document (mortgage, medical report) and the date it was received by the lawyer. The most suitable date may depend on the matter and the issues. If the date of a report, for example, is more for identification, than for ordering the item in the bill, put the date of the report into the description field.
Time is not normally needed in the text of a bill, but it serves two important purposes in the drafter’s notes. It allows correct chronological sorting. It allows a means of calculating the ‘units’ in both Scale and TB-A bills. ‘StartTime’ and ‘EndTime’ are useful fields. It may also suit to include a ‘units’ field calculated from the times. Procedure on taxation may now be unsettled on the correct treatment of time. This is due to the general discretion which permits the taxing officer to increase or reduce any Scale allowance in appropriate circumstances, under r63.72 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules). Depending on the terms of the Scale or the TB-A, continuous time for a variety of individually billable tasks may be the correct approach, rather than the ‘traditional’ allowance of a minimum ‘unit’ for each distinct task.
This field should describe what was done so that another practitioner reading it would understand its purpose. In a party/party bill, one is writing the ‘headline’. Even in this context, ‘Letter to Smith & Jones’ is inadequate. ‘Letter to Smith & Jones responding to offer’ is adequate as the offer itself should have been shortly described in a previous item.[5]
• Depending on the Scale or TB-A, the word ‘short’, ‘enclosure’, ‘circular’, ‘ordinary’ or ‘special’ may be used before the word ‘letter’. Those qualifying words inform the basis of the fee charged.
• Words like ‘skilled’, ‘clerical’, ‘filing’ can all be properly used to qualify an ‘attendance’ and will assist in drawing the bill.
• Consistency in descriptions for tasks that are treated the same way by the Scale or TB-A helps to formulate the bill. ‘Attendance on (name)’: or ‘Attending on (name)’ are both proper, but choose one format and stick with it. Similarly, ‘Telephone attendance on (name)’ or ‘Telephone call to (or from) (name)’ can be used.
• The impact of the Scale or the TB-A or the Rules must be kept in mind. If an allowance for a document includes ‘filing’ and ‘service’, filing and service should appear in the description. Following this method avoids any embarrassing duplication.
In many cases, a client bill should go beyond the headline and provide subheadings for larger claims; for example, the key points in a lengthy conference which help to explain the item. This assists the client and their (new) lawyer to decide whether or not to tax the bill. The drafter must make an effort to draw a concise summary, and can properly take advantage of items which precede or follow to clarify its meaning.
Page counts are important, because they justify the calculation of copy fees and give guidance for folio counts. The number of pages can also help to identify versions of developing documents.
Folio counts impact on the fee for letters, court documents, other documents drawn or exchanged in the course of the matter (proofs of evidence, summaries of documents perused), and other documents as provided by way of instructions. Scales provide for an objective measure for the lawyer ‘perusing’ the documents. TB-As often do not address folios drawn or perused as a chargeable item. Even on a TB-A, when the court is called upon to determine if the charge is ‘reasonable’ the primary quantification will be under the terms of the TB-A, but where doubt exists, the amount otherwise payable under the Scales may be a guide to what is ‘reasonable’.
The drafter’s notes in spreadsheet form are highly useful for drawing the bill. The defined fields enforce a rigour in the reading of the file. They also assist in creating chronological order, in calculating the fee, and for incorporating the ‘detailed’ information into the description. Those familiar with Excel functions, such as ‘concatenate’ and ‘filters’, can use these to avoid the need to retype. The calculation of the applicable fee can be done in batches, using filters, without the need for complex mathematical formulae; sophisticated formulae can be used if needed.
It would be rare for a bill in one matter to be so similar to another that it could be a ‘precedent’, but there are guides for drawing the ‘description’ field generally:
• Avoid including repetitive and marginally useful information, which assumes the reader has forgotten what the bill is, or what has been described above. ‘“Terms of settlement tendered under cover of the letter of 30/06/15 from Messrs Smith & Jones’ can be ‘said Terms’ or ‘Terms of Settlement’, if it is mentioned shortly before the newly drawn item.
• ‘Perusing three folios at $18.80 per folio’ is better expressed as ‘Perusing three folios’.
• After the first item referring to counsel by name, use ‘Attending on counsel’ rather than repeating counsel’s name.
• In client bills, GST is payable. Scale commonly now excludes GST. Take care to achieve consistent application of GST for disbursements in particular.
• Counsel are often unhelpful in marking their fees. It is a matter of the drafter’s judgement as to whether to provide the actual total figure for each task in the bill where, for example, the brief encompasses drawing documents, conferring and appearing. Alternatively, the drafter may show each ‘item of work’ separately. Separating items over several days generally assists the clarity of the chronology. If there is a difficulty, consider asking counsel for clarification.
• Dates of payment of filing or issuing fees are useful in verifying and clarifying the chronology.
It is helpful, sometimes, to include an item in the bill for which no charge is made if it helps to maintain a recognisable chronology. All practitioners would be familiar with the file note ‘LMTC’ or left message to call. The drafter’s notes should include those as it may assist in explaining why two calls are made on one day. Generally speaking, a lawyer is expected to cover all that needs to be covered at a particular stage in one attendance. Where a lawyer overlooks an item and must call someone back, for example, they should not charge for an attendance arising out of their error. However, demonstrating that a subsequent attendance did not arise through default will justify charging for the second attendance.
The following observations go beyond drawing the bill, and are directed to the contents of the lawyer’s file.
In Victoria, the rate for photocopies on the Scale became very generous compared with the actual cost, reaching $2.30 per A4 page in 2013 (Supreme Court). Now it is about $0.23 per page.
The higher fee was intended to cover the time to locate the document within a file, remove it, copy it, compare the copy, collate the copy and return the original. Now the fee covers only the making of the copy (which is, of course, simply done when an email is printed). Otherwise, the lawyer should have its support staff fill in a business record/form which indicates the date, the time commenced and the time finished for reproduction and collation. These records can be relevant in TB-As as well.
Previously, on Scale, an allowance was made for filing, regardless of time. Some Scales now permit actual time taken. TB-As are often silent or uncertain for this work. Again, a filing record kept on file with date and times is important. However, the lawyer also should, as a fiduciary, recognise that when multiple filings are taking place at the one time, some moderation should be applied.
Under the traditional Scales, the attendances were 15-minute, not 6-minute periods. Previously, the lawyer was allowed time to look at the file, read the contents, and then take some action, or mark it for review in the future. Under the current Scales, a time notation can properly be made to cover this time. Under the 6-minute unit regime, lawyers will suffer far greater economic loss by not noting time than was formerly the case, as the allowance for a 6-minute unit is less than that for the older 15-minute unit.
Under Scales, a lawyer is paid a fixed fee to read a document based on its length. There is a fee for perusals, which is the careful reading and consideration of the material, no matter how many times the lawyer returns to and considers the document. There are allowances for less onerous ‘reading’, identified as ‘scanning’ or ‘examination’ to reflect the diminished task of reading documents to check their version, or to have sufficient regard to see that the documents are not relevant.
From a file management point of view, it is useful if the lawyer reading through the documents makes adequate notes. It may help for the purposes of discovery, cross-referencing materials, and chronologies or to summarise and clarify information into a relevant form. At the very least, the making of notes demonstrates that the lawyer actually did the work for which they have rendered a charge.
As noted above, Scales formerly provided for ‘instructions’. Many of today’s Scales do not. They are structured like a piece work payment. The lawyer should recognise general allowances mentioned above. This area is not yet assisted by precedent, and may be uncertain. There are times when a prudent lawyer will periodically review a file independently of an event bringing it to their attention. Even a decision to ‘Mark the file for further review in two weeks’ time’ may be a proper item in a client bill, depending on its being ‘reasonable’. The drafter’s treatment of such an item is, like the ones mentioned above, to be assessed as to what is fair and reasonable and is consistent with the lawyer’s fiduciary obligation.
The purpose of this article is to give guidance in assembling the information and drawing a bill. No doubt the discretions and experience of the assessors and (in Victoria) the Costs Court give sufficient flexibility, but it is probably not wide enough to ensure ‘fairness’ to the lawyer if the bill itself is defective or incomplete.
Mark LaPirow practised as a solicitor between 1975 and 1986 and thereafter has been a member of the Victorian Bar.
[1]Legal Profession Uniform General Rules 2015 (LPUL General Rules), 5(1) definition – ‘a bill that specifies in detail how the legal costs are made up in a way so as to allow costs to be assessed’. See also Malleson v Williams [1930] VicLawRp 41; (1930) VLR 410.
[2] See LPUL, ss188, 189, 191, and 192; LPUL General Rules, rr73, 74, and 75.
[3] Obviously in the case of a bill pursuant to an Order, entitled as a document in that proceeding.
[4] Also, see further, the Civil Procedure Act (Vic) 2010 and equivalents, in particular s24 but also the other duties.
[5] See the discussion at 4.13 to 4.15 in G E Dal Pont’s The Law of Costs (3rd ed).
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/journals/PrecedentAULA/2016/75.html