Court notes ‘excessive’ legal costs for uncomplicated matter – copies reasons to LSC

In Adamson v Enever [2021] QSC 221, the Supreme Court of Queensland considered its supervisory jurisdiction over legal practitioners who may be considered to charge excessive legal costs in personal injury matters.

Background

The plaintiff, Mrs Adamson, was injured in a motor vehicle accident when she was struck by a vehicle that failed to give way at a pedestrian crossing. She suffered many injuries, including a head injury. At mediation, the parties reached an agreement that the insurer would pay to the plaintiff a settlement sum of $350,000 plus standard costs and outlays.

Issues

The terms of the settlement required the plaintiff to apply to the Supreme Court for a determination about her legal and financial capacity relevant to receiving, investing and managing the settlement sum, and, if not, an order sanctioning the settlement.

Issues considered

Plaintiff’s capacity to manage and invest the settlement sum

The court concluded the plaintiff has capacity to manage and invest her settlement sum with appropriate support from others.1

The court noted that, although the plaintiff was possibly at an early stage of cognitive decline, and there were reasons to be concerned that her cognition and functioning would decline over time to the point of incapacity, “it is not a reason to make a finding of present incapacity out of a desire to protect her interests in the future”.2

The court observed it was “disappointing, to say the least… Mrs Adamson’s solicitors had not considered some obvious matters that were highly relevant to the issue of capacity”.3 These included making inquiries about “basic legal and financial advice” available to the plaintiff in order to support her decision-making about investment of the net settlement proceeds.4

Furthermore, the court expressed concern that her solicitors “had not advised her to make a will and had not advised her about an Enduring Power of Attorney, despite the evidence of an expected cognitive decline in the future”.5

Plaintiff’s legal costs

The court held that “an aspect of the plaintiff’s capacity in relation to her receipt of the settlement sum is her ability to maximise the net proceeds of the settlement available to her by minimising the differential between the standard costs recoverable from the insurer, and the costs she must pay her solicitors, Shine Lawyers”.6

The court noted there was a substantial difference between the estimated legal costs and the standard costs she was entitled to recover from the insurer. Any substantial costs differential would have the effect of eroding the settlement sum.

The court stated Mrs Adamson’s estimated legal costs seemed “extremely high, indeed excessive”,7 particularly in light of the uncomplicated circumstances of the quantum only claim. This was not a complex matter. There was never an issue of liability, nor a claim for past or future economic loss.

The court found that the unusually high amount suggested Mrs Adamson had been charged for time spent by non-legally qualified paralegals in performing secretarial or administrative tasks.8 The court observed that “if the matter had proceeded to a sanction hearing, the likely differential between the costs claimed by Shine Lawyers and the standard costs may have been so significant as to affect the reasonableness of the compromise”.9

The court noted it would be for the plaintiff to decide whether to challenge the anticipated claim for costs by Shine Lawyers, with the support of her family and any independent legal advice she chooses to obtain.

The court has an inherent supervisory jurisdiction to regulate the charges made for work done by legal practitioners and to prevent exorbitant demands.10 However, broader issues regarding the fairness and efficiency of accident compensation systems, including the legal costs which they generate, require substantial policy and economic analysis beyond the scope of the court’s jurisdiction. The “fairness of standard costs agreements executed by injured claimants is a matter for regulators and policy makers”.11

The court directed that a copy of its reasons be provided to the Legal Services Commissioner to “further support Mrs Adamson’s capacity to make decisions about what appears to be a substantial, indeed excessive, costs differential”.12

Meagan Liu is a Law Graduate in the QLS Ethics and Practice Centre. This article has been approved by Grace van Baarle, Solicitor and Manager, QLS Ethics and Practice Centre.

Footnotes
1 Adamson v Enever [2021] QSC 221, [30].
2 Ibid [70].
3 Ibid [71].
4 Ibid.
5 Ibid [72].
6 Ibid [136].
7 Ibid [105].
8 Ibid [107].
9 Ibid [111].
10 Ibid [115].
11 Ibid [117].
12 Ibid [141].

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