It may come as a shock to some foreign lawyers (particularly to US attorneys) to learn that it is illegal for Australian lawyers to charge their fees on the basis of a % of the verdict obtained for the client. This has always been the case, but when maintenance and champerty were abolished by the Abolition of Champerty, Maintenance and Barratry Abolition Act 1993 (NSW), the Legal Profession Act (NSW) was amended (also in 1993) to make the position clear. One would have thought that most lawyers would be keen to keep abreast of the rules which regulate their professional practice. Apparently, despite having to fulfill a mandatory annual continuing legal education requirement to maintain his practising certifcate this was not the case for Mr Leslie (who, prior to returning to private practice had been the Registrar in Equity in the NSW Supreme Court).
The following transcript is from the first instance trial (this case ultimately wound its way to the High Court) Smits & Ors v Roach & Ors [2002] NSWSC 241 – some 9 years after the amendments….
Conclusions in relation to the retainer agreements.
262 The initial agreement between Leslie and Roach was clearly champertous but now provides only background to the present dispute. I doubt whether Leslie appreciated it to be champertous and it is likely he entered into it without knowledge of the 1993 amendments to the Legal Profession Act. He explained his ignorance of these matters when asked whether he knew of the 1993 amendments:
“Q. You knew there was a substantial raft of amendments to the Legal Profession Act in 1993, didn’t you?
A. No, I didn’t, actually. You seem to think every solicitor in this State knows every amendment that goes through. If you are a busy solicitor in this State you go on with doing your work. If you read the law journals you may pick up what the amendments are. You might be surprised that almost everybody who practices in this State don’t have time to do it. They have to get on with their lives and the work they have got. I don’t know if there were substantial amendments in ’83. I can’t recall that at all, actually.
Q. ’93, sorry.
A. I didn’t have time to read journals. We got on with life, got on with business.
Q. You didn’t have time to acquaint yourself with your professional obligations?
A. You are putting words in my mouth.
Q. You know that your professional obligations are in part contained in the statute law of this State?
A. They probably are.
Q. In particular in the Legal Profession Act?
A. The governing rights of solicitors are, yes.
Q. And if you do not keep up with amendment to the Legal Profession Act, are you not ignoring your professional obligations as they are from time to time?
A. Well, that’s a view that the Law Society might take. You are entitled to take whatever view you take about it.
Q. I am interested in your view, Mr Leslie?
A. I don’t have a view on it.
Q. Did you not know by June of 1998 that section 188 of the Legal Profession Act said, ‘A costs agreement may not provide that costs are to be determined as a proportion of or are to vary according to the amount recovered in any proceedings to which the agreement relates’?
A. No, I did not.
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