The Law Council of Australia has defended a national hot spot of high legal fees in the NSW family law courts, including “disappointment fees” for cancellations and retainers for top lawyers to freeze out other litigants, partly on the basis that there is “more money in Sydney”.
Federal MPs and senators looking at family law court reforms have been inundated with complaints about exorbitant legal fees, cancellation payments — with the potential to charge clients up to $80,000 for “work not done” — and family court disputes where legal fees were more than the total assets being fought over.
Joint select committee on Australia’s family law system chairman Kevin Andrews, the federal MP for Menzies in Victoria, told The Australian: “The high cost of legal fees in family law matters has been raised with the committee in hundreds of submissions.
“There is a widespread belief among parties to family law proceedings that their costs have compounded as cases are unnecessarily prolonged.”
Last week the select committee examined the issues of high legal costs in the family law court, particularly in NSW, and quizzed senior lawyers about the Sydney practices of cancellation fees and retainers for top silks that were not routine in other jurisdictions.
Mr Andrews told representatives of the Law Council of Australia and the NSW Bar Association there were “constant complaints made to this committee in the written submissions and, indeed, in the hearings that we’ve had with individuals … about costs — about excessive costs and legal fees that are disproportionate to the total assets of the couple”.
The committee heard last week of a case in Townsville in far north Queensland where legal costs were $170,000 for a dispute over total assets of about $500,000, and another case of costs of $800,000 to $900,000 for total assets of just over $1m.
Mr Andrews said the committee heard of another case of total legal costs of $500,000 where the assets were only $200,000 and that family law court judges had raised “substantial legal fees” in a single case of millions of dollars.
When asked if cancellation fees, where lawyers were paid at a full rate if a case were delayed and couldn’t be heard in court, were “prevalent in the Sydney Bar” and contributing to higher costs than in Melbourne, Brisbane, Perth or Adelaide, Law Council of Australia family law section chairman Paul Doolan said matters in Sydney, “in terms of financial matters, tend to have a higher net value”.
“They are more complex, in my experience, more so than in other cities. There is more money in Sydney,” Mr Doolan said.
He agreed the “more money” didn’t justify cancellation fees but said: “It’s what the money leads to. The money ultimately leads to very complicated arguments in some cases about tax, about valuations, about control of assets.
“Interventions by third-party companies in the Family Court happen quite regularly in the Sydney registry. It’s a different practice, I must say, to other cities.”
Mr Andrews said the committee had heard of judges talking about the “unreality” of costs and said in one case last year the judge pointed out that “the parties agree that the potential property pool available for distribution is between $1,500,000 and $1,900,000, the parties will potentially be spending in the order of $833,539 on legal fees”. Mr Andrews told the committee the issue of legal costs in family disputes had “got out of hand”.
“Surely if you’re dealing with a situation where you know the value of the asset, which you surely do in most cases, there needs to be some realistic check on the level of legal fees that can be charged,” he said.
“I’m not talking about complex discretionary trusts or things like that but cases where there are clear assets — the family home, the car, the dog or whatever they may be — and some superannuation, which in most people’s experience is not a lot of money anyway.”
When asked about the use of cancellation fees in the Sydney Bar, which could amount to $50,000 to $80,000 for “work not done”, NSW Bar Association family law committee chairman Michael Kearney SC said it was not peculiar to Sydney but was charged “more routinely in Sydney than in other parts of the country”.