Overcharging clients is a topic that has been repeatedly scrutinised in the legal profession.
It not only damages the reputation of individual practitioners but also erodes public trust in the profession as a whole.
This blog post provides a general understanding of the issue of overcharging, drawing on extracts from 3 Western Australian State Administrative Tribunal decisions: Legal Profession Complaints Committee and O'Halloran [2013] WASAT 105, Legal Profession Complaints Committee and Park [2017] WASAT 89, and Legal Profession Complaints Commitee and Penn [2015] WASAT 145.
The Vulnerability of Clients
One of the main reasons courts and disciplinary tribunals take a serious view on overcharging is the inherent power imbalance between lawyers and their clients (Veghelyi v The Law Society of New South Wales).
Clients are often in a vulnerable position when making decisions, as they may not know what work needs to be done or what charges are fair and reasonable.
Lawyers, on the other hand, are in a position of advantage, as they can inform themselves of the necessary work and appropriate charges.
This power imbalance and the trust clients place in their solicitors can lead to the misuse of such advantage and potentially result in adverse findings against lawyers by regulatory bodies and tribunals.
The Consequences of Overcharging
Overcharging can lead to significant consequences for legal practitioners, including suspension or striking off from the profession. In the O'Halloran case, the Tribunal found that the practitioner engaged in a course of conduct of grossly overcharging clients over a period of approximately six years. This conduct was considered to demonstrate that the practitioner was not a fit and proper person to remain a member of the profession.
In the Park case, the Tribunal considered overcharging by 15% to 20% of the proper costs of the criminal proceedings to be very serious.
In the Penn case, the Tribunal examined a situation where the practitioner was alleged to have overcharged their client by a significant margin. The initial amount charged to the client for obtaining a grant of probate, administration of the estate, and representation in various proceedings was $69,028.89. However, after an assessment of the work done, it was determined that a reasonable sum of costs for a competent and diligent practitioner should have been $28,959.80.
Although the practitioner argued that the assessment conducted by the Costs Consultant called by the Legal Profession Complaints Committee as an expert witness (Mr. Forbes) was incomplete, and failed to take into account the entire scope of work performed, the Tribunal ultimately accepted Mr. Forbes' evidence as to the appropriate charge.
The practitioner eventually conceded to a revised figure of $51,363.28, which still represented a significant overcharging of $17,665.61 or 25.6%.
The Tribunal found this level of overcharging to be excessive and agreed with the Committee's submission that such misconduct warranted disciplinary action.
The Penn case highlights the importance of transparency and fairness in legal billing, as well as the consequences practitioners may face for overcharging their clients, even when the practitioner disputes the extent of the overcharging.
Key Take-Aways
The issue of overcharging in the legal profession is a serious matter that not only affects the reputation of individual practitioners but also the profession as a whole.
Clients are often in a vulnerable position, and the trust they place in their lawyers should not be abused.
Legal practitioners have a responsibility to ensure they charge their clients fairly and reasonably, and those who fail to do so may face severe consequences, including disciplinary action and damage to their professional reputation.