Legal Billing, Statutory Causes of Action and Class Actions

At the end of last year (2014), the Productivity Commission handed down its Access to Justice Report, which was an inquiry into Australia’s system of civil dispute resolution with a view to constraining costs and ‘promoting access to justice’.  In an interesting movement in the legal profession, as a result of some of these recommendations, there is already an increase in different legal actions especially the rise of class actions and alternative dispute resolution.

The Productivity Commission - Terms of Reference

The Australian Government asked the Productivity Commission (Commission) to undertake a 15-month inquiry into Australia's system of civil dispute resolution, with a focus on constraining costs and promoting access to justice and equality before the law.

In particular, the Commission was to have regard to:

  • real costs of legal representation and trends over time;
  • level of demand for legal services;
  • factors that contribute to the cost of legal representation in Australia;
  • whether the costs charged for accessing justice services and for legal representation are generally proportionate to the issues in dispute;
  • the impact of the costs of accessing justice services, and securing legal representation, on the effectiveness of these services;
  • economic and social impact of the costs of accessing justice services, and securing legal representation;
  • impact of the structures and processes of legal institutions on the costs of accessing and utilising these institutions, including analysis of discovery and case management processes;
  • alternative mechanisms to improve equity and access to justice and achieve lower cost civil dispute resolution, in both metropolitan areas and regional and remote communities, and the costs and benefits of these;
  • reforms in Australian jurisdictions and overseas which have been effective at lowering the costs of accessing justice services, securing legal representation and promoting equality in the justice system; and
  • data collection across the justice system that would enable better measurement and evaluation of cost drivers and the effectiveness of measures to contain these.

Key Findings of the Commission

The key findings of the Commission, as stated in the report included:

  1. There are widespread concerns that Australia’s civil justice system is too slow, too expensive and too adversarial. However, parties can resolve their disputes in many ways, including through courts, tribunals and ombudsmen. Each differs in its formality, cost and timeliness. Such a complex system resists both a single diagnosis and remedy.
  2. While much focus is on the courts, the central pillar of the justice system, much is done in their shadow, with parties resolving their disputes privately. Community legal education, legal information (including self-help kits) and minor advice help ensure that parties are better equipped to do so. Better coordination and greater quality control in the development and delivery of these services would improve their value and reach.
  3. Where disputes become intractable, parties often have recourse to a range of low cost and informal dispute resolution mechanisms. But many people are unnecessarily deterred by fears about costs and/or have difficulty in identifying whether and where to seek assistance. A well-recognised entry point or gateway for legal assistance and referral would make it easier to navigate the legal system.
  4. Most parties require professional legal assistance in more complex matters. But the interests of lawyers and their clients do not always align. Reforms to professional regulation are required to ensure clients are better informed and have more options for selecting the tasks they want assistance with, and how they will be billed.
  5. Some disputes, by their nature, are more appropriately handled through the courts. While these disputes may be small in number, many individuals are poorly placed to meet the associated costs. Court processes in all jurisdictions have undergone reforms to reduce the cost and length of litigation. But progress has been uneven and more needs to be done to avoid unnecessary expense.
  6. The ways in which parties interact with each other and with courts and tribunals also needs to change. The adversarial behaviour of parties and their lawyers can hinder the resolution of disputes or even exacerbate them. Changes to rules governing the conduct of parties and lawyers, and the way in which costs are awarded, would improve incentives to cooperate.
  7. Court fees vary widely across courts and jurisdictions and are not set with reference to a common framework. A more systematic approach is required for determining fees.
  8. Disadvantaged Australians are more susceptible to, and less equipped to deal with, legal disputes. Numerous studies show that efficient government funded legal assistance services generate net benefits to the community.
  9. The nature and predictability of funding arrangements constrain the capacity of legal assistance providers to direct assistance to the areas of greatest benefit. This needs to change and, in some cases, funding should be redirected.
  10. While there is some scope to improve the practices of legal assistance providers, this alone will not address the gap in services. More resources are required to better meet the legal needs of disadvantaged Australians.

Effect on the Legal Profession

Michael Legg, in his article in The Conversation, suggests that the Access to Justice Report has resulted in some of the strictest compensation laws being slowly unwound, in order to encourage more litigation and fairer fees among lawyers and clients.

In particular, he mentions three areas that are ripe for change:

  1. Conditional Billing and Contingency Fees by Lawyers - in some ways, as mentioned by Legg, this is already being addressed with the Uniform Legal Profession Laws being slowly passed across the States;
  2. Court system's inconsistent approach to targeting individuals for their "deep pockets" - Legg argues that a proportionate liability model needs to be consistently applied across all cases; and
  3. Increases in litigation in other areas - Although Legg admits that core restrictions on personal injury claims will mean these will be unlikely to increase, he nominates class actions as the next big type of litigation which could see a resurgence. We have already seen some of the biggest class actions in Australia so far with the Black Saturday bushfires; Bank Fees litigation and Telecommunications Company Litigation.

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