When might a Tripartite Deed come in handy

Conversely, solicitors who find themselves on the receiving end of an authority to transfer with outstanding legal costs in the matter are often troubled by the thought – when will I be paid? Practitioners are reminded that in these moments of deadlock, a Tripartite Deed may be the solution.

Solicitor obligations under the Australian Solicitors’ Conduct Rules

Rule 14.1 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (Conduct Rules) provides that upon the termination of a retainer, a solicitor with designated responsibility for a client’s matter must return any client documents to the client or former client, or any person authorised by the client or former client, as soon as reasonably possible unless there is an effective lien.  However, Rule 15 of the Conduct Rules provides that if the client’s documents are essential to his or her defence or prosecution of current proceedings, the previous solicitor must release the client’s file to the new solicitor if certain conditions are met, notwithstanding the claim of the lien.  One such condition is both solicitors entering into an agreement with the client to procure payment of the previous solicitor’s costs upon the completion of the proceedings or the previous solicitor receiving reasonable security for their unpaid costs.

Tripartite Deed

A Tripartite Deed is an enforceable agreement, predominately, between a former solicitor, a client and the new solicitor for any outstanding legal fees owed to the former solicitor.

The Law Society’s precedent Tripartite Deed is frequently used by practitioners to provide reasonable security for the former practitioner’s costs. Practitioners are reminded that the Deed is a starting point and should always be reviewed and adapted to suit their own purposes.

As to whether the Deed provides satisfactory security for the previous practitioner’s costs, one should consider Pembroke J’s judgment in Tyneside Property Management Pty Limited & Ors v Hammersmith Management Pty  Limited & Ors [2011] NSWSC 22:

“satisfactory security will mean something of monetary value which will ensure the satisfaction of the possessory lien: Bechara v Atie (supra) at [64].”

The latest version of the precedent Tripartite Deed provides for two options.

• Option 1 should be used when the client does not agree to pay the former practitioner’s legal costs and disbursements at the execution of the Deed.
• Option 2 should be used when the client agrees to pay only for the disbursements incurred by the previous solicitor at the execution of the Deed.

The Law Society’s precedent Tripartite Deeds can be accessed through the following link: Tripartite Deeds

Solicitors are encouraged to make good use of the Tripartite Deed precedent to resolve the problem of liens acting as a stumbling block to the transfer of client files.

Further guidance

Solicitors who would like further guidance on the conditions of legal practice in NSW are encouraged to contact the Professional Support Unit’s (PSU) regulatory compliance team for support.

PSU provides free and confidential guidance to solicitors in NSW who require assistance understanding their regulatory, ethical and professional obligations in legal practice.

Dora is a Professional Support Solicitor with the Law Society of NSW. Dora assists members of the legal profession in relation to practising certificate conditions, regulatory obligations in legal practice management and legal costs.