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Case Study: What you can do if a client is refusing to pay costs

Updated: Apr 30

Rose Legal Costing were recently instructed on behalf of a law firm seeking to recover their costs from a client that had gone elsewhere and had refused to pay costs to the law firm. By the time of the assessment, the substantive case had reached a successful outcome.


One of the submissions put forward by Rose Legal Costing on behalf of the law firm was that the firm was entitled to a 'fruits of the action' lien, In short, if a law firm's work resulted in recovery of money, whether it be damages or party/party costs, the law firm has an equitable right to recover their costs from those gains.


The Assessor agreed, noting as follows:


"The Law Practice also contend for a “fruits of action” lien over the Settlement: Ex parte Patience: Mackinson v The Minister (1940) 40 SR 96 at 100; Firth v Centrelink & Anor (2002) 55 NSWLR 451. I agree. A solicitor’s lien is a species of the common-law possessory lien. Where [a] solicitor has possession of the thing (in rem), in some circumstances that possession may be maintained as a form of security for payment of work done in relation to those goods. Halsbury’s Laws of Australia ([295-4625]) expresses the nature of the solicitor’s security very pithily (citations omitted):


A solicitor has a general possessory lien to the extent of the client’s interest over all documents (other than a client’s will) and other property of the client received in the solicitor’s professional capacity and referable to the relationship of the solicitor and client and money held in a client’s account in respect of all taxable costs due to the solicitor in acting on the client’s instructions."


If you would like to know more about recovering your costs, give us a call today.


Note:


The informal nature of the costs assessment process in NSW brings many advantages including flexibility and avoiding rules of evidence that do not easily lend themselves to issues surrounding costs. One notable disadvantage is a lack of published assessments which would enable the profession to improve their understanding of legal costs. In order to provide insight into the costs assessment process, Rose Legal Costing will be providing useful insights into costs assessments in which they have been instructed.


Details of the Costs Assessor and party names are suppressed due to the fact that such decisions are not binding owing to the nature of NSW Costs Assessments. These insights will assist the profession but should not be used as clear precedents due to the discretion afforded to Costs Assessors.


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