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Barrister cancellation fees: are they fair?

By June 20, 2018October 26th, 2021No Comments

A judge of the Family Court has criticised barrister cancellation fees being charged to family law clients and called for bar associations around the country to review the now-common practice. Barrister cancellation fees are also known in the industry as “disappointment” fees and in order to be paid, must have been provided for in the retainer (or contract) agreed between clients and solicitors.

The comments were made in a judgment recently delivered by Family Court Judge Robert Benjamin, where in a very complex parenting and property matter involving family violence, the wife incurred $930,648.46 in legal fees, including “approximately $600,000 in solicitor costs, around $200,000 in barristers’ costs and the balance in joint expert fees, single expert fees, shadow expert fees, transcript fees, a proportion of the Independent Children’s Lawyer’s fees, a fee for bill of costs in relation to interim orders, searches and other disbursements.”

The husband’s costs were much lower at $385,000, including $140,000 for his barrister. The husband’s barrister charged $7,000 a day, or $850 per hour (plus GST), in a fee agreement that included provision for him to charge barrister cancellation fees for “Reservation of Dates” if the case settled or was adjourned.

In awarding costs against the husband, the judge took the husband’s conduct into account, which was “so bad during the hearing that the judge ordered [the husband] to pay his wife $359,712. It was two thirds of the wife’s “party to party” legal costs of $539,568.26 and wiped out the $338,000 in cash he was awarded in the property settlement. He must now pay his wife the difference, more than $21,000.”

The judge took the opportunity in this case to raise the issue of barrister cancellation fees being routinely included in retainers. Retainer agreements in family law are regulated in all states and territories by their own legislation regarding commercial arrangements between a legal practitioner and their client. Most jurisdictions require that the legal practitioner’s costs are “fair and reasonable” and “proportional”–and the judge questioned the fairness and reasonableness of barristers charging “disappointment” fees in cases where they did not actually undertake any work at all.

The idea of a cancellation fee is that the barrister is charging for time not used, on the basis that the day(s) reserved for a client’s court hearing, but which were not required, left the barrister unable to undertake another hearing over that time period.  As the judge noted, “In this context, I would have little difficulty in barristers charging reasonable and fair fees for preparation work which was actually done; that is entirely reasonable. However, I have grave difficulty in endorsing, as fair and reasonable or proportionate, terms in fee agreements which provide for barristers to be paid for doing nothing.”

The judge elaborated:

“[Barristers’] work is not all appearance [in court]; it inevitably includes advising, conferences, preparation and research. There is little or no reason why these busy barristers cannot apply the time lost on other matters. Most established barristers find that their problem is over-employment, not under-employment. For most, some unexpected time out of court is a welcome opportunity to catch up with chamber work.”

Aside from the question of fairness and reasonableness, the judge pointed out several other problems with the practice.

For example, inexperienced consumers of family law—compared to, say, businesses working out commercial legal arrangements—suffer from an “information asymmetry” regarding legal costs. Clients of family law legal services are often also “in a state of heightened sensitivity and pressed to make urgent and significant life decisions” in a situation where there is a “lack of market-based or scientific methods for valuing legal costs”.

There is also a lack of reciprocity, in that there is no provision or payment from barristers to consumers if for any reason it is the barrister who is unavailable: “Counsel become jammed through no fault of their own. Counsel can become ill or have family emergencies. These events are beyond counsel’s control but have the effect of the litigant losing at short notice the support and skills of counsel in whom the litigants have reposed trust and confidence. The agreement lacks reciprocity of obligation. Litigants may have no choice in the market place except to agree to such terms but that does not make them reasonable.”

Further, the cancellation fees could actually act as “a barrier to settlement”:

“If a party knows he or she can save many thousands of dollars by settling, that circumstance may lead to that negotiated outcome,” the judge said. “If, on the other hand, the party has or will be liable to pay the barrister irrespective of the settlement, the cost-saving inducement is lost.”

To deliver fairness to clients, solicitors should carefully consider their barrister’s cost agreement, ensuring that full disclosure is made to clients regarding the barrister’s fees, particularly regarding any barrister cancellation fees that may be sought.

Source: Australian Financial Review

You can read the case here.

You may also like to read our blog on keeping your family law costs down.

Do you require family law advice?  Please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Legal Services on (02) 6223 2400.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Legal Services.

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