ATTORNEY AND CLIENT FEES EXPLAINED

INTRODUCTION

ATTORNEY AND CLIENT FEES EXPLAINED Attorney and Client costs include all the costs in respect of which the client is indebted for professional services rendered by his/her attorney in legal proceedings to which the attorney had been formally mandated to act.

It is because of this indebtedness and the fact that the client has incurred these expenses that he/she may in case of success recover some of the costs from the losing party known as party and party costs.

Party and party costs are merely a cost contribution to assist the victorious litigant in addressing the indebtedness to his/her attorney.

Party and party costs only represent some of the costs he/she may recover from the losing party the excess of the indebtedness representing the attorney and client portion of the relationship between the mandated attorney and his / her client.

Having regard to the above the portion of the costs not recovered under party and party costs represents charges levied by the attorney which the client cannot recover from the other party.

FEES MUST BE REASONABLE

 In terms of Rule 28 of the Rules for the Attorneys’ Profession a practitioner is entitled to a reasonable fee for professional services rendered.

Coetzee v Taxing Master, South Gauteng High Court and Another (2010/14197) [2012] ZAGPJHC 175; 2013 (1) SA 74 (GSJ) (19 September 2012)

[10] “The payment by a client to the client’s own attorney is not aimed at a ‘full indemnity’, but rather is aimed at payment of a reasonable recompense for services rendered”.

The tariff in Rule 70 is not binding on attorney and own client scale costs, and is merely a guide for taxation.

[29] In exercising the discretion to determine a reasonable rate for time charges for services rendered the practice is to have regard to:

  1. Fees charged by other legal practitioners,
  2. The seniority of the attorney
  3. The time taken over the work
  4. The nature of the work performed

These guidelines should always be applied in determining the reasonableness of the practitioner’s fee regardless the outcome or the value of the claim and any agreement that caters for an inappropriately large fee could be subject to review and be found to be unenforceable.

CALCULATING FEES

 Attorney and client fees only apply to the capital amount (amount of damages recovered) obtained by successful litigation.

Clients often confuse the party & party costs as forming part of the capital settlement.

Party and Party costs are only a cost contribution to assist the successful litigant in paying his / her legal practitioner.

As such party and party costs do not form part of the equation when the attorney’s fees are determined nor when determining the amount owed to the client as the difference represents the amount of indebtedness to the practitioner that would otherwise have to be covered by the client by way of a deposit.

Gert Nel Incorporated does not require their clients to pay a deposit nor are they liable for any costs if the claim is not successful.

Example:

Capital Settlement amount: R 500 000.00
Less Attorney and Client fee: R 200 000.00
Sub Total: R 300 000.00
Plus Party and Party costs: R   75 000.00
Total owed to client: R 375 000.00 (75% of Settlement amount)*

*The amount owed to client is determined based upon the R 500 000.00 capital settlement and not by adding the cost contribution (party and party costs being R 575 000.00).

 CONCLUSION

We acknowledge that the client should be protected against potential abuses and for that reason guidance is given as to the qualification of what constitutes a reasonable fee and what should be regarded as overreaching, always subject to scrutiny by either the Professional Controlling body or the Courts.

A reasonable principle to follow in the application of fees is found in the matter of:

Thulo v RAF 2011(5) SA 446(GSJ), where Morison AJ, remarks in paragraph 58: “that the client is assured of being paid at least 75% of the money amount obtained by successful litigation”.

Having regard to the above the clients of Gert Nel Incorporated are guaranteed** to receive no less than 75% of their capital settlement upon successful finalization of the matter.

Gert Nel B.Proc LLB (UP)

Director at Gert Nel Incorporated Attorneys

**subject to no bridging finance being applicable

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