Warning Against Litigation On Spec
Article courtesy of The Australian – By Josephine Kelly
February 11, 2011
THE more restrained judicial language, the more powerful judicial criticism.
And for the perfect example, it is worth examining what NSW District Court judge Andrew Colefax had to say in his judgment last Friday awarding law firm Stacks Goudkamp indemnity costs personally against Keddies Solicitors.
It is a powerful decision and should become prescribed reading for any litigation lawyer.
The lesson is, do not commence litigation that has no real prospect of success on the off-chance the defendant will settle.
There are risks of personal indemnity costs orders and possible professional disciplinary consequences.
Keddies, acting for a former Stacks client, Mr Marshall, claimed Stacks had acted negligently in carrying out his instructions to settle the case.
The judge held that the proceedings brought by Keddies had no real prospect of success, and ordered Keddies to indemnify Stacks for costs in the proceedings and for two-thirds of the costs argument.
He also directed that a copy of his decision be provided to the NSW Office of the Legal Services Commissioner for consideration of “whether any legal practitioner acting on behalf of Mr Marshall has engaged in professional misconduct or unsatisfactory professional conduct”.
The judge said “there were many disturbing departures by Keddies during the course of their retainer from what I regard as acceptable and proper conduct as a solicitor”.
He listed the following departures from acceptable and proper conduct as a solicitor:
- Failing to provide the client with a copy of a heavily qualified letter of advice from counsel, or tell him what it said.
- Commencing proceedings without the client’s express instructions.
- Commencing the action without an appropriate expert’s report.
- Failing to inform the client of the difference of opinion held by counsel and a preliminary informal opinion of the proposed expert witness and that of the instructing solicitor.
- Failing to advise the client there was no legal authority to support his claim.
- Failing to inform and advise the client of the expert opinion obtained by Stacks.
- Failing to inform the client of the reasons senior counsel declined to accept a brief to appear.
- Failing to inform the client promptly of counsel’s advice recommending that the claim not be pursued further and instructions sought to resolve the matter “at all costs”.
In 2002 Stacks had settled Mr Marshall’s claim for damages against the insurer Allianz in relation to the death of his son, Matthew, in a motor vehicle accident. Keddies filed the statement of claim against Stacks in December 2007.
The hearing ran for a few days in late June 2009, but was adjourned while Mr Marshall, the first and only witness, was in cross-examination. No further hearing was held.
Mr Marshall’s claim against Stacks was dismissed in May last year, after Keddies was granted leave to withdraw from the proceedings on November 4, 2009, and after Mr Marshall had been given opportunities to finalise the case.
Mr Marshall was ordered to pay Stacks’ costs. Stacks then obtained the indemnity costs order against Keddies.
Judge Colefax was critical of at least one of the senior solicitors responsible for the day-to-day conduct of Mr Marshall’s matter.
The solicitor did not review the Keddies file before swearing the affidavit. It apparently was prepared for the witness by someone else.
Judge Colefax said: “This is a highly unsatisfactory because the affidavit cannot truly be said to have been the evidence of the witness.” He allowed the witness to continue his evidence, as the matter only emerged during cross-examination, but cautioned against such conduct in the future.
The judge also wrote without further comment that Keddies had filed a draft statement of claim that the counsel had provided for negotiation purposes only.
The proceedings before Judge Colefax are among many involving Keddies or its lawyers. In November, Russell Keddie, the founder of the firm, accepted responsibility in an affidavit filed in the NSW Administrative Decisions Tribunal for overcharging a client, Mrs Meng, who had become a paraplegic after a bus crash.
Mr Keddie, and partners Tony Barakat and Scott Roulstone were facing possible findings of professional misconduct.
Mrs Meng’s case was settled out of court. The settlement was $3.5 million and she was charged $800,000 in legal fees.
She reportedly claimed she did not receive a bill from Keddies until she complained to the Legal Services Commissioner that she had been grossly overcharged.
She also proceeded against those Keddies partners in the NSW Supreme Court.
Josephine Kelly is a Sydney barrister