lphocIt is somewhat strange that despite hundreds of years of formal legal development, there is still much uncertainty around the rather complex relationship between counsel, attorney and their mutual client; the litigator. Rather more pertinent is the question:  “who is ultimately responsible for counsel’s fee: is it the instructing attorney, the litigator, or both”?

It is trite that the type of contract entered into when legal assistance is required, is one governed by the principles of mandate. It involves an instruction by the mandator to the mandatary to carry out a task for him, and the mandate may or may not confer authority on the mandatary to enter into contracts on the mandator’s behalf. However, the mandate might be influenced by either agreed (express or tacit) or implied terms (naturalia), such as the argument that it is a trade usage that an attorney automatically stands in for the fee of counsel, where it has not been received from client.

The 97-day rule.
[1] Generally speaking, counsel may require fees to be paid in advance. If he does not, bar membership requires that his fee does not become payable before the end of the period determined by the Bar Council, and ethics preclude counsel from insisting on payment of fees before that time.(1)

[2] The General Bar Council affords attorneys a period until the last day of the second month following upon the month in which the work was carried out – and in respect of which an account has been delivered – to settle the outstanding amount.(2) This payment arrangement (60 interest free days) is applied at the Cape Bar. The Johannesburg Bar provides that fees due to its members are payable at the end of the month in which the fee was earned, but will remain so payable without the imposition of an interest charge for a period of i) three months (90 days) and a ii) demand for payment within seven days. During this time counsel may not insist upon payment.

[3] These are practical arrangements that boil down to a concession to allow the attorney time to collect payment from the client.

[4] It must be noted that the ‘67/97-day rule’ does not enjoy universal acceptance and is subject to criticism, such as:
We have a bizarre rule that requires members to wait 90 days for payment of their fee in JHB. In Cape Town the peremptory waiting period is 60 days. This is absolutely inexplicable and the black Bar bears the brunt of this wretched rule. … I have heard the arguments advanced for this and, quite frankly, it’s all rubbish … Members of the Bar cannot even charge interest … The 90-day rule must go…(3)

The counsel – client relationship.
[5] Many advocates are of the opinion that when they accept a brief, they do so on the understanding that they contract with the attorney. However, according to Welsh QC in Minister of Finance,(4) an advocate:
… only has one client and that is the litigator for whom he acts …
which dictum has subsequently been endorsed in both Bertelsman(5) and Serrurier.(6)

[6] It must be noted that when briefed, the advocate is not mandated in any way to act on behalf of the attorney, or his firm.

[7] Ordinarily there is a contract of mandate between attorney and client in terms whereof counsel is briefed. The trade usage over the years has been that the advocate is required to make use of the attorney as a go-between, both where he attends on his brief, and in resolving his fee.

[8] Thus, the attorney acts as the agent for a disclosed principal, and contracts – per brief – with counsel in terms of the mandate furnished him by his principal. Reciprocally, the client is bound to pay counsel a reasonable fee, whilst being entitled to proper performance.

[9] In Tredoux v Kellerman,(7) the Cape High Court expressed obiter that it remains ‘a vexed question’ whether an advocate can sue his client directly. It seems that this dictum referred to the question whether the client must be sued as a co-defendant with his attorney, which seems to indicate the uncertainty as to whether the attorney and client are joint / co-principal debtors, or whether the attorney is liable at all.

The attorney – counsel relationship.
[10] In considering the relationship between attorney and counsel, the following holds true:

[a] it cannot be said that the attorney is a surety for the client, as a suretyship must be in writing, and a brief is not a suretyship,
[b] neither attorney nor counsel acts as negotiorum gestor (‘saakwaarnemer’), as they cannot act without instruction in the controversy,
[c] counsel is not a sub-contractor to the attorney, as:

[i] it is not the attorney who renders the services of advocacy via his subcontractor (the advocate), but the advocate who renders the service personally,
[ii] counsel is personally liable to his client for any negligent performance of his duties,
[iii] it is trite that client is personally liable for payment of counsel’s fee,
[iv] the attorney must retain counsel’s fee in trust where received from client,
[v] the attorney cannot place a surcharge on the fee of counsel.

[d] the client is the principal in the matter, to furnish his instructions, and may even terminate the mandate,
[e] the attorney acts twofold, as:

[i] a practitioner for his own account for work done by him in the matter, and
[ii] the accountable institution (8) of the instruction, tasked – as a conduit – to manage payment of disbursements, because:
… moneys … are paid in respect of the service rendered by counsel, correspondent attorney, notary or conveyancer, expert witness, deputy sheriff or messenger of the Court … In no way does the fee accrue to and in no way is it received by the attorney … for a service rendered by him …(9)

Where payment has been received by the attorney from client.
[11] Where a client’s payment of counsel’s fee has been received by an attorney, the attorney would be ill-advised to dispute any liability to pay that fee, as:
There can be no doubt that, in the event of the client paying the attorney, but the attorney failing to pay counsel, an action against the attorney would be justified. (In such an event the fidelity fund would in all probability pay the counsel … Such an event would also attract the attention of a criminal Court(10)

Where payment was not received from client.
[12] In Minister of Finance(11) it was argued that:
“English law does not recognise any contractual relationship between a barrister and either his instructing solicitor or his client. He can sue neither. The solicitor is bound to pay the barrister’s fees only as under the rules of etiquette of his profession…”
however:
“In Roman-Dutch law counsel was entitled to sue his client for his fee.”

Bertelsman v Per (12)
[13] In Bertelsman counsel sued his instructing attorney for unpaid fees for professional services rendered. The attorney pleaded that he acted as an agent for a disclosed principal, that he engaged counsel on behalf of his client, and that he could not be (personally) sued on the principal obligation between principal and plaintiff. Plaintiff excepted that once briefed:
… the attorney was as a matter of law responsible for payment of counsel’s fees.

[14] This exception was dismissed – with costs – in the Magistrate’s Court, as

[a] there was no authority for this ‘rule of law’, and
[b] no evidence could be led in hearing an exception to establish such a practice.

[15] On appeal (noted against the costs order only) the exception’s dismissal was upheld. Southwood (J) pointed out as significant that Mssrs. Bertelsman could not refer to any rule of law or any judgment stating that an attorney was liable for counsel’s fees. As no evidence could be led in hearing an exception, the magistrate was quite right to dismiss the exception.

Serrurier v Korzia (13)
[16] In 2010 Serrurier held that Bertelsman had been misunderstood as authority that an instructing attorney is not liable to pay counsel where he has not received payment from client. Accordingly, Bertelsman was only authority to the effect that it had not (yet) became established practice (or a hard and fast rule) that an advocate is to be automatically paid by his instructing attorney. However, a trade usage – of joint liability – was still possible, but needed to be established.

[17] Although Jordaan (AJ) considered himself bound to the Bertelsman judgment, he was of the view that an attorney is liable for counsel’s fee. It would stem from either an express or implied agreement, as:

[a] counsel is prohibited from receiving payment from client,
[b] counsel is not permitted to enter into an express agreement that his fees be paid by anybody else than his instructing attorney, and
[c] where it is not an express term of the agreement (between the attorney and counsel), it cannot be implied that counsel can look to the client for payment of his fee.

Thus, Serrurier (at 181A) concludes,
“... an attorney will always be liable for counsel’s fees even in the event of the client not paying him.

[18] In terms of Serrurier an attorney in Johannesburg would thus probably only escape liability for counsel’s fee if he had contracted out of it; in terms of the (Gauteng South) judgment it now stands that as counsel may not look to anybody else than the attorney for his fee, the attorney must pay. However, it is respectfully submitted that :

[a] The examples presented in Serrurier do not indicate why payment is due by the attorney, but only that payment is due via the attorney. (Payment due via the attorney stems from the bifurcated profession, the attorney’s trust facilities, his duty in accounting to client and being an accountable institution in terms of FICA, all of which combine to protect the public.(14) However, the bifurcated profession has never been considered as a mechanism for the protection or benefit of counsel.)
[b] If Serrurier is authority for a trade usage or professional practice whereby the attorney should stand in for the payment of counsel’s fee, it flies in the face of Bertelsman’s full bench holding that such a trade usage has not yet been established and that no judicial notice has been taken of it. Insofar as no expert witness gave evidence for Jordaan (AJ) to be able to find the practice an established one, it is unclear from where the foundation of the finding stems, as evidence cannot be rendered from the bar.
[c] On the assumption that there is a trade usage that an attorney is impliedly contractually liable for a brief, uncertainties arise:

[i] Where the attorney is contractually obliged to stand in for the fee of counsel, does that mean the client can insist on credit to be extended? Does the attorney similarly also stand in for payment of a contingency or retainer fee? When would such a liability arise, or terminate? Does it survive termination of the attorney’s mandate?
[ii] It is a trite principle that when taxing a bill of costs on contribution, the costs belong to the litigant. However, if the attorney is automatically a co-principal debtor liable because of his firm’s brief to counsel, that no longer holds true. The attorney has a vested interest in the disbursements. it dilutes client’s ownership of the costs, which has never been the general construction preferred.

[d] In Serrurier the attorney was ordered to pay the fees, interest and costs to counsel. Although the client was ordered to pay the fee of counsel to the attorney, he was not ordered to pay interest or costs of suit. Ambiguously, the order suggests that the liability of the attorney is not on a joint / joint and several basis, but something else.

‘Standing in for the fee of counsel’.
[19] Where a trade usage is known to both parties, it is one of the surrounding circumstances relevant that such trade usage ought to be incorporated in a contract as a tacit term. It stems from the presumed common intention to include a term customarily included,(15) where it is so universal and notorious that the party’s knowledge and intention to be bound by it may be presumed (see Bertelsman).

[20] Arguably, a trade usage of an attorney standing in for the fee of counsel may stem from rules of the bar, that hold:
Mere inability to pay is not sufficient, as it is presumed that attorneys cover themselves before they brief counsel.(16)

However, this fiction that counsel’s fee is already in trust before counsel is briefed flies in the face of:

[a] the application of the 67/97-day rules,
[b] a contingency (or retainer) fee’s clear lack of being held in trust, and
[c] because in practice:
“Many disputes arise because of the sense of shock induced in the attorney or the client by the differential between the fee ultimately charged and what was expected.”(17)

[21] At the same time GCB r.7.8 holds that:
Counsel may not agree with the attorney briefing him that counsel will await payment of the fees payable on that brief until the attorney shall have received them from the lay client.(18)
which implies that attorneys are assumed to stand in for the fee. It is submitted that GCB r.7.8 is probably contra bonos mores, and the actual reason why attorneys often stand in for the fee is because of collective bargaining by the bar.

Collective bargaining by the bar.
[22] Where payment is outstanding, SA bar membership used to prohibit further services being rendered to the practitioner or firm, by blacklisting the firm and barring bar members from accepting briefs from that entity. (The position has been relaxed, and these days there is no longer a formal prohibition against accepting a brief from a blacklisted firm, but blacklisting now serves as a warning to members.)

[23] Where an attorney does – collegially – make payment from his own pocket, it would probably be because of pressure being brought to bear, his practice held hostage by the bar collective. Any perceived trade usage of the attorney ‘standing in for the fee’ is but one of him succumbing to the bar’s debtors management, paying ex gratia from his business account. It is submitted that the reason why Bertelsman and Serrurier found no precedent on the matter, is because practice has been one of etiquette not to sue the attorney, but to employ collective bargaining to sway him to pay.

[24] Such a construction seems to hold water when it is considered that it was the position in English law, that:
“…the solicitor is bound to pay the barrister’s fees only as under the rules of etiquette of his profession” (19)

[25] It is a relative recent development that the rules of the SA bar have changed towards suing the attorney. The General Council of the Bar’s ethical rule 7.9.2 used to read:
“It is contrary to the etiquette of the profession for a member to sue an attorney for fees, his remedy being contained in the society’s rules, but in special circumstances a member may apply to the Bar Council for leave to sue an attorney for fees”
echoing the English etiquette somewhat. The rule has been deleted and substituted with r.7.9.2(a) and (b) at the GCB’s 2001 AGM, resolving now that ‘special circumstances’ are no longer required to sue, but ‘a member may forthwith sue’.

[26] Collective bargaining by the bar – when arbitrarily applied – is somewhat in contrast to both the ‘cab-rank’ rule and the International Bar Association’s International Code of Ethics that hold:

“8. Lawyers shall treat their professional colleagues with the utmost courtesy and fairness.”
and:

“31. Lawyers should never forget that they should put first not their right to compensation for their services, but the interests of their clients and the exigencies of the administration of justice” (20)

The collection mandate.
[27] It is submitted that the profession actually operates on a ‘swings and roundabout’ relationship between attorneys and advocates. Many advocates will continue to nurture a successful or profitable relationship despite the odd outstanding invoice. It stems from the nature of colleagues within a profession, the ethics of practice and of acting in good faith in the interests of clients.

[28] This swings and roundabout approach evidences from the fact that the advocate’s profession blacklists the firm, not the client. It is a simple warning to counsel that the practitioner does not have a profitable client base.

[29] However, it is submitted that there is an undisputed trade usage that attorneys are responsible for collecting counsel’s fee from client. It implies that there is an accessory mandate from counsel to attorney that the latter will collect and receive counsel’s fee from client, and where the attorney’s efforts are successful he is bound to pay over to counsel the fees so collected. Importantly:

[a] an unreasonable fee cannot be collected,
[b] counsel would only be entitled to a fee in terms of the rules of his association, and
[c] professional work must be rendered,

which are obstacles counsel must overcome before he can mandate his attorney to collect the fee from client. This (arguably) renders GCB r.7.8 contra bonos mores.

[30] Where the attorney was unsuccessful in collecting the fee, he would only be :

[a] contractually liable in terms of counsel’s mandate to collect his fee, if he materially breached the collection mandate, or
[b] delictually liable, if he was negligent in collecting that fee,

but he is certainly not automatically (jointly) liable on the same terms as the client, as Serrurier holds. All of the normal defences would be available to the attorney in either case. A material consideration is whether the client withheld payment because he was dissatisfied with counsel’s performance, as it could deny counsel’s claim to any fee at all.

[31] The mandate simply does not create a stronger right of recompense from the attorney, than the principal claim against the client (in line with the principle of nemo plus juris ad alienum transfere potest, quam ispe habent.)

The general position.
[32] It is submitted that the ‘implied contract’ referred to in Serrurier is not one of joint and co-principal liability of the attorney with his client. It is rather an accessory, collegial mandate from counsel to collect and manage payment – tacit to the brief – in the terms of the bar rules, being a trade usage of the bifurcated profession. Counsel’s entitlement to a fee stems from work done for his client, not for the attorney, and the attorney should assist counsel with his fee pro amico.

[33] Within this interpretation it would follow that:

[a] non-compliance with the 67/97 day rule simply entitles counsel to moratory interest, in addition to his (reasonable) fee,
[b] the attorney is only personally liable for the (reasonable) fee of counsel, where:

[i] he materially breached the mandate to collect the fee, i.e. where he did not invoice his client for the fee, or did not assist with the recovery of counsel’s fee,
[ii] he negligently caused counsel damages, eg. he did not have authority to brief counsel, but did, or neglected to recover the fee,
[ii] he undertakes to pay ex gratia and stands in for the fee of counsel.

[c] the client should be sued for outstanding fees by the attorney – not counsel – in terms of the fee collection mandate from counsel, pro amico.
[d] the client (having contracted as a disclosed principal) can be sued by counsel in terms of the professional services rendered, as instructed by the client’s mandatary.
[e] the attorney is not a co principal debtor jointly and severally liable with his client to counsel; they incur liability on separate mandates, and separate sets of facts.

Exceptions to the general position.
[34] It is submitted that there are instances where an attorney can be held principally liable for the costs of counsel, such as where:

[a] the attorney accepts the client’s mandate on a contingency basis, and the liability shifts on principles of subrogation,
[b] the attorney negligently occasions costs, such as where his conduct necessitates a condonation application, or a postponement,
[c] costs are ordered de bonis propriis.

However, the terms of the client’s mandate remain paramount in any consideration of liability towards disbursements. It always remain a factual question.

Contributed by:
Albert Reinecke
(21)
Reinecke’s ‘Legal Practitioner’s Handbook on Costs’ (22) is an extremely useful work – now in its second edition – with a comprehensive overview of the various aspects of both litigious and non-litigious costs. It is indispensible to anyone tasked with ordering, taxing, presenting, opposing or even paying legal costs.

Reference to above:

  1. Per GCB: ‘Uniform Rules of Professional Ethics’ (2009) r.7.6.1.
  2. Per GCB r.7.7.2.
  3. V. Ngalwana: ‘The Legal Services Charter: Black skills development and procurement.’ An address to the Fifth Young Leaders Symposium, Kievitskroon Country Estate (Pretoria: 19 July 2008).
  4. Minister of Finance and Another v Law Society, Transvaal 1991 (4) SA 544 (A).
  5. Bertelsman v Per 1996 (2) SA 375 (T).
  6. Serrurier and Another v Korzia and Another 2010 (3) SA 166 (W).
  7. Tredoux v Kellerman 2010 (1) SA 160 (C) par 17.
  8. Both to client and in terms of FICA.
  9. Minister of Finance and Another v Law Society, Transvaal 1991 (4) SA 544 (A) at 556 I – 557 B.
  10. Per Serrurier at 178 A-B.
  11. At 552D-553D.
  12. Bertelsman v Per 1996 (2) SA 375 (T).
  13. Serrurier and Another v Korzia and Another 2010 (3) SA 166 (W).
  14. De Freitas v Society of Advocates of Natal 2001 (3) SA 750 SCA)
  15. ABSA Bank Ltd v Blumberg and Wilkinson [1995] 4 All SA 379 (W)
  16. GCB r.7.7.10.
  17. Chris Loxton SC : ‘Fee disputes and their resolution: Is the system working?’ Advocate (2000 2nd term.)
  18. (per GCB r.7.8).
  19. Halsbury’s Laws of England 4th ed vol 4 at 664 par 1198 and 1201.
  20. A rule adopted at Oslo on 25 July 1956 and amended by the General Meeting of the International Bar Association at Mexico City, 29 July 1964 and at Stockholm, 18 August 1976.
  21. Albert Reinecke is an attorney and legal costs consultant of Gauteng.
  22. The Legal Practitioner’s Handbook on Costs: 2nd ed (2011) can be obtained from albertreinecke@gmail.com .

 

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