Over-charging by lawyers under scrutiny
November 17, 2009 12:00AM
Legal Affairs Editor
LAWYERS face a national crackdown on over-charging that could end the practice of billing clients for sending them Christmas cards and reading thank you notes. Also for the chop is the practice of charging for using the telephone directory, opening and closing files and organising untidy files.
These are some of the abuses singled out for reform by a federal-state taskforce reviewing the regulation of the legal profession. If the plan is accepted, the nation's lawyers would be prevented from charging for administrative and communication activities that are part of the cost of doing business.
"These costs should be absorbed as overheads by law practices," the taskforce says. In a discussion paper to be made public this week, the taskforce argues that lawyers should adopt the same approach as doctors, who charge for professional services rather than items such as "file-opening fees".
The discussion paper, which has been obtained by The Australian, also calls for rules that would oblige law firms to employ translators to explain cost-agreements to clients from "culturally and liguistically diverse backgrounds".
Rules in most states already say that lawyers "may" provide cost disclosures in other languages and the taskforce says making this a positive obligation would not be unduly onerous. However concerns have already emerged that this proposal could backfire by encouraging law firms to avoid extra costs and the risk of disciplinary action by refusing to accept clients who do not speak English.
The taskforce is also considering new rules to prevent lawyers from avoiding the ban on contingency fees.
While lawyers cannot charge clients a percentage of any damages they might be awarded, this ban does not apply to the litigation-funding industry.
"Generally, practitioners should not be able to avoid these prohibitions by taking a financial interest in a litigation-funder or by their associate or relative taking an interest," the taskforce says.
The taskforce also calls for new rules that would impose a positive obligation on all lawyers - except those working for sophisticated consumers of legal services - to charge legal fees that are "fair and reasonable". This would reverse the current arrangement in which clients who wish to challenge their legal bills have the burden of proving their bills were not fair and reasonable.
"The taskforce considers that placing a positive obligation on law practices to charge fair and reasonable costs would be a more effective consumer protection than the current provisions which place the onus on the client," the taskforce says.