balancing your client's interests and making a profit...going to your lawyer is a bit like...

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1 BALANCING YOUR CLIENT’S INTERESTS AND MAKING A PROFIT or How not to fail A law firm is not a Bank – People come to lawyers for legal advice, in the same way as they go to a coffee shop for a cup of coffee. Try asking your local barista to extend you even $4.00 credit. Unless you are daily regular you will get short shrift. So why do people not like paying lawyers? What is it about a law practice that people get it confused with a bank? Is it because they are not happy? In fact they are probably stressed and upset. Going to your lawyer is a bit like going to the dentist. You know you have to go but you know you won’t enjoy it. So we are in a no-win situation. People need us to help them, but they don’t like needing us, and even less do they like paying for the pain we are helping them deal with. So how do we deal with this? People need us, and we need them. Without people with problems lawyers would have nothing to do. Have you noticed the absence of sword makers lately? We not only need people to have problems for us to solve, we need people who can afford to pay us to solve their problems. We all have costs that need to be met and a law practice is no different. So we have a tension, how do we manage it? What does this mean in practical terms? How do we keep our clients happy, not only with our legal expertise but with our bills? How does not managing our law practice cause problems? What things can go wrong? As a starting point, I am going to propose that we assess the situation. In order to do this we need to look at our Law Practice and work out what we are, or our position in the marketplace. Most of you are probably familiar with the

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Page 1: Balancing your Client's Interests and Making a Profit...Going to your lawyer is a bit like going to the dentist. You know you have to go but you know you won’t enjoy it. So we are

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BALANCING YOUR CLIENT’S INTERESTS AND MAKING A PROFIT

or How not to fail

A law firm is not a Bank – People come to lawyers for legal advice, in the same way as they

go to a coffee shop for a cup of coffee. Try asking your local barista to extend you even

$4.00 credit. Unless you are daily regular you will get short shrift.

So why do people not like paying lawyers? What is it about a law practice that people get it

confused with a bank? Is it because they are not happy? In fact they are probably stressed

and upset. Going to your lawyer is a bit like going to the dentist. You know you have to go

but you know you won’t enjoy it.

So we are in a no-win situation. People need us to help them, but they don’t like needing us,

and even less do they like paying for the pain we are helping them deal with.

So how do we deal with this? People need us, and we need them. Without people with

problems lawyers would have nothing to do. Have you noticed the absence of sword

makers lately?

We not only need people to have problems for us to solve, we need people who can afford

to pay us to solve their problems. We all have costs that need to be met and a law practice

is no different.

So we have a tension, how do we manage it? What does this mean in practical terms? How

do we keep our clients happy, not only with our legal expertise but with our bills?

How does not managing our law practice cause problems? What things can go wrong?

As a starting point, I am going to propose that we assess the situation. In order to do this we

need to look at our Law Practice and work out what we are, or our position in the

marketplace.

Most of you are probably familiar with the

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I’m not going to go into detail with this as we will be doing this in our workshop a bit later.

But how many of us actually sit down and work out what this means for our firm or us? After

all we are lawyers not business people aren’t we? Well actually we are both. If you are

planning on just operating as a lawyer, running a Law Practice is not going to do it for you.

You could join a Community Legal Service but they probably have budgets too.

Most of you are aware of the amount of time you take on administration etc. In fact, if

everything was going according to plan you probably wouldn’t bother to come here today to

listen to me. There are plenty of other talks to get your CPD points.

But this is something we all need to do. Me as well as you if I want to be successful in my

Law Practice. I need a plan, a road map and then I need to follow it.

Why do we need to do this? Well, there are plenty of lawyers and Law Practices out there,

in fact 17, 570 as at 30 September, 2013.1 Each year the Supreme Court of Victoria admits

Lawyers to the profession, during last September alone there were 66 new lawyers admitted.

With 7 Law Schools now (count them if you think I am wrong) this is unlikely to slow down.

1 http://www.lsb.vic.gov.au/lawyer-search/practitioner-statistics/

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The other reason we need to do this is because we have made a huge investment. Not just

into the actual Law Practice you have set up, but all the years beforehand.

So later on we are going to do our own SWOT analysis. Before we do that I will go through

my suggestions which I hope will prompt fruitful discussion. I want us to think about where

we are. To do this we need to list the strengths of our Law Practice:

• What do we do well?

• What areas of the Law are we really competent in?

• What are our staff like? Do they perform to the standard both we and our clients

expect?

• What good things do our clients/competitors say about us?

Then there are our weaknesses:

• What do clients complain about?

• Where do we know we don’t perform, even if we haven’t been found out yet?

• Are we managing our Cash Flow?

Then back to the positives, what are our opportunities?

• When we look at our strengths, how can we translate these into opportunities?

• What is going on outside the walls of our Law Practice that we can turn to a

profit?

• What are our capabilities?

Back to the negatives, what Threats are out there?

• Who are our competitors?

• Do our weaknesses mean we won’t retain clients and/or good staff?

• If our Cash Flow is poor how does this impact on how we can utilise our

strengths, capabilities and opportunities?

These exercises enable us to draw up a Business Plan by drilling down further into where

we are now, where we would like to be and what we may face in getting there.

This is a very broad brush to get you thinking about your own Practice before we get look at

some of the issues I think are critically important if you are going to run not only a good Law

Practice providing excellent legal services, but also managing that Practice to produce a

profit.

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Well here is my own diagram of what I think is necessary to achieve this. I have kept it as

simple as possible. The necessary elements are You, Communication, Clients and

Procedures.

Now some of these overlap but I have tried to keep them separate and simple. The first and

most important is You!

YOU

If you are going to be successful and serve your client well you need to know what you want

out of life.

Do you really want to be working 80 hours a week on client files or administration?

An unexamined life is not worth living Plato

Communication

You

Procedures

Clients

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We all need to set realistic goals for ourselves. In the same way as we set up a Budget for

our business, we need to budget our time and know what is important, as well as what is

urgent.

Take time out to really think about what you enjoy doing. Write it all down – no matter how

petty it may seem. In the same way as we say there are “No stupid questions in Law” there

are no stupid goals if that is something that inspires and refreshes you.

If you have family you will need to budget time to be part of that family. It is sad but many of

our high fliers or very competent people end up alone and lonely because they have

sacrificed themselves on the altar of achievement. If that is what you want, at least

recognise it. Make it your decision, not something you fall into by accident.

Another issue for all of us, not just lawyers is Health. We can argue that one day we will

have a balanced life style but just now we can work like a dog in order to relax. Again, there

are two parties to this agreement you and your body. Will your body stand the pace? Do

you have check-ups regularly. What does your doctor say? If you smoke and/or are

overweight you risk a short brilliant career.

So later on we are going to do our own SWOT analysis. Before we do that I will go through

my suggestions which I hope will prompt fruitful discussion. I want us to think about where

we are. To do this we need to list the strengths of our Law Practice:

• What do we do well?

• What areas of the Law are we really competent in?

• What are our staff like? Do they perform to the standard both we and our clients

expect?

• What good things do our clients/competitors say about us?

Then there are our weaknesses:

• What do clients complain about?

• Where do we know we don’t perform, even if we haven’t been found out yet?

• Are we managing our Cash Flow?

Then back to the positives, what are our opportunities?

• When we look at our strengths, how can we translate these into opportunities?

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• What is going on outside the walls of our Law Practice that we can turn to a

profit?

• What are our capabilities?

Back to the negatives, what Threats are out there?

• Who are our competitors?

• Do our weaknesses mean we won’t retain clients and/or good staff?

• If our Cash Flow is poor how does this impact on how we can utilise our

strengths, capabilities and opportunities?

These exercises enable us to draw up a Business Plan by drilling down further into where

we are now, where we would like to be and what we may face in getting there.

This is a very broad brush to get you thinking about your own Practice before we get look at

some of the issues I think are critically important if you are going to run not only a good Law

Practice providing excellent legal services, but also managing that Practice to produce a

profit.

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Well here is my own diagram of what I think is necessary to achieve this. I have kept it as

simple as possible. The necessary elements are You, Communication, Clients and

Procedures.

Now some of these overlap but I have tried to keep them separate and simple. The first and

most important is You!

YOU

If you are going to be successful and serve your client well you need to know what you want

out of life.

Do you really want to be working 80 hours a week on client files or administration?

An unexamined life is not worth living Plato

Communication

You

Procedures

Clients

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We all need to set realistic goals for ourselves. In the same way as we set up a Budget for

our business, we need to budget our time and know what is important, as well as what is

urgent.

Take time out to really think about what you enjoy doing. Write it all down – no matter how

petty it may seem. In the same way as we say there are “No stupid questions in Law” there

are no stupid goals if that is something that inspires and refreshes you.

If you have family you will need to budget time to be part of that family. It is sad but many of

our high fliers or very competent people end up alone and lonely because they have

sacrificed themselves on the altar of achievement. If that is what you want, at least

recognise it. Make it your decision, not something you fall into by accident.

Another issue for all of us, not just lawyers, is health. We can argue that one day we will

have a balanced life style but just now we can work like a dog in order to relax later. Again,

there are two parties to this agreement you and your body. Will your body stand the pace?

Do you have check-ups regularly. What does your doctor say? If you smoke and/or are

overweight you risk a short brilliant career.

The following is a case on point:

Legal Services Commissioner v Owens (Legal Practice) [2010] VCAT 1686 (14 October

2010)

Legal Profession Act 2004 s.2.2.2(1); This case involved an Australian lawyer who practised

without a practising certificate on ten occasions; the lawyer had previously been

reprimanded eight times and fined once in unrelated disciplinary matters; he was not entitled

to apply for a practising certificate for five years.

In the past this was more a question for when you get older but nowadays even younger

people have been known to go out like a firecracker.

And the consequences can be quite drastic.

LSC v Sampson (Legal Practice) [2013] VCAT 1177 (10 July 2013) Jonathan

Smithers, Senior Member.

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A lawyer was complained about for issuing Letters of Demand and Urgent

Notices to pay which VCAT determined to be untrue, misleading and intimidating

seeking payment of legal costs as well as the debt owed.

The notices had been used by the lawyer for more than 5 years and was an

issue of ongoing debate between the lawyer and the LSC. The lawyer had

contacted the LIV but there was confusion in the communication received from

the LIV. In March 2009 the lawyer misinterpreted a letter received from the LSC

that they were to cease sending Notices in that form. Concurrently the lawyer

suffered serious health problems. Notwithstanding these health problems VCAT

determined that the lawyer was guilty of 2 charges of professional misconduct.

It is a recognised fact that practising Law is stressful. In fact the Legal Services

Commissioner’s website has a special page addressing issues of Mental Health in the

profession.2

Recently I read this article which emphasises my point:

http://blogs.hbr.org/2013/10/dont-treat-your-career-marathon-like-a-sprint/

2 http://www.lsb.vic.gov.au/legal-profession/mental-health/

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Communication

The best thing we can do for our clients is to communicate with them. Given Law is all about

communication you would think this was a given and a general rule for all lawyers to operate

by but the sad truth is that lack of communication is one of the main complaints by clients of

law firms.

Legal Services Commissioner v Morgan (Legal Practice) [2010] VCAT 1814 (22

October 2010)

Mr Morgan was found guilty of 6 charges of unsatisfactory professional conduct

and to failing to use his best endeavours to complete legal work. He was

ordered not to apply for a Practising Certificate for12 months and pay the

LSC’s costs.

Legal Services Commissioner v Battiato (Legal Practice) [2012] VCAT 1279 (21

August 2012)

Ms Vita Battiato had held a practising certificate in Victoria since her admission

to practice in November 1987. The charges related to her practice as a sole

practitioner in Dandenong. The LSC brought six charges of professional

misconduct against her under the Legal Profession Act 2004 (the Act). These

related to her conduct in acting for three clients over the period 2007 – 2010,

all in family law matters. The charges related to extended delays in completing

work for clients, poor communication with clients, acting without instructions in

one instance and failing to respond to requests by the LSC for an explanation

of her conduct. Ms Battiato pleaded guilty to all six charges. She was

reprimanded and fined $3,000 and to pay costs of $2,585 to the LSC and was

unable to engage in practice for 2 years.

Either we are not contacting our clients often enough or else what we are telling them

doesn’t make sense and it is going straight through to the keeper.

So why aren’t we communicating with our clients?

One of the main reasons is cost. Every time we communicate with our clients it costs them –

so keeping in mind people don’t like paying lawyers we try to avoid complaints about over-

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servicing and the consequent costs. But very often this is an unsubstantiated fear. If we

follow the correct procedures set out in the Legal Profession Act 2004 (LPA) and the Legal

Profession Regulations (LPR) 2005, we may receive complaints from unreasonable clients

but we won’t be criticised by the Legal Services Commissioner (LSC), or taken to task.

Saying that, the LSC is not a fly on the wall, they are reliant on the Complainant and you. If

you receive a written request from the LSC regarding a Complaint you need to respond in a

timely manner. I have listed 4 cases where lawyers did not respond promptly.

Legal Services Commissioner v Brondolino (Legal Practice) [2010] VCAT 182 (18 February

2010) Failed to respond to LSC’s request re a complaint by a client, reprimanded, fined and

pay LSC’s costs.

Legal Services Commissioner v Buller (Legal Practice) [2009] VCAT 981 (11 June 2009)

Failed to respond to LSC’s request re a complaint by a client, reprimanded, fined and pay

LSC’s costs.

Legal Services Commissioner v Burgess (Legal Practice) [2009] VCAT 463 (13 March 2009)

Failed to respond to LSC’s request re a complaint by a client, reprimanded, fined and pay

LSC’s costs.

Legal Services Commissioner v Canals (Legal Practice) [2008] VCAT 576 (1 April 2008)

Failed to respond to LSC’s request re a complaint by a client, reprimanded, fined and pay

LSC’s costs.

We need to start how we plan to continue. If we have fallen into bad habits it may be

too hard to re-educate our existing clients, although I wouldn’t say don’t try, but we need

to work out how we want our Practice to work, how we agreed to work for our clients

and then stick to it. No one likes chaos or confusion, after all we are supposed to be

solving problems not creating new ones.

So what do we do? We need to meet our clients, establish a rapport, find out why they

are there, then we need to start charging them.

Have you noticed when you go to the doctor or the dentist they have fixed guidelines

about how they operate. Funding their patients’ treatment is generally not one of them.

The banks these days are anxious for us to borrow their money but they still want to get

paid for the privilege of us borrowing from them.

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I told a joke to an accountant recently, “Why don’t sharks eat lawyers? Professional

courtesy”. She fell about laughing and then proceeded to explain that accountants never

apologise for billing for their work. She had often seen lawyers’ bills where the lawyer was

obviously embarrassed to charge for their work. The ones where your bill comes to $2,500

but then you generously add another line.

“BUT SAY $2,000”

And promptly write off $500 without even being asked to discount your fees by the client.

Why do we do that? Are we embarrassed? I had to ask myself the same question as I have

been guilty of doing this as well. If we have done our homework then we know what we

ought to charge for the work that has been done and we need that work to be paid for in

order to maintain a healthy bank balance.

Yes, there are going to be difficult cases. People generally come to lawyers in trouble with

the law, and such troubles usually cause financial problems also. Family Law is a prime

example where you go from two people sharing assets to two enemies battling over an item

they really don’t care about. But just because they don’t care, why should your practice

suffer? If you are providing the agreed service, and we will talk further about our services,

you are entitled to the fee you are charging.

So that’s one aspect, I’ll address the whole issue of Costs and charging later when we get to

the Procedures part of this Seminar.

Before I forget, the telephone. We know the uses of the smartphones, texting etc, but some

of us still use a fixed line and make and receive phone calls. Whenever you receive or make

a phone call make sure you are smiling as you speak. You would be amazed at how much

our voice communicates. Unless you are trying to take Telstra to task for some problem with

your phone, in which case you will want your impatience and crossness to get across, use

your phone to encourage your client to talk to you about their problem.

I know we are all busy people, including your clients, but sometimes they get chatty and you

have a deadline you need to meet. I have found apologising to the client for taking up so

much of their time when they are so busy and excusing myself works to extricate myself

without the client feeling as though I am trying to get rid of them. It gets the message across

with no feelings hurt.

Get to know your clients

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Someone walks in your office door and engages you to do some legal work. You complete

the work and take their money, please note I am being positive here that you have billed the

client and expect to get paid within the agreed trading terms.

Your client has paid their bill and left. But just like when you buy something in a shop, they

will be back. Maybe not tomorrow or next week, unless they have a business that requires

your regular legal assistance, but you want to retain them.

Any marketing guru will tell you repeat business is a lot easier and cheaper to manage than

acquiring a new client. So how can you do this?

If your client is a commercial client, as well as getting their personal details, including a

photo ID, you should do a Historical Search of their company. This search will tell you a lot

about their business, and probably even about them. If they are a director of a company

they will need to list their birthdate, more about that later.

On the negative side, if your client has a Company whose search shows they have lots of

Charges listed against it, has been subject to a Winding Up application (remember they are

there forever, not like bankruptcy which is eventually wiped), you may want to probe some

more and make sure they are able to pay for your firm’s services. However, if you take my

advice about Funds in Trust, this will deal with that issue. This information should make you

alert, if not alarmed, and ensure you don’t accidentally slip into becoming a silent partner in

their business by extending them too much credit.

Of course, getting to know your client involves ensuring you don’t have any conflicts of

interest, or that your close family members don’t either, unlike the following case:

Legal Services Commissioner v Blaker (Legal Practice) [2013] VCAT 87 (31

January 2013)

This legal practitioner continued to act in conflict of interest acting for both

parties to a contract of sale and loan agreement. The charges were

professional misconduct, failing to re-lodge a caveat on behalf of one client and

failing to inform that client that the other client had created security interests

This was considered unsatisfactory professional conduct under LPR Rules 8.2

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and Rule 39. The legal practitioner pleaded guilty and consented to a

reprimand and an appropriate fine in respect of each charge.

This issue will come up again when we look at dealings with Trusts but it doesn’t hurt to

repeat it.

I know most larger firms have a sophisticated system for ensuring that they don’t take on a

case they have a conflict with, but I have found even Microsoft Search will bring up a name.

So, if you have dealt with your client’s opponent before, you will be able to excuse yourself

before someone finds out and embarrasses you into withdrawing. If we don’t look bad, we at

least look inefficient and unprofessional by not knowing these things.

If, however, you have taken whatever steps you could and later find you are conflicted what

do you do? Excuse yourself and hand the file on to someone who isn’t conflicted. We are

talking about profitability here and balancing the client’s interests. You may be the better

lawyer but it won’t cost him/her any less and probably more if you continue and then have to

remove yourself. The firm will lose the fees but it will cost a lot less than defending the

firm/principal against the Legal Services Commissioner in VCAT with its attendant legal

costs and fines. A case on point is:

Legal Services Commissioner v Cassidy (Legal Practice) [2009] VCAT 2647 (8

December 2009)

A finding of professional misconduct was made against the lawyer for not

withdrawing from his clients’ matter as soon as a conflict of interest arose. The

lawyer was fined $2,500.00.

1. Get to know your client better, not just his/her business them personally.

2. What else can we do?

a. Socialising – ask clients to Seminars they may be interested in.

b. Take your client to the football/cricket/tennis or something else they may be

interested in. Sometimes you can get relatively cheap theatre tickets. Not only

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will you be sponsoring the theatre you will get a chance to get to know your client

better.

c. Networking events – we are all doing it these days. Think about holding a

networking event yourself. You can organize a large event where lots of people

are invited, a bit like my film example, a large event will impress your clients that

you are busy ie good at what you do..

Or you could make it a small, intimate affair with just a few people. It depends on

the topic, people and what you are hoping to achieve. In the case of a small event

you will have an opportunity to really communicate with your clients and get to

know them. And if it is somewhere where there is music, make sure its not too

loud so you can communicate without shouting.

d. Coffee – not just at the office although if you are going to do that make sure it is

drinkable coffee with unchipped cups. Melbourne is known for its coffee

aficionados, you want to keep your clients not drive them away. The same goes

for tea, you have all seen the tea shops out there. We are not only spoilt for

choice, we are snobs about our tea and coffee.

Better to give just a good glass of water than a bad coffee.

e. What about birthdays? You could even send sympathy cards. Since we collect

that information we may as well use it positively. You know the bit where we get a

copy of some photo ID, if its their driver’s licence birthdates are given. We need to

be careful how we use the information but as long as we don’t send a “Happy 60th

Birthday” or some other insensitive reminder of age. Remember that Historical

Search? It lists directors’ birthdates.

f. And then there are Christmas cards – or at least Season’s Greetings if you know

your clients don’t celebrate Christmas. If you are going to send a card make it

count, sign it personally, add a personalised note which shows you know your

client.

With the advent of email and the internet “snail mail” is becoming rarer. Given the

effort involved make sure the envelope is worth opening. A nice card and stick on

a stamp. Make it look like you went to some effort.

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g. Commercial clients – what about sending Case summaries – if you know your

client’s business and interests you can show your interest by sending them a

relevant case. They are unlikely to want to read the whole case, but the headnote

details may be of interest to them. Again, this is another thing accountants have

beaten us to, not to mention Superannuation Funds, in fact everyone is sending

us information. Which is why you need to know your client and send them

relevant things, don’t flood them with irrelevancies.

h. Websites – use them to communicate with your clients and also potential clients.

Done right they are a cheap form of advertising. You need to ensure your website

will be accessed by search engines and bring your firm to the top of the list. Being

on page 3 is not really helpful.

Websites are good places to put information not only about your firm but about the

Law in general which may apply to your clients or their business. If you have to

prepare a talk make sure you have a copy of it on the website. There is a lot of

work in preparing a talk, you want to get the most mileage out of all that work.

i. Blogs

I believe most Law Practices have their own website but if you have a particular

interest and enjoy writing regularly, you may want to consider a blog.

j. Linked In

To me this is a bit like a commercial Facebook, someone where you can catch up

with people and where they are at. In order to use it you need to be a member,

although there is no cost to join, apart from your time. Again, you need to keep it

up to date.

I have found it useful in keeping in contact with lawyers who brief me and then

move firms.

Costs Agreements – these are another form of communication with the client. Strictly

speaking they fall under procedures so I will just touch briefly on their role in communication,

not why you have to do them, in case it isn’t blatantly obvious. Costs Agreements go hand

in hand with your Retainer letter. The one you write shortly after the client instructs you in

their Matter. It sets out what legal work you are undertaking for the client, the estimated

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timeline and how much you estimate it will cost based on the information you have to hand.

Things change in the Law, sometimes very quickly and often we need to provide an

Amended Costs Agreement when this happens.

Apart from underlining the fact that you expect to get paid, and when you expect to get paid,

it is clear what you are planning to do for the client. Their acknowledgement by signing the

Costs Agreement, or continuing to instruct you so contracting by course of conduct, (except

in the case of a contingency agreement), not only communicates the scope of the work you

are undertaking on the client’s behalf, but also that you are a professional.

Lawyers don’t produce widgets, we sell the contents of our brains or using them to solve the

client’s problem/s. In case you have forgotten the LPA and the LPR require us to provide

the client with a Costs Agreement whenever the fees are going to exceed $750.00.

Failure to provide a Costs Agreement

Legal Services Commissioner v Nowicki (Legal Practice) [2011] VCAT 1003

(24 May 2011)

Reprimanded, fined $15,000 and ordered to pay the LSC’s costs.

As well as communicating with our clients we should communicate with our colleagues, our

competitors if you like. Keep up with what is happening in the wider legal world. A few

barristers I know are great at this. When there is no work coming in and there is some

downtime that is the time for communicating with colleagues to catch up on all the news.

Not just the legal news. This catching up is not a waste of time, we may not use the

information right away but it keeps us sharp.

Then there are your in-house colleagues, your fellow practitioners or employees who will

pick up your file the next time you are not around for whatever reason, be it health, family or

holiday. You should keep your files in the way you would like others to. So that anyone

picking up your file knows exactly what is happening with the file at this point in time. Your

file notes should be dated and the time taken noted, signed and if your signature is a

scribble like mine, your name printed somewhere clearly. In a few years’ time when you are

not around your client may be relying on your file note. Make sure it counts.

Clients

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We all have different clients depending on our Law Practice as well as lots of other hard to

quantify factors. Was the Law Practice just there when the client decided to take the time to

ask a legal question? Were we recommended to the client by another client? Has our

advertising hit the mark?

How do we get our clients? What is our Sales Process? Do you have a way/ways of finding

potential clients? In the past we used to rely on advertising in the Yellow Pages or in

newspapers, with the changes in technology many of these have become obsolete and

many firms now rely on their Firm’s own website. After all here you have control of what the

client can find out about you and you can use it to “advertise” your wins, advantages or to

inform your clients and others. You can also have a “Members Only” restriction on some

information so your clients can feel they are special.

The downside of a website is the cost of maintaining it up to date. If you aren’t going to keep

it current it may do your firm more harm than good. Again, what does an out of date website

say about your Practice? Too busy to update it? Too poor to pay someone professional to

do it?

Does your firm do lots of Wills, do they follow up with the Probate. Generally if your Firm

holds the original of the Will you are likely to get the Probate work, but not always. After all

your client who executed the Will is going to be dead. There is no requirement on the

Executor, if it isn’t you, to instruct your firm. What steps have you taken to ensure, as much

as you can without being overbearing, to ensure that that well-paid work stays with your

firm?

Again, it is a question of Communication. Will the Executor remember being told by your

now deceased client, that you and your firm took the time to keep in contact. Maybe

remembered those birthday cards, Christmas cards I was suggesting earlier?

We talked earlier about you holding Networking events. You also need to attend them to

find new clients. Regrettably we all die so we need to keep getting new clients. Unless you

are at the stage of winding down your Law Practice and don’t intend to sell it, you need to

keep finding new clients.

But not all clients are worth it.

We need to assess our current clients, our Law Practice and work out our perfect match.

Our A-class client. Then when dealing with potential clients make sure you ask the

questions to see if the client fits your requirements. Remember Contract Law 101 –

acceptance, offer and consideration has to pass. If the consideration isn’t passing into your

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bank account you are acting pro bono. I have nothing against lawyers acting pro bono I do it

myself, but I choose when I am acting pro bono. Not the client.

Before you can go out and scout those A-Class clients you will need to look at your current

clients. What is it about them that makes them A-Class? The time they take? The type of

work they give you? The way they pay their bills? This gives you a measure for any

potential clients. Not only the ones who walk in the door, but also the potential clients you

meet at those Networking events.

We will look at this issue again when we get to our Workshop.

Procedures

Does your Law Practice have a Procedures Manual? If not why not? Too busy to put one

together? Not having a Procedures Manual makes it very difficult to train staff and maintain

expectations of them. Of course, the Procedures should also apply to you, you need to lead

the troops by example.

With a Procedure Manual you can optimise all your processes. Everyone in the firm needs

to know what is expected of them.

Invoicing – how often, when is the information required by the person generating the

invoices. Where is it stored. If you have a computer system which maintains your times this

is going to be easy but if you are smaller firm you may have not have such a sophisticated

system.

Perhaps, like me, you run Job Sheets or Work Sheets. I have attached a copy of the Work

Sheet I use. You can see from this that I not only put down dates and times but all relevant

details I need, my lawyer’s contact details, the client’s contact details, including email

address and also my opponent’s details.

I keep this sheet at the front of my file so if I need to contact anybody the information is right

there I don’t have to fumble through the file. Also, because I record all the time I take, as

well as the billable time, I can keep a track on how much time I am actually spending on the

Matter.

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A Procedure Manual of some sort should increase accountability and communication and

help your team stay focussed on key priorities. It is also a way to deal with slackers.

The Procedures Manual doesn’t have to be a beautifully bound volume, but it certainly adds

gravitas if it is. You can start with just getting everyone to document how they do things.

Then read through and see if this is how you want things done, however make sure you

discuss any proposed changes with the various stakeholders in your organisation. There

may be a good reason why something is done a particular way. If not, discussing why you

think it should be changed will ensure that your stakeholders are going to not just write down

the procedures but also follow them.

So what sort of things do we need in this ubiquitous Procedures Manual? I can make a few

suggestions: I have arranged these in alphabetical order to ensure I didn’t forget any.

BOOKKEEPING/MONEY

I seem to be harping on money a lot but realistically the work we do costs. Lawyers, like any

business, have to pay insurance, rent, salaries, subscriptions etc. Because we need money

to pay these bills, we need to bill clients and have them pay us at the agreed terms.

Your Cost Agreement will set out when you are going to send your client bills. Make sure

you stick to it, send bills regularly. The bills can be Lump Sum or Itemised and need to be

prepared according to the LPA/LPR requirements, which include being signed by someone

in authority at the firm.

If you have arranged for Funds in Trust then once you have waited the statutory 7 days

monies to cover the work done can be drawn down. Disbursements like Counsel’s fees,

search fees etc, can be drawn down as needed.

Counsel’s fees in particular are not necessarily the client’s responsibility. You need

instructions to engage Counsel either to give advice or appear at a hearing, but the contract

for their engagement is between the lawyer or law firm and counsel. Not the client, even

though the client may have put Funds into Trust to cover Counsel’s fees.

The following is a relevant case:

Gillespie-Jones v Legal Services Board [2011] VCC 223 (24 March 2011)

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Naturally, since you are sending out bills regularly all your accounts are in apple-pie order.

In other words, your income is entered and banked, your bills are up to date and your

creditors paid on the agreed trading terms. For those of you who don’t practice in Insolvency

let me remind you that the Courts consider poor bookkeeping and failure to have financial

statements up to date as one of the indicia of insolvency.

Lawyers are not known for being good with figures, this is usually the first thing Trainee

Lawyers tell me when I teach Trust and Office Accounts. However, you need to be able to

do the basics for your own financial health and that of your firm. Even if you don’t do much

commercial work you should be able to read a Profit and Loss Statement and a Balance

Sheet. Again, this information will help you when assessing your client’s financial position

and their ability to pay your bill.

If you can’t understand a Profit and Loss and Balance Sheet and you run a Law firm I

suggest you are walking on thin ice. I also rely on my accountant but mostly to keep me

honest and up to date with my tax requirements, not to tell me if my business is viable or not.

I don’t get him to do my books monthly or even quarterly. If I waited the 12 months till my

tax return to find out I was losing money it would be too late.

There are strict rules with regard to keeping your Trust Account and this talk is not focussed

on those specifics however I will remind you that the money is your client’s, held on Trust for

them and for the Matter in particular. You may be running a number of Matters for your

client, but just remember you cannot transfer Funds in Trust between client Matters without

your client’s written authority.

It goes without saying that you need to ensure that the money you receive is your client’s

money, hence the photo id we mentioned earlier, and banked as soon as possible. In a

number of instances clients transfer money directly into your Trust Account. Make sure you

issue receipts for these as well as for cheques received. You may or may not send them to

your client, they may just want an email confirmation of receipt of the monies, but your

Auditor will want to see them.

I usually take the opportunity of contacting the client to acknowledge receipt of monies.

Again it is another form of communication and reminding the client that they are special.

As we mentioned earlier you may have an arrangement with the client that they will pay by

credit card, with you retaining their credit card details. Make sure that those details are kept

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safe. Make sure you confirm to the client in an email that you have charged their credit card

and email them a copy of the receipt for the charge against their credit card so they don’t get

a fright.

BUDGETS

Business Plan – when you are starting a business this is a lot of guess work, but by the time

you have finished your first financial year, you will have a wealth of information. Presumably

your expenses will be high as there will be lots of set up costs which may not be recoverable

and may not repeat, or at least not annually.

Remember “Cash is King” having sufficient cash to pay your bills on time will enable you to

concentrate on doing your best work for your clients.

Budget for all of your expenses and your projected sales. You need to have something to

aim for. Of course setting an annual goal of $2M is going to be a bit daunting, but if you

break it down into quarterly, monthly or even weekly sums this will be easier. Given the

nature of the legal industry with its “shut downs” particularly over the Christmas New Year

period, you need to factor that in.

This will also help you to keep an eye on expenses. If you know what you paid for

something last year and your actual figure is way above your budgeted figure you can check

before it becomes a real problem.

COMPETITION

When you do your SWOT analysis you may put your competitors into your threats area. To

know how much of a threat they really are you need to get to know them and their business.

Lawyers Associations are ideal opportunities to do this in a non-threatening way. You can’t

ask all the questions you want answers to up front, but over time you will glean information

without people even realising they are telling you. If you listen. Take time to get to know

your competitors. You pay fees make sure you get value for your money. Often

Associations, apart from the Law Institute (LIV) put on CPD functions which enable you to

get your points cheaply while catching up with colleagues. Often they can be in your own

area. I have spoken to a number of Associations including in the country. For me it is an

opportunity to get to know lawyers who don’t currently brief me. There is generally time to

socialise and get to know what the law firms are doing so I can find out if my practice will suit

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their practice. Goes back to A-class clients again. After all without you lawyers we

barristers don’t have any work. We don’t accept direct briefs, except in a few very limited

circumstances, generally criminal Matters.

Again, looking at these events from your perspective, you also get an opportunity to meet a

barrister you may not have briefed and decide whether you can work with them or not.

Do your points early and keep a record. You can’t sign your application for renewal of your

Practising Certificate without it. When you are sent a program, if you don’t have time to

review it, diarise to review it and book yourself in for the ones that relate to your practice, or

where you would like your practice to be sooner rather than later. Conferences are a good

way to check out what is happening over a range of topics relating to an area of practice, as

well as an opportunity to catch up with colleagues, competition and get a feel for what is

happening out in the market place, as compared to your practice. Very often it will relate, or

at least make you think about how you do things.

COMPUTERS

Most of us rely heavily on our computers. Banks certainly do, remember the last time NAB

had to shut down its ATM’s? More and more we retain data on our computers, information

we may not need. With scanning becoming easier, more documents can be stored

electronically with very little effort (as compared with scanning for the old microfiches) and

retrieving documents is also easier.

If you are running a Trust Account you will know to keep back up copies of your Trust

accounts off site.

However, the other issue that is more sinister is the safety of your data. Very often we are

storing sensitive information relating to the client, not only their credit card details. How safe

is your data? Can your system be “hacked” into? Can your data be held to ransom? Are

you sufficiently insured for this risk?

I have attended a few Seminars on this issue and one which shocked me was photocopiers.

I have always been careful with my computer shutting down and not opening suspect emails.

My son works in the area of IT Security so I have been pummelled into good practices.

Earlier this year I attended a Seminar which raised this issue and taught me that modern

photocopiers have memories. A copy of each document which is photocopied or scanned is

retained on the memory of the photocopier. When you trade-up or trade in your old

photocopier you are releasing that data to the next person who purchases that photocopier.

Not everyone will be able to access the information but a lot of smart people can and

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apparently do. Make sure the photocopier’s memory is wiped clean before it leaves your

premises.

CONTINUING PROFESSIONAL DEVELOPMENT (CPD)

Do your CPD points early – each year work out what areas of your business you need to

focus on and work out what you need to brush up on or learn. Don’t just stick to your “main

game” branch out – often there are synergies. The following are a few causes why you

shouldn’t neglect or “fudge” CPD:

Legal Services Commissioner v McNamara (Legal Practice) [2011] VCAT 1228

(1 July 2011)

Lawyer gave advice to Executor and beneficiary widow suspected of suffering from

dementia. The lawyer had a conflict of interest as well as acting beyond his

expertise and knowledge

Legal Services Commissioner v Johnston (Legal Practice) [2011] VCAT 1366

(11 July 2011)

A lawyer was requested to provide funds to Executor of deceased estate to

complete a renovation. The lawyer loaned funds from a shelf company of his

without getting client to sign a Form 2 acknowledgment of the lawyer’s interest

in the company.

The lawyer pleaded guilty was reprimanded, fined and ordered to pay the LSC’s

costs.

CPD’s at the moment is a deductible expense, hopefully it will continue this way. Choose

carefully, and choose early in the year. I do a bit of training of CPD’s and I have made a

decision not to do any Seminars in mid March – it is very frustrating to give a Seminar to

people who have just realised they need their points and they are running out of time – so

they pick something, front up, even sit through the Seminar but either play games, read the

paper, or sleep, don’t interact with the person giving the lecture.

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There is a lot of work in preparing a paper, totally out of sync with the return on investment.

Remember, if you have been involved in a particular case, or are an “expert” in a particular

area, you may be able to get some mileage out of that knowledge by preparing your own

CPD paper.

Planning your CPD’s you can space them out over the year and if you book them in you

won’t miss out.

Make sure the course you have chosen fits your needs. If the advertising isn’t clear contact

the provider, I am sure they will be happy to discuss your needs and whether their course is

going to meet it. They also don’t want unhappy clients.

Use CPD as a way of trying out new things. If you have an interest in an area it is often

worth upgrading your skills to be able to move into a new area.

COSTING

Individual files need to be costed. Overall your firm may be doing very well and your cash

flow may be fine, but you need to know what areas of work are generating your profit. You

can have a “loss leader” like Wills but you still need to know how much you are making, or

losing. The overall margin for your sales must be sufficient for the firm to make a profit.

Again, this kind of work can be ego-deflating. You think you are doing well and the money is

coming in but if at the end of the day there is no profit you won’t last.

COST AGREEMENTS

If we don’t have a Procedures Manual for other things we definitely need procedures for how

Costs Agreements are produced and provided. Ensuring that all staff, and not just the

lawyers, should know and be are aware that this is a legislated requirement that will impact

both the Law Practice and the lawyers’ practising certificate if not provided to the client. We

need to ensure that the issue of being able to recover legal costs billed is addressed by

sending both a Retainer letter, including a Disclosure Statement and a Costs Agreement,

how you are going to bill the Client and for what.

For those of you who have forgotten I suggest you re-read the section in the LPA (Sections

3.4.25 -3.4.32) and ensure that whenever you, or your staff, take instructions from a client

that you advise them what it is going to cost them. You can tell them verbally, but this verbal

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advice must be followed up with a letter of retainer setting out the scope of the work you are

instructed to do and an estimate of what it is going to cost. This retainer letter should be

sent with a Disclosure setting out what recourse the client has if they don’t like what we are

charging them. Plus you need to send a Costs Agreement which sets out rates and how and

when we will bill the client.

Some practitioners have incorporated a clause to allow them to deduct their fees from a

credit card provided by the client, provided the time frame for bills is adhered to, ie 7 days

from date of receipt by the client (LPR 3.3.9). Naturally, the client can still complain or

request an itemised account of the work (LPA Section 3.4.18)

Legal Services Commissioner v Angelatos (Legal Practice) [2011] VCAT 1390

(17 September 2012)

Failing to progress clients’ matters, failing to provide invoices to clients before

taking trust monies, failing to communicate properly and effectively with client,

failing to pay Counsel’s fees from moneys received from clients on behalf of

Counsel. Professional misconduct six charges, unsatisfactory conduct (two

charges), guilty plea, the lawyer was declared bankrupt in 2008.

He was reprimanded and not entitled to apply for Practising Certificate before

17 September 2017 with a further requirement to obtain 10 CPD points above

the usual 10 required, in relation to Trust and Office accounts, before

applying.to manage a Trust Account as well as paying the LSC’s costs of

$30,000.

Legal Services Commissioner v Hession (Legal Practice) [2010] VCAT 1687 (5

October 2010)

The Practitioner gave undertaking to take courses in applying for Probate and

management of estates and not to act as Executor under a will. The

practitioner had transferred $109K in commission from an estate without

authority either for the commission or the transfer. He was fined $30,000 and

ordered to pay the LSC’s costs of $38,161.90.

I know some firms work a fee for service with the work quantified and the client advised

up front how much they are going to be charged. Again, this needs to be written down

and provided to the client.

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Once the client has received the Costs Agreement they need to sign it and return a

copy. In some Costs Agreements there is a clause providing for acceptance of the

Terms of the Costs Agreement by continuing to instruct the firm in the matter, course of

conduct etc.

So what is the downside if we don’t do it – Well for a start any Matters in excess of $750

require a Costs Agreement to be provided to the client (LPA Section 3.4.12).

So if we don’t provide a Costs Agreement the client can complain to the Legal Services

Board (LSB), then we have to do more work. As I said earlier, if the LSB writes to you about

a client’s complaint respond quickly and explain your position. You ignore the LSB at your

peril. It is their job to keep us all honest. Just remember, without a practising certificate you

can’t work as a lawyer.

You don’t want to waste time and money going to VCAT to defend yourself.

You don’t want to spend money on legal costs and fines

You don’t want the bad press of ending up on their bad list

(http://www.lsb.vic.gov.au/news/regulation-prosecutions-and-alerts-news/)

DEBT RECOVERY or CLIENTS WHO DON’T PAY

23% of Small business enterprises had a customer go bankrupt in the last 12 months

21% had customers increasing agreed terms of trade

Dun & Bradstreet have stated that some customers are waiting up to 8 weeks turnaround for

invoices

Sales are weak.

This is a problem none of us wants to have. You do a complex piece of work for a client, get

a good result and then they don’t pay your bill. There is no complaint with the work, it is just

not something they like to pay. They have no problems with Accountants’ bills and

Accountants are pretty ruthless in chasing recalcitrant debtors, clients or not!

If your firm has a procedure for dealing with clients part of that procedure will be coming to

an arrangement about how the work is to be paid for. Firstly you will advise the client orally,

and then confirm in writing as we said in Costs Agreements.

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Going back to communication, you need to take your first interview with your client to work

out how they are going to respond to your bill. An ideal way to do this is to ask for monies

up front, Funds in Trust. However, if you don’t run a Trust Account this is not an option for

you.

You will know from the description of the work approximately how much is involved. It is a

good idea to tell the client before you go much further than the initial interview approximately

what is involved cost-wise and how much you will require them to deposit into your firm’s

trust account.

You can explain that sitting in your Trust Account you don’t get the benefit of the interest, it

goes to the Fidelity Fund, and this is merely a safeguard to ensure the fees are paid. You

can also explain that the firm needs to send a bill to the client prior to taking the funds. In

most cases it will be the 7 days wait after sending the bill, to allow them to scream or request

an itemised account. Incidentally, you can’t charge for itemising an account so make sure

whatever system you are using to bill enables you to spit one out without having to do the

work again.

In some cases the client doesn’t have the funds but is happy for you to charge his or her

credit card. Make sure you get the details right, write down the credit card details yourself,

including the expiry date and the 3 digit number on the back. You will, of course, have to

ensure that this information is kept confidential.

Some firms even include the option in their Costs Agreement.

But the important thing is that your client knows that you are serious about getting paid.

Some lawyers don’t like to ask for money, however, if your staff don’t do their job and ensure

that the client knows what they are required to pay and when, you wont’ have a firm for very

long and neither will they have a job.

Going back to my barista – he wants his $4.00 as much as you want your $4,000. And

likewise if you expected to pay $4.00 and were suddenly handed a bill for $40.00 you would

want to know why. It’s a circular argument. You tell the client what the work will cost, you

write confirming what you have told them, also telling them when you will bill, and then you

bill and expect to get paid.

In some instances lawyers think they have the client by the short and curlies because of the

nature of the matter but the reality is if a client gets seriously cross with you not only can

they leave and take their business elsewhere, you will find it difficult to get the support of the

LSC if you haven’t complied with the legislation and regulations.

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So what do you do if things go wrong, the client doesn’t have funds in Trust, no credit card

details, refuses to pay?

Again, stick to your procedures, don’t just ring and harass the client on the phone or by

email:

1. Letter of Demand – make sure it meets the legal criteria so you can rely on it in

Court. Don’t threaten, charge legal costs or charge for anything not provided for

in the Costs Agreement.

2. Contact the client – don’t harass, don’t ring them after 9pm at night. If they don’t

respond move to litigation.

A non-paying client is bad, it takes time away from paying clients, causes stress

and anger.

3. Other options – a Payment Plan – the ATO does it rather than bankrupt people –

with a payment plan there is some money coming in. Sit down with the client and

work out one that will work. Don’t demand payments that the figures of your

client’s income, or their business income, will not sustain. You are just setting

yourself up for a fall and wasting your time. It is better to have the payments

coming in over a longer period than the start stop of unreasonable payments.

4. Issue proceedings – don’t be a doormat – recognise you will probably lose the

client but unless there is a good reason why they are not paying, their failure to

pay will impact your bottom line.

5. Remember that you may get your Order for the client to pay but that doesn’t

mean you can enforce that judgment. There is a whole other area of the Law that

some of you may already be all too familiar with.

DIARISE

Diaries can fit under a number of our headings, Communication, Clients, Billing, Procedures

in fact practically anything can and should be diarised. There are so many things happening

all the time, if you don’t have a simple diary system, preferably one with an electronic

reminder to beep at your when things come up, you run the risk of missing some deadline. It

may only be your spouse’s birthday but that could be fairly painful as well.

Everyone has their own way of keeping a diary, I use Outlook on Word, I use the colour

coding to define what the item in the diary is Personal, Business, Marketing, CPD events etc

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coming up. If I haven’t booked, I put in a reminder with sufficient time to book and make it.

Sometimes there is work that “goes away”, probably more so for barristers than lawyers, but

it could happen to lawyers too. Suddenly I have a spare day that hasn’t already been

allocated to other stuff, could be the day to get ahead on my CPD points and preferably on a

topic I am interested in rather than scraping in at the end of March.

EMPLOYEES

Employees are one of the most valuable and most vulnerable assets of a firm. Can your firm

stand an employee claim? Do you know the steps you need to take to ensure you don’t face

an Unfair Dismissal claim? Is there any bullying in your firm?

All the things we discussed in relation to communication apply not only to your clients but to

your staff also. Before you hire staff make sure they fit in not just that they can do the work.

You will be working closely together in stressful situations, you want to get on. There could

be cultural differences that both of you need to understand and allow for.

Of course if you are the bully you are bound to end up with problems which are going to

impact not only your clients but your bottom line as well.

Slavery may still be around in some parts of the world but it is very hard to justify to the Fair

Work Commission.

FACTORING

This is another way of resolving a negative cash flow. There will be times when money is

tight and you need to get it in. The principle behind factoring is essentially discounting your

bill to a factoring agency. You get 85% of the value of your bill/s and when the client pays

the bill, the other 15% less the agency’s factoring fee.

The advantages of factoring is that it doesn’t require you to use your personal property.

Your debtor finance grows with your business and there is no risk to your personal assets.

Also, it is self-liquidating, there is no repayment shown on your Balance Sheet. To be

worthwhile you need a turnover greater than $200,000 and good record keeping.

FILE NOTES

We mentioned File Notes earlier in Communication but I think they also need to be part of

your Procedures and you need to ensure that all lawyers in your law firm are doing them

according the procedure you have set down. Firstly because the Legislation requires us to

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keep them, not only will our client rely on them, but others will rely on them to be legible,

signed, dated and also the time. Even the time taken should be noted.

Why?

1. Litigation – file notes support your position – A File Note is like an undertaking

from a lawyer. When you are admitted as an “officer of the court” any notes you

make can be used in Court. You don’t want to be embarrassed by them – write

them as if someone was going to read them. Like the rest of your work – it

advertises your law practice.

2. Costs – if you have done everything to keep your client happy and they still

dispute the bill, or if you are engaged in litigation and get costs awarded to you or

your client, in the absence of the court fixing the costs, which is my preferred

option, you may need to agree with either your client or your opponent the

amount of the bill and your file notes will count towards your costs.

3. In the absence of agreement you could end up in the Costs Court before an

Associate Justice of the Supreme Court, regardless of whether your Matter is in

the Magistrates, County or Supreme Court. Then that file note which is itemised

on your Bill in Taxable Form will need to be substantiated by the actual thing

claimed for, your letters, emails, faxes, and file notes.

I have included the url for the information about the Costs Court on the Supreme

Court website

http://www.supremecourt.vic.gov.au/home/practice+and+procedure/prothonotary

_s+office/applications/

4. Trust Accounts – if your firm runs a Trust Account you may not be directly

involved. Someone else receives and banks the money, you just manage the

file. Each year the Trust Accounts are audited – remember even your files are

part of the Trust Accounts if there are funds in Trust. If your colleague hasn’t

kept the Trust Account records properly the Auditor may decide to look at the files

and the work being charged for. What state is the file in? What kind of

communication is the client receiving? How professional is the firm? The

following is an article about the importance of file notes.

http://michaelsmithnews.typepad.com/.a/6a0177444b0c2e970d017eeab61a8

7970d-pi

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REPRESENTATION – MISREPRESENTATION

You are probably all familiar with the fairly recent Australian Consumer Law which

incorporates a number of issues regarding representations made. It includes some of the

old Trade Practices Act and more besides.

The following is a case on point:

Noone v Mericka & Ors [2012] VSC 101 (27 March 2012) Sifris J

Action by Director of Consumer Affairs Victoria. Lawyer contravened Estate

Agents Act 1980 (Vic) and Fair Trading Act 1999 (Vic) by carrying on the

business of a real estate agent without the required license. Activities went

beyond the exemption in Section 5(2)(e) of the Estate Agents Act 1980 (Vic).

TAX

Make sure you keep your books of account up to date, do your BAS on time and your

Income Tax Returns and make sure you pay your tax, and your employees’ entitlements on

time. With the changes in the Taxation legislation there is no “Get out of jail free” card to

offenders.

If you don’t pay your tax on time the ATO will charge you interest. And if you fail to pay your

tax they will have no compunction in taking you to Court. They have their own Winding Up

and Bankruptcy Lists at the Federal Court.

Failure to Lodge Tax Returns and GST Returns

Legal Services Commissioner v Long (Legal Practice) [2011] VCAT 1164 (10

June, 2011)

Lawyer pleaded guilty to a charge of professional misconduct, he had failed to

file tax returns which were filed following action by the ATO. The lawyer’s

Practising Certificate was suspended for 4 months, he was fined and ordered to

pay the LSC’s costs of $12,000.

Legal Services Commissioner v Turner (Legal Practice) [2013] VCAT 390 (3

April 2013)

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Failure to lodge income tax returns and BAS returns, the lawyer was now

bankrupt and had committed professional misconduct.

The lawyer was found guilty and fined $5,000 and required to advise the LSB

within 7 days of his discharge from bankruptcy. He was allowed to retain his

Practising Certificate but required to advise the LSC of any failure to pay tax

and ordered to pay the LSC’s costs of $8,233.

To add insult to injury, if you argue poverty and they “remit” the interest charge,

ie the money charged at 20% or whatever, they will expect you to declare that

remission as “income” on next year’s tax return – because you no longer owe

it. How does that work? Because they are the ATO and the Legislation says

that is what is to happen. Remember the ATO have more powers than the

police.

CONCLUSION

Now perhaps I should have started with what our problems are. When I first started

researching this topic I came across this article written by an accountant but about law firms.

You may have read it: http://www.lawyersweekly.com.au/news/no-hope-for-mid-sized-firms

Given that most of you in this room are likely to fall into Mr Ritchie’s category of the “smaller,

hungrier and more nimble” firms, I thought it a positive note to end on.

Mr Ritchie echoed a lot of my thoughts and reasoning behind this talk, in particular that we

are not banks, clients shouldn’t expect us to fund them but unless we tell them we won’t

maintain our profitability and won’t be around the next time the client has a legal problem.

The best way we can service our clients’ needs and to maximise our profitability is to ensure

that not only do we provide the best legal advice and service we can, but we also run a trim

firm, organized and lean on unnecessary costs.

Lydia Kinda

November 20, 2013.