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Division 9 (personal injury) cases





Part 3.2, Division 9, limits legal costs in ‘personal injury damages’ cases.  Section 338 provides that ‘if the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed’ by the imposition of statutory maximum amounts.  It also says that ‘a law practice is not entitled to be paid or recover for those legal services an amount that exceeds those maximum costs’, subject to ss339 to 341.  Section 339 provides that Division 9 ‘does not apply to the recovery of costs payable as between a law practice and the practice’s client to the extent that recovery of those costs is provided for by a costs agreement that complies with Division 5 (Costs agreements).’  Clause 116 of the Legal Profession Regulation 2005 imposes additional requirements for ‘the law practice’ to make disclosure to ‘the client’ as a condition for engaging the protection of s339.  How this applies to the normal case where the client retains and enters into a costs agreement with solicitors and the solicitors retain and enter into a costs agreement with a barrister is unclear and has not been authoritatively determined. 

The first question is whether s338 affects the barrister’s right to recover his or her fees from the solicitor (assuming in the case of a conditional costs agreement that any applicable condition has been satisfied).  If so, there is a further question: are the barrister’s fees capable of attracting exemption under s339, and by what criteria?  One possibility is that costs payable by a solicitor to a barrister under a costs agreement between them can attract s339 if they are also payable by the client to the solicitor under a complying costs agreement between the client and the solicitor in the character of disbursements, that being within the statutory definition of costs, and that the disclosure requirements of reg 116 correspondingly address themselves to the relationship between solicitor and client.  If this is so, the barrister needs to ensure that the client has received requisite disclosure from the solicitor.

Where the barrister enters into a costs agreement under LPA s322(1)(c) with instructing solicitors and wishes to take advantage of exemption under section 339 from the limits otherwise imposed under Part 3.2, Division 9, in a personal injury case, assuming that this is legally possible where the costs agreement is between barrister and solicitor (barristers should consider this question and the legal effect of the precedent for themselves), the costs agreement may include a warranty from the solicitors that they have entered into a complying costs agreement with the client and made the necessary disclosure. The solicitor’s warranty may be coupled with additional clauses added at the end of the barrister/solicitor costs agreement providing certification by the client and a collateral costs agreement between client and solicitor covering the barrister’s fees. 

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These may be coupled with extra certification clauses in the agreement, such as the following:

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