The Victorian and Civil Administrative Tribunal (VCAT) found a costs agreement between a client and Melbourne-based firm Manby & Scott, Child Support Lawyers and sole practitioner Simon Bacon was void because of a failure to comply with costs disclosure obligations.

Member Neill Campbell said this stemmed from the “unusual” way Bacon sent the client a costs agreement, a costs disclosure, and an invoice for the total amount of legal costs at the same time.

The tribunal also emphasised one part of the costs disclosure statement, which set out that Bacon has “considerable experience” in child support law and “could be considered one of the nation’s leading practitioners in the jurisdiction”.

“From a costs perspective, it is important to note that engaging someone of this standing within the profession will cost more than engaging a more junior lawyer,” the costs disclosure set out.

The written costs agreement provided for the engagement to be billed in two stages; the first for research and a draft letter of demand, and the second for negotiation and consent orders.

Stage one would initially cost the client a lump-sum fee of $4,000, and stage two was a lump-sum fee of $300, both with GST added.

When asked to point to the part of the costs disclosure that set out how the legal fees would be calculated, Bacon was unable to do so.

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Campbell said Bacon also changed his evidence “at least three times” about work that was included in each stage and whether any of the work was completed on a pro bono basis.

“If Bacon, a lawyer with 35 years’ experience, who relies on the costs agreement, has difficulty deciphering the agreement, then disclosure to [the client], a non-lawyer, is deficient,” Campbell said.

Initially, Bacon told the tribunal the pro bono work was a phone call and an initial appointment with the client and added no further pro bono work was done after he was formally engaged.

When the tribunal suggested the invoice was sent before stage one was completed, Bacon said the letter of demand had already already been drafted and stage one was complete. He then said the invoice was sent before work was completed and he would not be paid until work was done.

After Bacon was asked whether he had charged for work that was not completed, he changed his evidence to state the finalisation and despatch of the letter – which fell under stage one – “must have been pro bono”. This was in contradiction to his earlier evidence “of not having undertaken any pro bono work after he was formally engaged”.

“Despite giving this contradictory evidence as to the costs agreement and disclosure statements, Bacon maintained that the basis of the legal costs was clear in the costs agreement and disclosure statement,” Campbell said in his written reasons for judgment.

Campbell said the “more fundamental” issue was the costs agreement provided for the “vast majority” of the fees to be paid “almost immediately” after the firm was retained.

The letter of demand was “not particularly detailed or complicated”, but Bacon said the costs were arranged in this manner because he provided the most value in the formation of a claim and “any lawyer or paralegal could negotiate and finalise consent orders”.

The tribunal did not accept Bacon’s evidence that he provides “so much value” in framing his claim for the purpose of the draft letter of demand “that he charges nearly his entire fee for that work and very little for the likely more time-consuming work of negotiation”.

When Campbell raised that it appears the arrangement “looks like the front loading of the payment” because Bacon did not operate a trust account, the sole practitioner denied this.

Campbell went on to say there was “no urgency which required Bacon to commence legal work prior to providing [the client] with the costs agreement and disclosure”.

VCAT was not satisfied that either the costs agreement or costs disclosure “clearly and genuinely” set out the method by which the legal costs would be calculated.

“The legal costs are represented in a manner to allow the law firm early access to the legal costs before the work is complete and to secure payment for future work, without the necessity of operating a trust account,” Campbell said.