Recovery of unpaid legal fees in Queensland\nAre you a solicitor or an Australia Legal Practitioner in Queensland who is owed money from clients and looking at the recovery unpaid legal fees?\nTo be entitled to the recovery of unpaid legal fees (without a costs assessment having been undertaken), the following steps should have been taken:\n\nIf applicable, costs disclosure must be made; and\nEither a client retainer and a costs agreement will have been signed; or if you do not have a signed agreement, proof that a client retainer and costs agreement was sent, and then evidence that acceptance was conveyed; and\nThe bills adhere to ss 329, 330 and 331 of the Legal Profession Act 2007 (Qld) (“LPA”).\n\nIn an action between a legal practitioner and a client for unpaid professional fees, the following should be pleaded as a minimum:\n\nDetails of any applicable costs agreement, or the relevant scale of costs, or the basis for calculation of fair and reasonable costs; and\nDate and means by which a legal costs bill was served, confirming that at least 30 days have passed; and\nDetails of the legal costs bill, which complies with ss 329 and 330 of the LPA; and\nThat a ‘Notification of client’s rights’ has been served (s 331 of the LPA).\n\nIf all of these requirements have been adhered to, then an Australian Legal Practitioner must still remember the High Court decision of Bell Lawyers Pty Ltd v Pentelow  HCA 29. Based on this case, a self-represented lawyer or a law firm will not be able to seek to recover their own legal costs.\nThis is not an article on client engagement generally, nor is it an article on complying with all the sections of the Legal Profession Act 2007, but an article in relation to matters related to the recovery of unpaid legal fees, and the best practices for solicitors.\nI am sure most lawyers have been in this situation; a client does not want to pay their bill for legal work performed, and after protracted negotiations a lawyer is at the point where they have to decide whether to write-off the outstanding amount or to start proceedings for recovery of unpaid legal fees.\nIf a lawyer decides to start legal proceedings, then it is vital that they have followed the correct steps right from the start – from when they were initially engaged by the client, through to every bill sent to the client – otherwise they may have trouble recovering all of their outstanding legal fees.\nIn this article, our debt recovery lawyers provide detailed information as to the best practices for client engagement and billing in relation to the recovery of unpaid legal fees in relation to:\n\nClient identification.\nDisclosure notices.\nMaking costs disclosure.\nDuty of ongoing disclosure.\nClient retainer & costs agreements.\nApplicable scale of costs.\nBilling and requirements under the LPA.\nCommencing legal proceedings; and\nThe enforcement of money orders.\n\nBell Lawyers Pty Ltd v Pentelow\nIn relation to the recovery of unpaid legal fees, the High Court of Australia in Bell Lawyers Pty Ltd v Pentelow considered two key issues:\n\nWhether the Chorley exception, which allows self-represented solicitors to recover their professional costs, should be recognised as good law in Australia.\nWhether the Chorley exception should be extended to barristers who represent themselves.\n\nThe majority of the High Court held that the Chorley exception should not be recognised as part of the common law in Australia. It followed that the Chorley exception was not extended to barristers.\nThe Chorley exception is based on the principle that solicitors have a unique skill set that allows them to provide legal services to themselves in a way that is equivalent to the services they would provide to a client. It derived from the English decision of London Scottish Benefit Society v Chorley (1884) 13 QBD 872.\nThe majority of the High Court held that the Chorley exception could not be justified in modern Australia. The High Court noted that the cost of legal services has increased significantly in recent years, and that many people cannot afford to hire lawyers. The High Court also noted that the Chorley exception can create a conflict of interest for solicitors, as they may be incentivised to represent themselves even when it is not in their best interests to do so.\nThe High Court’s decision in Bell Lawyers Pty Ltd v Pentelow has significant implications for self-represented litigants and for the legal profession. Self-represented solicitors will no longer be able to recover their professional costs if they are successful in litigation for the recovery of unpaid legal fees.\nThe legal profession will also need to be aware of the potential conflicts of interest that can arise when solicitors represent themselves.\nClient Identification\nLike with all contracts it is important to clearly identify the contracting party \/ parties. Whether contracting with a person or a corporate entity, best practice dictates ensuring that as much due diligence as possible is performed prior to engagement.\nRisk management is a key part of the client engagement process. The more information you can get in relation to your client, the better it will be if you need to recover your unpaid professional fees.\nCheck the current status of your client\/potential client in your matter, to ensure they are not deregistered, under administration or insolvent\/bankrupt. In circumstances where you act for a corporate client, confirm who has authority to provide instructions.\nBest Practice – Take the time at the beginning of the engagement process to ensure that you have identified the correct entity. Get copies of their driving licence, passport, title search, ASIC Organisational Extract, bankruptcy search, insolvency search, etc. (if required). You do not want to commence proceedings for recovery of unpaid legal fees against the incorrect party.\nDisclosure Notices\nThere are some serious consequences in relation to the recovery of unpaid legal fees if a legal practitioner fails to give disclosure on costs.\nSection 316(2) of the LPA states:\nA law practice that does not disclose to a client or an associated third party payer anything required by this division to be disclosed may not maintain proceedings against the client or associated third party payer, as the case may be, for the recovery of legal costs unless the costs have been assessed under division 7.\nThe client or associated third party payer may also apply for the costs agreement to be set aside under s 328 of the LPA. Section 316(4) of the LPA provides that on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose.\nIf an assessment is made under section 341 of the LPA, the costs of an assessment in these circumstances are generally payable by the law practice.\nSection 311 of the LPA sets out exemptions with respect to the requirement to give costs disclosure. There are two (2) main scenarios where costs disclosure may not be needed, they are:\n\nIf the client is a ‘sophisticated client’ – s 311(c)&(d) of the LPA;\nIf the total legal costs, excluding disbursements, are not likely to exceed the prescribed amount (currently $1,500.00) – s 311(1)(a) of the LPA and s 70 of the Legal Profession Regulation 2017 (Qld) (“Regulation”).\n\nThese are the two (2) main reasons, but please read all of the exemptions in section 311 of the LPA.\nBest Practice – If you are unsure whether the exemptions under s 311 of the LPA apply, then provide scope (included \/ excluded with warning of consequences) and costs disclosure.\nMaking Costs Disclosure\nIf a law practice is thinking about the recovery of unpaid legal fees, it is important to remember that costs disclosure is required to be made pursuant to s 308 of the LPA. This requires that:\n\nCosts disclosure contain all of the relevant information listed at s 308 of the LPA if applicable; and\nCosts disclosure be made in writing before, or as soon as practicable after, the law practice is retained in the matter – s 310(1) of the LPA; and\nCosts disclosure be in clear and plain language – s 314(1) of the LPA.\n\nBest Practice – Be mindful of future potential pleadings for the recovery of unpaid legal fees. If disclosure is to be made prior to receiving a signed retainer, email a copy of the compliant disclosure notice before emailing your client agreement. Then this may be pleaded and copies annexed to your affidavit.\nDuty of Ongoing Disclosure\nSection 315 of the LPA states that a law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change.\nThe effect of non-disclosure under this section is the same as under s 308, being the triggering of s 316. The Court in Connollys Lawyers Pty Ltd v Davis  QCA 231 found that if the fees for WIP are likely to exceed the estimate in a costs agreement, the solicitor has to give a written update to the client. They found that simply issuing monthly account statements did not constitute disclosure.\nThis can be seen in Taylor v Kolev  QCAT 50. Ms Taylor charged $3,000.00 but the initial estimate of costs was only $2,000.00. The client only paid the $2,000.00 and Ms Taylor commenced proceedings to recover the remaining $1,000.00. The Tribunal held that the application should be dismissed as there was no further disclosure to the client that would justify fees beyond the original $2,000.00.\nRisk – before commencing proceedings for the recovery of unpaid legal fees, you must ensure that the law firm has been compliant with the above regarding disclosure. Failure to do so may trigger 316(2) of the LPA and the debt recovery matter may be dismissed with costs awarded against the law practice or the Australian legal professional; and may also apply under section 328 of the LPA for the costs agreement to be set aside.\nBest Practice – At the time each bill is issued, check whether you are approaching the costs estimate provided to the client. Set a bring-up in every matter to provide further disclosure prior to reaching the estimate. This will enable you to correspond with your client in relation to disclosure of ongoing fees, provide a further written estimate of costs, and it means that you do not do additional work that you may not get paid for, or are able to recover.\nClient Retainer & Costs Agreements\nAs a bare minimum, the client agreement should:\n\nBe in writing;\nState that it is an offer to enter into a costs agreement;\nState that the offer can be accepted in writing or by other conduct; and\nSet out the type of conduct that will constitute acceptance.\n\nSection 326 of the LPA states that a costs agreement may be enforced in the same way as any other contract. Therefore, your client agreement is the contract you intend to rely on in the event that your client breaches their obligation to pay your professional fees.\nAs well as the legal requirements under the LPA, when thinking about the recovery of unpaid legal fees, it is important to include debt recovery clauses in your client agreement that may help to facilitate a speedy and problem-free recovery of those outstanding fees and costs.\nWe recommend that your costs agreement include the following clauses:\n\nPayment clause – amount, rate, how charged, what scale etc; and\nDefault clause – define what constitutes a default and the consequences of a default; and\nCosts clause – in the event of a default under the contract, define recoverable costs; and\nInterest clause – define the amount of interest claimable upon default.\n\nWhat if there is no signed costs agreement? What can I recover and how? \nIn relation to recovery of unpaid legal fees, if there is no signed costs agreement or client agreement then a solicitor’s ability to recover costs depends upon the specific circumstances.\nIf there is evidence that a costs agreement was sent but it was not signed \nIf you have evidence that you sent a costs agreement but you did not receive an executed copy in return, acceptance of that offer may be inferred by conduct.\nBest Practice – add a clause in the costs agreement that acceptance of the offer can be by conduct and define the types of conduct that will constitute acceptance – e.g. giving instructions after receiving the costs agreement.\nIf there is no evidence that a costs agreement was sent\nIf there is no valid costs agreement or client agreement; or you are unable to produce evidence to prove the existence of a written costs agreement then a law firm may recover pursuant to s 319(1)(b) and (c) of the LPA.\nSection 319 of the LPA states:\n(1) Subject to division 2, legal costs are recoverable—\n(a) under a costs agreement made under division 5 or the corresponding provisions of a corresponding law; or\n(b) if paragraph (a) does not apply—under the applicable scale of costs; or\n(c) if neither paragraph (a) nor (b) applies—according to the fair and reasonable value of the legal services provided.\nApplicable Scale of Costs\nEach Court has its own scale of costs, including the state courts and the federal courts.\nMagistrates Court, District Court, and Supreme Court Scale\nIf the jurisdiction of the work performed is the Magistrates Court, District Court or Supreme Court then the scale of costs in Schedule 1 and Schedule 2 in the Uniform Civil Procedure Rules 1999 (QLD) (“the UCPR”) will apply. For more on this, read:\n\nBannerot v Waddington  QDC 332.\nFranklin v Barry & Nilsson Lawyers (No 2)  QDC 55.\nParoz v Clifford Gouldson Lawyers  QDC 151; and\nTurner v Mitchells Solicitors and Business Advisers Qld  QDC 61.\n\nFederal Court Scale\nThe applicable scale of costs in the Federal Court are allowed under Schedule 3 of the Federal Court Rules 2011 (Cth).\nIn the Federal Circuit Court, the costs are to be assessed on a fair and reasonable value for the legal services provided. The Federal Court scale of fees in the Federal Court Rules may not apply between your firm and client. Federal Circuit Court Rules 2001 – Rule 21.09 section 3 states:\n(3) Unless otherwise provided, these Rules do not regulate the fees to be charged by lawyers as between lawyer and client in relation to proceedings in the Court.\nNote: For any dispute between a lawyer and a client about the fees charged by the lawyer, see the State or Territory legislation governing the legal profession in the State or Territory where lawyer practises.\nFair and Reasonable Value\nIn relation to the recovery of unpaid legal fees, the criteria for assessment are set out in section 341 of the LPA. This provides:\n(1) In conducting a costs assessment, the costs assessor must consider—\n(a) whether or not it was reasonable to carry out the work to which the legal costs relate; and\n(b) whether or not the work was carried out in a reasonable way; and\n(c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 340 applies to any disputed costs.\n \n(2) In considering what is a fair and reasonable amount of legal costs, the costs assessor may have regard to any or all of the following matters—\n(a) whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with this Act;\n(b) any disclosures made by the law practice under division 3;\n(c) any relevant advertisement as to—\nthe law practice’s costs; or\nthe skills of the law practice, or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf;\n(d) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter;\n(e) the retainer and whether the work done was within the scope of the retainer;\n(f) the complexity, novelty or difficulty of the matter;\n(g) the quality of the work done;\n(h) the place where, and circumstances in which, the legal services were provided;\n(i) the time within which the work was required to be done;\n(j) any other relevant matter.\nIn considering what is a fair and reasonable amount of legal costs, the costs assessor may have regard to a number of matters mentioned above, including any disclosures made by the law practice, the complexity, novelty and difficulty of the matter, the quality of the work, and the time within which the work was required to be done.\nTherefore, in order for the costs to be assessed as closely to the actual amount of work billed, it is vitally important that you keep good filing records for evidence of actual work done.\nIn Woolf v Willis  HCA 51 Griffith CJ said:\nThe solicitor must prove that he did the work, and if the fact is denied, that it was necessary and proper to be done. That onus is usually discharged without any difficulty.\nIn Gregg Lawyers Pty Ltd & Anor v Farrar (formerly Sweeney)  QDC 194, Judge C. F. Wall QC said:\nThe barrister and solicitor each bore the onus of proving that:\n(a) they performed the work they charged for;\n(b) it was reasonable to carry out that work;\n(c) the work was carried out in a reasonable way; and\n(d) their costs were fair and reasonable.\nBest Practice – An assessment of what is fair and reasonable in made on the facts of each matter. To ensure you are able to claim your fees (or as close to the actual fees as possible) it is vital that you keep immaculate records. Who did the work, why the work was done, what was the work done, and details of exactly what work was carried out. This will be vital in Court proceedings for the recovery of unpaid legal fees.\nKeep emails, correspondence, detailed file notes, receipts for all disbursements, correspondence in relation to difficulties that arise which may push the costs up.\nBilling and Requirements under the LPA\nThe LPA requires certain billing requirements which if not complied with, may prevent you from recovering all, or part of the outstanding sum.\nSection 329 of the LPA provides:\n329 Legal costs cannot be recovered unless bill has been served\n(1) A law practice must not start legal proceedings to recover legal costs from a person until at least 30 days after the law practice has given a bill to the person under sections 330 and 331 or under provisions of a corresponding law that correspond to sections 330 and 331.\nA bill must be given to the client “at least 30 days” before a recovery action can be commenced as per 329 of the LPA.\nBest Practice – as your client is entitled to an itemised bill pursuant to s 332 of the LPA within 30 days of receiving a lump-sum bill, it is good practice to send them an itemised bill, with the recovery of unpaid legal fees, you can start the 30 day countdown immediately. Preparation in relation to the commencement of proceedings is vital to maximise your chances of success. This can be done alongside the open letter of demand and the offer of compromise (if any).\nA bill must comply with s 330 of the LPA. This provides:\n(1) A bill may be in the form of a lump sum bill or an itemised bill.\n(2) A bill must be signed on behalf of a law practice by an Australian legal practitioner or an employee of the law practice.\n(3) It is sufficient compliance with subsection (2) if a letter signed on behalf of a law practice by an Australian legal practitioner or an employee of the law practice is attached to, or enclosed with, the bill.\n(4) A bill or letter is taken to have been signed by law practice that is an incorporated legal practice if it\n(a) has the practice’s seal affixed to it; or\n(b) is signed by a legal practitioner director of the practice or an officer or employee of the practice who is an Australian legal practitioner.\n(5) A bill is to be given to a person—\n(a) by delivering it personally to the person or to an agent of the person; or\n(b) by sending it by post to the person or agent at—\nthe usual or last known business or residential address of the person or agent; or\nan address nominated for the purpose by the person or agent; or\n(c) by leaving it for the person or agent at—\nthe usual or last known business or residential address of the person or agent; or\nan address nominated for the purpose by the person or agent;\nwith a person on the premises who is apparently at least 16 years old and apparently employed or residing there; or\n(d) if the legal costs or the basis on which they have been calculated have or has been agreed as a result of a tender process—in a way provided as part of the tender process or by later agreement between the client and the law practice.\n(6) A reference in subsection (5) to a way of giving a bill to a person includes a reference to arranging for the bill to be given to that person by that way, including, for example, by delivery by courier.\n(7) Despite anything in subsections (2) to (6), a bill may be given to a client electronically if the client requests the bill to be given electronically.\nTo summarise, a bill must be:\n\nLump sum or itemised;\nSigned by lawyer or employee at your firm, or enclosed with a letter signed by lawyer or employee at your firm;\nGiven to the person, pursuant to s 330(5) of the LPA unless the client requests the bill be given electronically (which is permissible if your client agreement includes a clause where your client expressly consents to being billed electronically).\n\nA bill must also comply with s 331 of the LPA. This provides:\n331 Notification of client’s rights\n(1) A bill must include or be accompanied by a written statement setting out—\n(a) the following avenues that are open under this Act to the client in the event of a dispute in relation to legal costs—\ncosts assessment under division 7;\nthe setting aside of a costs agreement under section 328; and\n(b) any time limits that apply to the taking of any action mentioned in paragraph (a).\n(2) Subsection (1) does not apply in relation to a sophisticated client.\n(3) A law practice may provide the written statement mentioned in subsection (1) in or to the effect of a form approved by the chief executive for this subsection, and if it does so the practice is taken to have complied with this section in relation to the statement.\nIncluded on the bill, or as a separate statement accompanying your bill, you must provide a written statement as described above.\nCommencing Debt Recovery Proceedings\nThere are two main options in Queensland for the recovery of unpaid legal fees, they are:\n\nSuing in the Court with jurisdiction; and\nSuing in the Queensland Civil and Administrative Tribunal(“QCAT”).\n\nThe jurisdiction of these courts and tribunals are:\n\nQCAT– small claims of up to $25,000.00\nMagistrates Court– claims up to $150,000.00\nDistrict Court– claims up to $750,000.00\nSupreme Court– claims over $750,000.00\n\nThere are pros and cons for commencing proceedings for the recovery of unpaid legal fees in a Tribunal or commencing proceedings in the Court.\nAdvantages and Disadvantages of Commencing Proceedings in QCAT\nThe advantages of commencing proceedings in QCAT are:\n\nIt is a lot less expensive than commencing in the Court; and\nThe process can be a lot quicker than the Court; and\nQCAT is designed for self-represented people.\n\nThe disadvantages of commencing proceedings in QCAT are:\n\nThe minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items; and\nLegal representatives do not have an automatic right of appearance. This means that if you want debt recovery solicitors to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given; and\nThe minor debt jurisdiction is capped at $25,000.00.\n\nBecause of the costs issue stemming from Bell Lawyers Pty Ltd v Pentelow, if a law practice were going to seek the recovery of unpaid legal fees then it may be a better option to commence proceedings in QCAT.\nHowever, if the law practice is going to pay a third party solicitor or law firm, then it may be a better option to commence in Court.\nAdvantages and Disadvantages of Commencing Proceedings in the Court\nThe advantages of commencing proceedings for the recovery of unpaid legal fees in the Court are:\n\nIt is a legal process, with judicial officers who understand the law. It is less likely that you will get a non-typical result (as can happen in QCAT).\nYou can use debt recovery lawyers to maximise your chances of successfully obtaining your desired outcome.\nYou are able to claim costs, either standard costs or indemnity costs of commencing the proceeding.\n\nThe disadvantages of commencing proceedings in the Court are:\n\nIt can be more expensive than QCAT;\nIt can take longer to reach your desired outcome if they defend proceedings.\n\nIf you were going to engage debt recovery lawyers, then proceeding in the Court may be a better option because you can claim some legal costs.\nRead more here – Debt Recovery Solicitors.\nGetting an Enforceable Money Order\nThe purpose of legal proceedings for the recovery of unpaid legal fees is to obtain an enforceable money order.\nRule 793 of the UCPR says:\n“enforceable money order” , of a court, means:\n(a) a money order of the court; or\n(b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement.\nSection 131 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) says:\n(1) This section applies to a final decision of the tribunal in a proceeding that is a monetary decision, to the extent the decision requires payment of an amount to a person.\n(2) A person may enforce the final decision by filing a copy of the decision in the registry of a court of competent jurisdiction.\n(3) On filing a copy of the final decision under subsection (2), the decision is taken to be a money order of the court in which it is filed and may be enforced accordingly.\nSo, if you have an enforceable judgment or money order from the Court, or you have registered your QCAT decision in the Court with jurisdiction, and your debtor still will not pay, then you can commence enforcement proceedings to enforce the money order. Our debt recovery solicitors can do all of this for you.\nEnforcement of money orders – what are my options?\nIn relation to the recovery of unpaid legal fees, if you get an enforceable money order in your favour then you can take steps to enforce that judgment \/ order.\nSteps that may be taken to enforce a judgment against a debtor include:\n\nEnforcement hearing to attempt to extract from the debtor information regarding its financial position; or\nApply to the Court for the issue of one of the various types of enforcement warrant; or\nServe the debtor with a statutory demand or bankruptcy notice.\n\nWe will explain a little more in detail below.\nAttempting to Extract Information Regarding the Debtor’s Financial Position\nThis enforcement option is strictly an information gathering exercise. If the debtor provides documents showing any assets they own, the equity in those assets, and details of any debts owed to them, this method of enforcement has achieved its purpose.\nThe first step is to give the debtor a written notice requiring them to complete a sworn statement of financial position pursuant to rule 807 of the UCPR.\nThe debtor will have fourteen (14) days from receiving the notice to complete and return it. If the debtor is a person, then it will be directed at them personally, or if it is a company then it will be directed at the company director(s).\nIf you are not satisfied with the contents of the completed statement of financial position, or the debtor does not return one at all, you can then apply to the Court for an enforcement hearing summons order pursuant to rule 808 of the UCPR.\nAn enforcement hearing summons order is a Court order requiring a debtor (or a director of the company debtor) to complete a statement of financial position (if they have not done so), produce substantial documents regarding their financial position, and appear in Court for the purpose of being cross examined about their financial position.\nThe enforcement hearing can proceed no earlier than fourteen (14) days after the enforcement hearing summons order is served.\nAn enforcement hearing summons may be directed to:\n\nan enforcement debtor; or\nif an enforcement debtor is a corporation—an officer of the corporation; or\nif an enforcement debtor is a partnership—a partner or a person who has or had the control or management of the partnership business in Queensland.\n\nAn enforcement hearing summons may be served on the person to whom it is directed personally or by prepaid ordinary post.\nIf a debtor is served with an enforcement hearing summons order at least fourteen (14) days before the date set for the enforcement hearing, but does not attend the hearing, the Court may issue a warrant for their arrest.\nIn Remely v. Vandenberg & Ors  QCA 214, Otto Remely (the appellant) appealed against an order of a judge in the trial division, which found him guilty of contempt of court and sentenced him to imprisonment for six months. The contempt of court was based on the appellant’s failure to comply with an order to appear at an enforcement hearing and produce certain documents, as well as his refusal to answer relevant questions during the hearing.\nThe appeal was dismissed on all grounds, including the challenge to the appellant’s sentence and the validity of the enforcement hearing and related orders, with the court emphasising the importance of complying with court orders and the serious nature of contempt of court.\nIssuing an Enforcement Warrant\nThe three (3) main types of enforcement warrants that can be issued to enforce a judgment are:\n\nEnforcement warrants for seizure and sale of property; and\nEnforcement warrants for redirection of debts.\n\nIf the enforcement debtor is a natural person, then also:\n\nEnforcement warrants for redirection of earnings.\n\nEnforcement Warrant for Seizure and Sale of Property\nTo issue a warrant for seizure and sale of property for the recovery of unpaid legal fees, the Court will need evidence showing what property is owned by this debtor and the equity in that property.\nSearches of the online records of the Queensland land titles registry will reveal if the debtor owns real property in Queensland.\nThe steps needed for a warrant for seizure and sale of property include:\n\nA creditor will need an enforceable money order;\nThe creditor must complete an application – Form 9;\nThe creditor must complete the draft warrant – Form 75;\nThe creditor must complete a statement in support of the application – Form 74;\nThe creditor will then need to provide the warrant to the enforcement officer for enforcement by one of the various enforcement options.\n\nRead more here – Enforcement Warrant for Seizure and Sale of Property.\nYou can apply for this enforcement warrant requiring the enforcement officer to visit this debtor’s home or principal place of business to make enquiries about whether there are any assets owned by the debtor that can be seized and sold. However, in our experience, debtors rarely voluntarily reveal to the Court’s enforcement officer what assets they own that can be seized.\nEnforcement Warrant for Redirection of Debts\nRule 840(1) of the UCPR says:\nA court may issue an enforcement warrant authorising redirection to an enforcement creditor of specified debts certainly payable, belonging to an enforcement debtor, from a third person.\nFor the Court to issue an enforcement warrant for redirection of debts for the recovery of unpaid legal fees, the creditor will need:\n\nAn enforceable money order;\nAn application – Form 9;\nA draft warrant – Form 76;\nA statement in support of the application – Form 74; and\nTo serve the debtor and the third person.\n\nOnce issued, the warrant must be served on the third person who owes the debt to the judgment debtor. The warrant is valid for one year after issuance.\nIf the third person does not comply with the warrant, the creditor has the same rights to enforce the debt as the debtor had.\nRead more here – Enforcement Warrant for Redirection of Debts.\nIf your debtor client is a natural person then you can also apply for an enforcement warrant for redirection of earnings.\nEnforcement Warrant for Redirection of Earnings\nRule 855(1) of the UCPR says:\nA court may issue an enforcement warrant authorising redirection to an enforcement creditor of particular earnings of an enforcement debtor from a third person.\nFor the Court to issue an enforcement warrant for redirection of earnings for the recovery of unpaid legal fees, the creditor will need:\n\nAn enforceable money order;\nAn application – Form 9;\nA draft warrant – Form 78;\nA statement in support of the application – Form 74;\nA notice to employer for redirection of earnings – Form 79;\nA notice that debtor is not an employee – Form 80; and\nTo serve the debtor and the debtor’s employer.\n\nThe court has discretion in issuing the warrant. It considers factors like the debtor’s employment status, ability to satisfy the debt, and the impact of the warrant on the debtor’s living expenses and liabilities.\nThis statement must provide evidence required by the court to issue the warrant, including details of the money order, payments made, costs incurred, and interest due, and the debtor’s employment details.\nThe warrant must be served on both the debtor and the employer. The employer is given instructions on how to comply with the warrant.\nRead more here – Enforcement Warrant for Redirection of Earnings.\nServing the Debtor with a Statutory Demand\nIn relation to the recovery of unpaid legal fees, and as outlined above, if your debtor is a company which owes a debt of $4,000.00 or more, then you have the option to serve this debtor with a statutory demand for payment of the debt under section 459E of the Corporations Act 2001 (Cth).\nIf this debtor is served with a statutory demand, it will have twenty one days to:\n\nComply with the demand (pay, secure, or compound for the debt); or\nApply to the Court for an order setting the demand aside.\n\nIf the statutory demand is not set aside and the debtor does not comply with it, then the debtor is presumed to be insolvent for three (3) months. While the debtor is presumed to be insolvent, you may apply to wind it up on the grounds of insolvency.\nIf the debtor is forced into liquidation, its liquidator(s) will sell all of its assets to raise money in an attempt to make a distribution to creditors.\nThe costs of an application to wind up a debtor company on the grounds of insolvency are recoverable from the pool of funds realised in the liquidation in priority to the liquidator’s fees.\nRead more here – Statutory Demand – Complete Guide\nServing the debtor with a Bankruptcy Notice\nIn relation to a judgment for the recovery of unpaid legal fees, if a debtor is a human (not a company) and owes a judgment debt of over $10,000.00 then a creditor can may be able to apply to bankrupt the debtor. This requires establishing that debtor has committed an act of bankruptcy.\nThe most common act of bankruptcy is failing to comply with a bankruptcy notice. This notice is issued by the Australian Financial Security Authority (“AFSA”) and then served on the debtor.\nOnce served, the debtor will have 21 days to do any of the following:\n\npay to the creditor the amount of the debt claimed; or\nmake arrangements to the creditor’s satisfaction for settlement of the debt; or\napply to set aside the bankruptcy notice.\n\nIf the judgment debtor does not do any of these things, then they will commit “an act of bankruptcy“. Using this act of bankruptcy, the creditor can apply for a sequestration order (making the debtor bankrupt).\nRead more here – What is a Bankruptcy Notice?\nKey Takeaways\nIn relation to the recovery of unpaid legal fees, following best practice guidelines in relation to client engagement, contract formation and billing will greatly increase your chances in recovering unpaid professional fees.\nKeeping good records and accounts will increase your chances of being paid as close to your actual fees as possible in the event that your claim is disputed or the costs are assessed.\nOf course, prevention is better than cure – and getting your client to transfer funds into your trust account on account of professional fees and disbursements will prevent the need to sue your clients.\nFinally, it is important to remember that following Bell Lawyers Pty Ltd v Pentelow the lawyer or law firm will only be able to seek costs if they engage debt recovery solicitors to recover these debts.\nRecovery of Unpaid Legal Fees – FAQ\nThis FAQ section provides insights into the complexities of legal billing, pleadings, and the recovery of solicitors’ professional fees in Australia. It addresses common queries related to the process, legal requirements, and best practices for solicitors in managing and recovering unpaid legal fees.\nWhat are the prerequisites for a solicitor to recover legal fees?\nTo recover legal fees, a solicitor must first ensure proper costs disclosure to the client. This involves having a signed client retainer and costs agreement, or evidence of acceptance if no signed agreement exists. The bills must adhere to sections 329, 330, and 331 of the Legal Profession Act 2007 (Qld). These steps are crucial to establish the solicitor’s entitlement to the fees and to comply with legal standards.\nWhat should be pleaded in an action for the recovery of unpaid legal fees?\nIn legal actions for unpaid fees, solicitors must include specific details in their pleadings. These include the nature of any costs agreement, the date and method of serving the legal costs bill, and confirmation that at least 30 days have passed since service. Additionally, details of the legal costs bill and evidence of serving a ‘Notification of client’s rights’ under section 331 of the LPA are required. This ensures transparency and adherence to legal protocols.\nHow does the Bell Lawyers Pty Ltd v Pentelow decision impact solicitors?\nThe Bell Lawyers Pty Ltd v Pentelow decision is a significant High Court ruling that affects self-represented lawyers and law firms. It states that self-represented lawyers cannot recover their own legal costs in litigation. This decision marks a departure from the previously accepted Chorley exception and has major implications for solicitors representing themselves. It underscores the need for solicitors to be aware of potential conflicts of interest and the cost implications of self-representation.\nWhat is the importance of client identification in legal billing?\nProper client identification is a critical step in the legal billing process. It involves conducting due diligence to verify the client’s legal status and authority, especially in cases involving corporate entities. This process helps in risk management and is vital for the successful recovery of unpaid fees. Failure to accurately identify clients can lead to complications in enforcing payment agreements.\nWhat are the consequences of failing to give costs disclosure?\nFailing to provide proper costs disclosure can have serious legal consequences. Under section 316(2) of the LPA, a law practice that fails in this regard may not be able to maintain proceedings against the client for the recovery of legal costs, unless the costs have been assessed under division 7. This underscores the importance of transparency and adherence to legal requirements in the billing process.\nWhat are the exemptions from the requirement to give costs disclosure?\nThere are specific scenarios where costs disclosure may not be necessary. These include cases where the client is considered a ‘sophisticated client’ or when the total legal costs, excluding disbursements, are unlikely to exceed $1,500.00. However, solicitors should carefully consider these exemptions and err on the side of providing disclosure to avoid legal complications.\nWhat constitutes effective ongoing disclosure?\nOngoing disclosure involves informing the client of any substantial changes to previously made disclosures as soon as practicable. This is a legal requirement and a key aspect of maintaining transparency in the solicitor-client relationship. Failure to provide ongoing disclosure can lead to legal challenges in recovering fees and may damage the solicitor’s credibility.\nWhat are the essentials of a client retainer and costs agreements?\nA client retainer and costs agreement should be in writing and clearly state that it is an offer to enter into a costs agreement. It should specify how the offer can be accepted, either in writing or by other conduct, and outline the type of conduct that constitutes acceptance. These agreements form the contractual basis for the solicitor-client relationship and are crucial for enforcing payment of fees.\nWhat if there is no signed costs agreement?\nIn the absence of a signed costs agreement, a solicitor’s ability to recover costs depends on the specific circumstances. If there is evidence that a costs agreement was sent but not signed, acceptance may be inferred by the client’s conduct. However, if no evidence of a sent costs agreement exists, recovery may proceed under section 319(1)(b) and (c) of the LPA, based on the fair and reasonable value of the legal services provided.\nHow are legal costs assessed?\nLegal costs are assessed based on several criteria, including the reasonableness of carrying out the work, the manner in which the work was carried out, and the fairness and reasonableness of the costs in relation to the work. The assessment also considers compliance with the LPA, the complexity of the matter, and the quality of the work done. This process ensures that the fees charged are justifiable and in line with legal standards.\nWhat are the billing requirements under the LPA?\nThe LPA mandates specific requirements for billing, including providing a lump sum or itemised bill, ensuring the bill is signed by a lawyer or employee of the law firm, and including a notification of the client’s rights. Compliance with these requirements is essential for the lawful recovery of fees and to avoid legal challenges in the billing process.\nWhat steps should be taken before commencing proceedings for recovery of unpaid legal fees?\nBefore initiating debt recovery proceedings, it is crucial to ensure compliance with all disclosure and billing requirements under the LPA. This includes providing proper costs disclosure, issuing compliant bills, and preparing for potential legal challenges. Adherence to these steps maximises the chances of successful fee recovery and minimises legal risks.\nWhat are the options for enforcing money orders?\nTo enforce money orders, solicitors can attempt to extract financial information from the debtor, apply for various types of enforcement warrants, or serve the debtor with a statutory demand or bankruptcy notice. These steps are part of the enforcement process and are aimed at securing payment of the owed fees.\nWhat is the significance of the Chorley exception in Australian law?\nThe Chorley exception, which previously allowed self-represented solicitors to recover professional costs, is no longer recognised in Australian law. This change, established by the Bell Lawyers Pty Ltd v Pentelow decision, reflects the evolving legal landscape and the need for fairness and transparency in legal billing practices.\nHow can solicitors ensure compliance with legal billing and debt recovery regulations?\nTo ensure compliance, solicitors should adhere to best practices in client engagement, maintain detailed records, and stay informed about legal precedents and changes in law. They should also ensure strict adherence to LPA requirements in billing and client communication. This proactive approach helps in effective debt recovery and upholds professional standards.\nHow Can Stonegate Legal Help?\nStonegate Legal are experts in debt recovery, the recovery of unpaid legal fees, and the enforcement of money orders.\nWe offer fixed fees* and scale fees* where applicable to limit the out of pocket expenses to you.\nWe work in partnership with our debt collection company – Advance Debt Collection – for commission based debt collection, prior to a referral to Stonegate Legal (if needed).\nDon’t waste time trying to collect these debts in-house, contact Stonegate Legal today.