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Interest rates changed by lawyers on unpaid legal bills

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The blessed mother of my child is being sued by her former family law solicitor for unpaid legal fees.

I'm trying to help her out of her predicament because a writ has been served so the sheriff can take her car. She didn't attend local court for the hearing. We now need to get a 'stay' of orders.

The mother owed her solicitor $20k. Debt owed since Feb 2010. He's whacked on $8k interest. Doesn't seem fair to me.

Does anyone know if there are limits on how much a lawyer can charge in interest on unpaid legal fees.

4mydaughter said
The mother owed her solicitor $20k. Debt owed since Feb 2010. He's whacked on $8k interest. Doesn't seem fair to me.

Does anyone know if there are limits on how much a lawyer can charge in interest on unpaid legal fees.
  There are limits imposed by the respective Law Societies, however she might have signed a separate costs and payment agreement which imposed various interest rates. You need to view the Costs agreement.

Payment disputes are of course why so many solicitors want the money 'up front' in a Trust Account before commencing or continuing legal support.

SRL-Resources. the Family Law People on this site (look for the Avatars)  Non gender Professional and peer support for SRLs. Closed site, no public forums, no search engines, no lurkers, guests or the other side and their Lawyer and Friends.
Best I can do is say what the deal is in WA so I will probably get flamed out of the forum after this but here goes:

The 'rules' re WHEN you can charge interest on unpaid fees is outlined at s.273 of the Legal Profession Act 2008:
273 .         Interest on unpaid legal costs

         (1)         A law practice may charge interest on unpaid legal costs if the costs are unpaid 30 days or more after the practice has given a bill for the costs in accordance with Division 7.

         (2)         A law practice may also charge interest on unpaid legal costs in accordance with a costs agreement.

         (3)         A law practice must not charge interest under subsection (1) or (2) on unpaid legal costs unless the bill for those costs contains a statement that interest is payable and of the rate of interest.

         (4)         A law practice may not charge interest under this section or under a costs agreement at a rate that exceeds the rate prescribed by the regulations.

You will note that s.273(4) refers us to the Legal Profession Regulations 2009 re the max amount of interest they can charge:


 79 .         Interest on unpaid legal costs: section 273(4)

         (1)         This regulation is made for the purposes of section 273(4) of the Act and prescribes the rate of interest in excess of which a law practice may not charge interest under section 273 of the Act or under a costs agreement.

         (2)         The rate is the rate that is equal to the Cash Rate Target as at the relevant date, increased by 2 percentage points.

         (3)         In subregulation (2) 

         Cash Rate Target means the percentage (or maximum percentage) specified by the Reserve Bank of Australia as the Cash Rate Target;

         relevant date means the date the bill was issued by the law practice concerned.

         (4)         This regulation does not apply to a period occurring before the commencement of this regulation.

So, given the current RBA Cash Rate of 4.75% (Reserve Bank of Australia - Home Page) + 2% (ref s.79(2) of Regs) = 6.75% is the current 'cap' on interest chargable on unpaid legal fees in WA.

Obviously, the Cash Rate changes from time to time and interest must be calculated for X period in accordance with the applicable Cash Rate at that time. I usually use an excel spreadsheet. Template on hand if you want it - I use mine to work out the total interest payable if a party neglects to make their lump sum payment at settlement.

Hope the above helps.

- Zer0ne -
4mydaughter said
The mother owed her solicitor $20k. Debt owed since Feb 2010. He's whacked on $8k interest.

Seems a bit rich. Might one assume his interest includes additional costs of prosecuting his own case for costs and enforcement of costs? The next step is that he commences bankruptcy proceedings against his erstwhile client, based upon the judgement debt.

This seems to be a bit of a solicitor scam for increased revenue using the Courts. Obtaining a Court Order for the debt causes that debt to increase and not to be dischargeable by bankruptcy. The debt remains active for 12 years compared to 7 years. Goodbye credit & home loan.
The big firms seem to have a preferred company for such litigation. Apparently, such deterrence is needed to their other clients not paying. In Melbourne it is White Clelland P/L. It might be beneficial to use the law institute referral for a free half hour to such a firm. Ask the specialists how others have defeated such costs.

I know that a fundamental precept of justice is that one cannot be deprived of property or liberty without an opportunity to be heard.  I am not a solicitor but one would expect, in the interests of justice, that an application to the same local Court for a re-hearing of the complaint should be allowed.

The case Halantas v Velos (Legal Practice) [2007] VCAT 602 might be relevant
Legal Practice Act 1996 s.103 ; application by client to cancel costs agreement; application brought in response to claim in Magistrates Court for payment of costs; existence of costs agreement denied by client in Magistrates Court;

Bariamis v Coadys (Legal Practice) [2007] VCAT 645 was successful - failure by legal practitioner to provide current cost estimates when agreement signed; applicant would not have signed agreement if provided with current cost estimates; misrepresentation by silence; costs agreement cancelled.

"In the matter of the Legal Practitioners Act 1970 and in the matter of an application by the Law Society of the ACT in relation to the conduct of Barry and Christopher Roche" [2002] ACTSC 104 might provide some useful catchwords - professional misconduct - grossly excessive and unreasonable charging - blanket application of $250.00 fee per hour to all staff, however unskilled - improperly procuring clients to enter costs agreements that purported to authorise grossly excessive and unreasonable charging - duty of solicitors to warn a client of unusually expensive charges - need for oral advice to determine fairness of agreement

And for a real di ck struck off see Clyne v NSW Bar Association [1960] HCA 40; (1960) 104 CLR 186  - orgy of litigation - deliberately protracting litigation to serve his own ends - Conduct of case for client without means - impropriety, fraud, crookery,
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