The role of cost budgeting in modern litigation has gained significant attention in recent years, in light of the Lord Jackson Report and the subsequent reforms in the UK.
The report, which was published in 2010, emphasized the need for greater transparency and predictability in legal costs.
As a result of the report, the UK introduced a number of measures to promote cost budgeting, including:
1️⃣ mandatory cost budgeting in more complex legal matters, and
2️⃣ the requirement for parties to file cost budgets at various stages of the litigation process.
Once the cost budget is approved by the judge, it serves as a guideline and a benchmark for the parties to follow throughout the litigation process.
The judge will review and approve the budgets at various stages of the litigation.
Deviations from the approved budget may be subject to scrutiny.
If a party exceeds their approved budget without good cause, they may have their costs limited to the budgeted amount in the event that they succeed at trial and costs are awarded to them.
For example, imagine a case where a plaintiff is suing for breach of contract.
The plaintiff's legal team prepared a detailed cost budget, outlining all of the expenses they anticipate incurring over the course of the litigation. After reviewing the budget, the judge approves it as reasonable and proportionate.
Throughout the litigation, the company's lawyers are not diligent in keeping their expenses within the approved budget.
After the trial, the judge awards costs to the plaintiff, but limits the sum to the amount budgeted, rather than the actual expenses incurred.
As a result, the out-of-pocket legal costs exceed the damages awarded for breach of contract, and it was a pointless exercise to have commenced the litigation. ▶ It cost more than was gained.
The process of costs budgeting serves as a powerful incentive for both parties to stay within their budget and to be mindful of the costs of their actions. Any deviation from the approved budget could result in significant financial consequences. Not to mention embarrassment for the lawyers involved.
This serves as a powerful incentive for parties to stay within their budget and to be mindful of the costs of their actions.
Additionally, it also helps to ensure that the litigation remains fair and proportionate, with the costs of the proceedings being proportionate to the amount in dispute.
While these reforms have not yet been implemented in Australia, it seems inevitable cost budgeting will be introduced to our legal system at some stage.
Revolutionizing Legal Costs: The Impact of AI in 2023
In my legal costs work, I see big changes coming with AI during 2023.
Doing this work, I am closely involved in drafting bills of costs and negotiating party-party costs for clients. This includes where I am retained by other lawyers to deal with the costs side of things after a hearing or trial.
With the advent of AI, many of the tasks associated with this work are becoming more efficient and automated, with the use of AI-powered e-billing software.
AI-powered e-billing software can automatically review and analyze legal bills, highlighting any potential overcharges or discrepancies.
This can significantly improve the accuracy and speed of cost assessments, making the process more efficient for both the lawyer and the client.
It can also assist in identifying patterns, trends, and outliers in billing data which can help negotiate costs.
One real-world example of this is the use of AI-powered e-billing software in identifying and flagging overcharges.
AI presents a big opportunity for costs lawyers to adapt and evolve our skills to stay ahead of the curve. Costs disputes have traditionally been maddeningly costly (pardon the pun), driving the ultimate client to despair after having already spent so much on the actual case. This is about to change big-time.
AI-powered e-billing software is the biggest advance in costs for decades and we have only scratched the surface.
Why Clients Should Ask About a Lawyer's Experience Before Hiring
Why Clients Don't Ask Lawyers About Their Experience Before Hiring Them:
When it comes to hiring a lawyer, many clients assume that all lawyers are created equal. They trust in the reputation of the law firm and assume that any lawyer from the firm will be competent.
However, this is not always the case, and clients can be taken by surprise when a relatively junior lawyer, with little experience in the subject matter, is handling their case.
Here are some reasons why this happens to clients:
1. Lack of knowledge or understanding about the legal process: Many clients may not fully understand how the legal process works and may not know what questions to ask.
2. Trust in the law firm's reputation: Clients may trust in the reputation of the law firm and assume that any lawyer from the firm will be competent.
3. A belief that more experienced lawyers will oversee and guide the junior lawyers: Clients may assume that more experienced lawyers will oversee and guide the work of the junior lawyers, so they don't ask about the experience of the specific lawyer handling their case.
4. Lack of time or resources to research and compare different lawyers: Clients may not have the time or resources to research and compare different lawyers or law firms.
5. A belief that all lawyers have the same level of expertise and experience: Clients may assume that all lawyers have the same level of expertise and experience, so they don't ask about the experience of the specific lawyer handling their case.
6. Being referred by someone they trust: Clients may be referred to a law firm by someone they trust, and may not feel the need to ask further questions.
7. Being in a difficult or emotional state: Clients may be in a difficult or emotional state and may not think clearly about the hiring process.
8. Not wanting to appear rude or difficult: Clients may not want to appear rude or difficult by asking too many questions.
9. Cost of hiring a lawyer: Clients may assume that the cheapest option is the best option, and may not ask about the experience of the specific lawyer handling their case.
10. Not wanting to take the time to interview multiple lawyers: Clients may not want to take the time to interview multiple lawyers and compare them.
It's important for clients to understand that not all lawyers have the same level of expertise and experience. Before hiring a lawyer, it's essential to ask about their experience and qualifications and research different options.
Even just to ask their first-point-of-contact at the firm (who is often just a 'white label'), "Who will be my actual lawyer? Will you just be supervising that person? How many of this type of case has that lawyer handled during the last 5 years? Can you send me any published cases in which they acted?"
These are essential questions in an era of high settlement. These days even many independent barristers have never done a trial as lead counsel. Without doing due diligence, clients can be surprised the actual lawyer handling their case might be an "L Plater" in the particular area of the law.
Remember the adage, "... the more you know".
Lawyers of the Future: How AI and AVR are Transforming the Junior Lawyers' Tasks and Costs
As technology continues to advance, the legal industry is also evolving. Artificial Intelligence (AI) and Automatic Voice Recognition (AVR) are becoming increasingly prevalent in the field and are changing the way junior lawyers work.
In this blog post, I take a closer look at how AI and AVR can assist junior lawyers in their daily tasks and how they can free up time for more important and value-adding tasks. Moreover, I will examine how these technology can help to reduce costs and increase access to justice.
To begin, let's take a look at a breakdown of tasks that a typical 40 hour workweek for a junior lawyer doing litigation might look like, with an estimate of how many of those hours could potentially be done by AI, specifically natural language processing models, with the assistance of an operator and how many hours could be done by Automatic Voice Recognition (AVR):
It's important to note that this is just an estimate based on my analysis and not a scientific study.
This analysis is drawn from my common sense analysis and my tech knowledge and insights over the last few months and my many years of being, working with, supervising and employing junior lawyers.
As we can see from this table, AI can assist junior lawyers in tasks such as legal research, document review, and contract drafting.
These tasks are typically time-consuming for junior lawyers, but with the help of AI, they can be done more efficiently and accurately.
This can free up 22 hours a week for more important and value-adding tasks.
AVR can also play a major role in the legal field, by transcribing audio recordings of meetings and hearings, which can be a time-consuming task for junior lawyers, to sit in meetings making notes.
This could save an additional 2 hours a week, allowing junior lawyers to focus on more important and value-adding tasks such as analysis and decision making.
The benefits of AI and AVR go beyond just saving time, they also have the potential to reduce costs and increase access to justice for clients in dramatic ways.
High legal costs can be a barrier to justice for many individuals and businesses.
By using AI to efficiently complete tasks such as legal research, document review, and contract drafting, and AVR for transcribing audio recordings, legal professionals can help to make the legal process more efficient and affordable, which can increase access to justice for many people.
While these technologies are not meant to replace human judgement, they are designed to assist and make the legal process more efficient. This means that junior lawyers will have more time to focus on higher-level tasks and provide better service to clients.
As the legal industry continues to evolve, it's important for junior lawyers to be aware of the advancements in technology and to embrace the opportunities they provide.
With AI and AVR, we can work smarter, not harder, and provide even better service to our clients while also helping to reduce costs and increase access to justice.
It's an exciting time for the legal industry and I can't wait to see how these technologies will continue to shape and improve the way we work.
Advantages of Hiring a Specialist Lawyer
As my career progressed, I became a specialist in 3 fields:
1. defamation
2. guardianship in SAT, and
3. costs.
It was like gravity pulled me towards these 3 over 19 years as a lawyer, after also trying other things.
Hiring a specialist lawyer brings numerous benefits.
Here are a few:
Expertise: A specialist lawyer has in-depth knowledge and experience in a specific area of law. This means that they are better equipped to handle complex legal issues and provide accurate advice.
Efficiency: Because a specialist lawyer focuses on a specific area of law, they are likely to have a better understanding of the relevant laws and regulations, as well as the specific processes and procedures involved. This can lead to a more efficient resolution of your legal matter.
Cost-effectiveness: While it may seem counterintuitive, hiring a specialist lawyer can often be more cost-effective in the long run. Because they have a deeper understanding of the relevant laws and processes, they may be able to resolve your legal matter more quickly and efficiently, saving you time and money.
Personalized service: A specialist lawyer is likely to have a better understanding of your unique needs and concerns, and will be able to provide more tailored and personalized legal representation.
Overall, hiring a specialist lawyer can bring a level of expertise and efficiency to your legal matters that a generalist lawyer may not be able to provide. While it may cost more upfront to hire a specialist, the benefits can far outweigh the costs in the long run.
An Australian first costs decision: Security for costs knocked back in setting-aside application
I acted for the Plaintiff in Steven Pugh Investments Pty Ltd v Mossensons Pty Ltd [2020] WASC 225. The decision is here.
The overall case involved my client seeking to set aside a costs agreement he signed with a previous Law Practice.
This particular decision was about the Defendant Law Practice’s application for security for costs.
This was a novel application in Australian legal history.
There were no previous published decisions where a Law Practice opposing a setting-aside application had applied for security for costs.
What is a Security for Costs application?
In litigation, the purpose of an order for security for costs is to protect a defendant or respondent in whose favour the court has made an order for costs from having that order wholly frustrated by the inability of the plaintiff or appellant to satisfy it. [1]
In the context of a setting-aside of costs agreement application, the Law Practice submitted that the Court should order its former client (the Plaintiff) to provide security in the form of a payment of money into Court as a pre-condition for the application being progressed to a final hearing.
Public Interest
Master Sanderson, relied on the case of Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57, in which Edelman J pointed to ‘public interest’ as a factor in deciding whether to exercise the court’s discretion in cases such as these.
Master Sanderson ruled that there could be no doubt that when a party seeks to set aside a costs agreement with a solicitor, it is in the public interest that the application ought to be heard.
Application of the Legal Profession Act
I relied on the Legal Profession Act 2008 (WA) in order to bring the setting aside application.
Section 260 of the Act details what disclosures of costs must be made to clients, and section 262 dictates how and when disclosure must be made.
If these sections are not complied with, then a client may apply under section 288 for the costs agreement to be set aside.
Decision
The Supreme Court dismissed the application for security of costs.
Master Sanderson stated that an order shutting out a client from attempting to establish a failure of statutory/legal obligations in a client/solicitor relationship ran contrary to the public interest and as such should not be allowed.
[1] Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248 at 255 per Hill J, Fed C of A; Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 ; BC200105623 at [52] per Einstein J; Talwar v Sharma [2018] FCCA 483 ; BC201802738 at [6] per Judge Obradovic.
Costs awarded in SAT guardianship application in favour of my clients
My clients were awarded costs in a guardianship application. The costs were payable to them by the Applicant (who was a family member they were opposed to in the application).
This was rare.
Costs are rarely awarded in guardianship anyway. When they are awarded, it is more common for costs to come from the estate of the Represented Person, rather than from a family member who you are opposed to in the application.
The decision is here.
The main proceedings
The substantive application was for a review of a guardianship order previously made by the SAT, as well as an application for the appointment of an Administrator of the Represented Person’s estate.
The Tribunal refused to grant the applications.
My clients made an application for their costs incurred in responding to the proceedings.
Application for an extension of time
The Applicant objected to my client’s application at first instance as it was made more than 21 days (24 days) after the orders to which the application related.
Rule 42A of the SAT Rules prescribes the 21-day requirement.
In my submissions, however, I drew the Member’s attention to the operation of rule 46 of the SAT Rules.
Rule 46 relevantly provides that the SAT retains a discretion to waive non-compliance with requirements arising under the rules.
This, read in tandem with the objectives set out under s 9 of the SAT Act, as well as the relatively minor delay and the existence of extenuating circumstances, meant the Tribunal granted an extension of time. Only a few days extension was required.
Costs applications generally in SAT
Section 87 (1) of the SAT Act provides that parties ordinarily bear their own costs, subject to an order of the Tribunal to the contrary.
Section 16 of the Guardianship and Administration Act (GA Act) deals with costs in relation to proceedings commenced under the GA Act. Section 16 (5) of the GA Act provides that nothing in the GA Act limits any power exercisable by the SAT under the SAT Act.
Consequently, the SAT retains considerable discretion in the determination of whether costs ought to be paid, conferred by s 87 (2) of the SAT Act.
The key issue in the application was whether the proceedings were commenced or continued unreasonably.
In the Tribunal’s reasons it was noted that there were plain deficiencies in the Applicant’s case.
The Tribunal at [54] affirmed the position that a weak case alone is not sufficient to warrant an adverse costs order.
However, the Member pointed out a variety of circumstances, raised in my client’s submissions, that enlivened the Tribunal’s discretion to award costs pursuant to s 87 (2) of the SAT Act.
Delay, Irrelevance and Improper Purpose
Prior to the substantive review hearing, the Applicant was late in providing its material to the Tribunal.
At the hearing it was clear to the Member that the Applicant had potentially misconceived the nature and purpose of the proceedings.
The Applicant focused heavily on scrutinising a report of a delegate of the Public Advocate and cross-examining my client on issues irrelevant to the dispute.
The delay ultimately led to a prolongment of the matter as the Tribunal did not have time to hear from the other parties and required written submissions to be filed as a result of running out of time.
At [50] – [51] the Tribunal referred to the potential that the review application was brought for an improper purpose to influence the discretion of the Public Advocate. Additionally, the Tribunal in its reasons pointed out that the Applicant and its Counsel were advised at the original directions hearing as to the role SAT plays in relation to the dispute before it.
Therefore, the delay and conduct of the Applicant following such directions from the Tribunal (in pressing ahead with its scrutiny of the Public Advocate’s report and its cross-examination of my client), was considered to be unreasonable conduct.
For the above reasons, the Tribunal awarded costs to my clients in the sum of $7,000.
Appeal from the Magistrates Court of WA
I appeared for the Appellant in Chapple v Dulux Group (Australia) Pty Ltd [2022] WADC 73. The decision is here.
The case involved an Appeal from a Minor Case in the Magistrates Court of Western Australia.
The case related (amongst other things) to the Appellant’s allegation that the Respondent failed to provide goods (paint coating and render) in accordance with the description offered by the Respondent.
Magistrates Court Proceedings
At trial, both the Appellant and Respondent adduced expert evidence and tendered expert reports in support of their respective cases. The Magistrate made a finding that the expert witness called by the Appellant did not possess the relevant expertise to give opinion evidence at trial.
The Magistrate dismissed the Appellant’s claim, brought under the Australian Consumer Law, and awarded costs in favour of the Respondent.
Appeal
The Notice of Appeal alleged on three separate grounds that the Magistrate had denied him natural justice.
The decision of Commissioner Collins of the District Court of Western Australia highlights several crucial features of the Magistrates Court as compared to other jurisdictions.
Minor Cases
Part 4 of the Magistrates Court (Civil Proceedings) Act 2004 (MCCP Act) relates to Minor Cases, defined under s 26 of the MCCP Act.
There are limited grounds upon which an appeal can be brought in relation to the decision of a Magistrate in a Minor Case. Relevantly here, s 32 (3) (b) permits an appeal on the ground of a denial of natural justice.
Each ground of appeal relied upon in the Appellant’s case asserted a denial of natural justice.
Costs in the Magistrates Court
The Magistrates Court is typically a “no costs jurisdiction”.
However, s 31 (3) of the MCCP Act allows a successful party to claim costs other than “allowable costs” if the Court is satisfied that there are “exceptional circumstances” that would create an injustice if costs were not awarded to the successful party.
The Magistrate delivered brief reasons for the award of costs (see at pages 44 and 45 of the decision).
Decision
The District Court allowed the Appeal (in part) and set aside the costs order made by the Magistrate in favour of the Respondent.
The Court, after considering thoroughly the law on natural justice, ultimately agreed with my submission that the learned Magistrate, in awarding costs, failed to disclose adequate reasons in relation to the existence of “exceptional circumstances” as required by s 31 (3) of the MCCP Act.
The case highlights the importance of decision makers providing adequate reasons for their decisions.
Additionally, the Court highlighted the necessity of a thorough consideration of the legislative context of a decision and the relevant jurisdiction, when determining the content of the duty of natural justice that applies in any given case.
Crucial here, was the overriding objects of the Magistrates Court as a court of summary jurisdiction and the explicit requirements for “exceptional circumstances” in the legislation before an adverse costs order can be made.
For these reasons, the Court held that the Magistrate was required to identify the relevant facts upon which the decision was based and allowed the Appeal on this point.
Statistics on the small number of cases that go to trial in WA
It is very interesting to get statistics about how only a small number of cases actually go to trial.
In the Department of Justice's Annual Report 2015/2016 the raw numbers are published for the Supreme Court of Western Australia and the District Court of Western Australia.
Only 51 civil cases went to trial in the Supreme Court, out of 2,964 cases that were finalised.
This means 98.25 % of cases were settled / discontinued etc and only 1.75 % went to trial.
Only 50 civil cases went to trial in the District Court, out of 4,948 cases that were finalised.
This means 98.99 % of cases were settled / discontinued etc and only 1.01 % went to trial.
Similar statistics are not available online for the Magistrates Court of WA.
I have put together this spreadsheet, showing more detail.
Questions to ask before hiring a lawyer
You should ask these questions before hiring a lawyer.
Duplication of work
To avoid duplication of legal costs it is important to find out who will actually be doing the work.
Will the Partner, or person you speak to on the first occasion, be getting a junior lawyer to do the work?
Does this include Court appearances and mediations?
How is the potential for duplication of legal costs, as a result, avoided?
If the case goes to trial, or there are any contested hearings in the lead up to trial, will a barrister be hired too?
How will any duplication of legal costs be avoided as a result of hiring a barrister?
Experience
It is important to know what legal experience the lawyer or lawyers doing the work have.
How long have you been admitted as a lawyer? Have you done this type of work, before, and how frequently?
How often do you appear in Court?
If the matter is likely to be heard in the Magistrates Court of Western Australia, do you have experience in the Magistrates Court and in Magistrates Court procedure?
If the matter is likely to be heard in the District Court or Supreme Court of Western Australia, do you have experience in those Courts?
What extra training have you done and do on an ongoing basis, relevant to the work I am engaging you to do?
Costs & advice
The most frustrating part of hiring a lawyer is the limited information available your future legal costs.
On what basis are the costs estimates provided? Has a spreadsheet been used to do the estimates? Can the spreadsheet be made available?
What is the method for providing advice? Is this provided in writing or orally or both? If both, what factor determines whether the advice is provided in writing vs orally?
If we need to get in touch, can we send each other text messages to avoid wasted time leaving messages for each other, by telephone? Do you use Skype?
Based on your experience, what % of costs in a case like this are recovered if we win? What am I getting from you for the "gap"?
Do you charge anything extra for work done by secretaries and non-legal staff?
Will you provide me options for work to be contracted out, including offshore? (This is such as in relation to preparation of list of documents for discovery)?
If there is any need for a taxation of costs in relation to costs awarded during the course of the case, do you personally do the bill of costs and attend any hearing, or do you hire an external costs consultant?
If I have questions about my bill, how do you make it easy for me to ask questions?
Do you provide audio recordings of our meetings, at request? What about telephone conversations, as well?