Unsatisfactory conduct: Client billed double the estimate

This is a summary of a decision by a Lawyers Standards Committee under the Lawyers and Conveyancers Act 2006. This summary was published in LawTalk 782, 7 October 2011.

After the cost of a High Court appeal turned out to be double the estimate given to the client, a Lawyers Standards Committee fined a lawyer $500 and reduced his fee.

The committee found the lawyer had breached Rule 9.4 of the Conduct and Client Care Rules, which says that lawyers must promptly inform their clients if an estimate of fees is likely to be exceeded. 

The client, a director of a construction company, was the sixth respondent in a leaky building case. All the other respondents settled the claim after mediation but the client was pursued to adjudication before the Weathertight Homes Tribunal. There the client was largely successful, but the Tribunal ordered him to pay $13,300, 5% of the cost of the mediation, on the basis that he was partially responsible for the building damage. 

In his complaint, the client said the lawyer had suggested he appeal the tribunal’s order to the High Court, telling him an appeal would cost around $6,000. The cost of the appeal had reached $12,840, however, with the case still yet to be heard. 

The client told the committee that the lawyer’s estimate had been a significant factor in his decision to appeal. The client said they had also agreed the lawyer would inform him if the cost went over the estimate, but the lawyer had not done this. The client also thought the amount billed for the tribunal proceedings, $31,127, was high.

A costs assessor appointed by the committee reported that the amount billed for the tribunal matter was reasonable, possibly even low. However, the assessor thought the amount billed for the appeal was high, given the low quantum, the lawyer’s $6,000 estimate, the fact the appeal had yet to be heard, and other factors listed in the Conduct and Client Care Rules (see Rule 9.1). The assessor suggested the lawyer reduce his fees by the likely cost of a High Court hearing ($1,012.50), whether or not the hearing went ahead. 

The committee agreed with the assessor’s proposal to reduce the fees, but was also concerned the lawyer had not told the client the estimate was likely to be exceeded. Aside from any agreement with the client on this, lawyers are required to notify the client promptly in such cases. The committee found the lawyer guilty of unsatisfactory conduct. As well as reducing his fees and fining him, the committee ordered him to pay $500 costs to the Law Society. 

The client had also complained that, while all the invoices indicated the lawyer had worked alone on the case, the client had in fact dealt with a senior solicitor from the firm for much of the time. The assessor and the committee explained to the client that it was not unusual for a supervising partner or responsible principal to put their own name on invoices, and this did not necessarily imply that no other lawyers had worked on the file.

© New Zealand Law Society 2008