- Each year a number of costs orders are sought against legal practitioners personally.
- The Court’s jurisdiction to make such a costs order arises where costs have been incurred by serious neglect, incompetence or misconduct.
- Lawyers can be ordered to indemnify the client or pay the opposing party.
- Lawyers’ duty of confidentiality to the client needs to be taken into account.
Each year, a number of costs orders are sought against legal practitioners personally. This article examines the court’s jurisdiction to make such orders, outlines what the authorities suggest the court ought take into account, and looks at some Lawcover claim examples.
Practitioners should note that claims made against them by opponents to litigation (or, in rare cases, third parties) may be covered under their Lawcover policy.
The court’s jurisdiction can arise in different ways. For example, section 99 of the Civil Procedure Act 2005 (NSW), provides:
‘(1) … if it appears to the court that costs have been incurred:
(a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or
(b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.
(2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:
(b) … direct a legal practitioner:
(ii) … to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person …
(c) … direct a legal practitioner to indemnify any party … against costs payable by that party.’
Matters the court will take into account
- The jurisdiction to order a legal practitioner to pay costs personally must be exercised with care and discretion and only in clear cases (Ridehalgh v Horsefield Ch 205, at ).
- A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail (Ridehalgh at ; Medcalf v Mardell  UKHL 27; White Industries (Queensland) Pty Limited v Flower & Hart  FCA 806).
- The legal practitioner is not the judge of the credibility of the witnesses or the validity of the argument (Tombling v Universal Bulb Company  2 TLR 289). If the solicitor reasonably decides to believe their client, criticism cannot be made (Myers v Elman  AC 282;  4 All ER 484).
- A judge considering making a personal costs order arising out of a solicitor’s conduct of court proceedings must take full allowance for the exigencies of acting in that environment (Ridehalgh at ). The solicitor must be given full and sufficient notice of the complaint and full and sufficient opportunity of answering it (Myers v Elman).
- Where a solicitor’s ability to rebut a personal costs application is hampered by the duty of confidentiality to the client, he or she should be given the benefit of the doubt (Orchard v South Eastern Electricity Board  QB 565,  1 All ER 95). In such circumstances, the court should not make an order against a solicitor who is precluded by legal professional privilege from advancing his/her full answer to the complaint against him/her without satisfying itself that it is in all the circumstances fair to do so (Medcalf at ).