Other Business Disputes
Legal Costs Disputes
Are you concerned you were charged legal fees that are more than your lawyer is entitled to be paid?
You have a right to challenge the amount you are charged. Normally, the lawyers who acts for you will in good faith consider a complaint about the amount of legal fees you were charged, and the matter may be informally resolved, especially for small matters, by a reduction in the amount you are required to pay.
If you cannot informally resolve the matter, you have a right to have legal costs assessed by an independent cost assessor. If necessary, you can obtain an order from the court that the costs be assessed.
You can obtain an order for an assessment of the legal costs you are charged even if you have already paid, or part paid those costs. Time limits apply and you should obtain legal advice quickly if you wish to challenge the legal costs you were charged and for which you are liable or which you have paid.
You also have a right to challenge the costs agreement if it is unfair and unreasonable and obtain an order setting it aside. If you are successful, you will still have to pay legal costs, but the amount may be reduced.
The main causes of costs disputes include:
- Not giving costs estimate or not revising them when the legal costs exceed or are likely to exceed the initial estimate;
- Lack of clarity in the scope of the retainer (the work you and the lawyer agree the lawyer will do) which leads to additional work and higher costs than both parties initially expected;
- Changing circumstances. Actions of the other party or a third party, or unforeseen problems or complexities emerging, may cause more work to be done than anticipated at the start of a matter.
We have acted for many clients in costs disputes against their former lawyers. Our strategy aims at early resolution, and we have been successful in obtaining large refunds for clients through negotiation even before commencing a court proceeding. This may involve obtaining the expert opinion and assistance of the experienced and highly skilled cost consultants with whom we successfully work to resolve legal costs disputes.
As in all negotiations, early resolution of a legal costs dispute requires a proper understanding of the merits and strength of your position and vulnerability and points to apply pressure on the other party. The goal is not about avoiding paying legal fees your previous lawyer has earned and has a right to receive. It is about not paying more than you must if you were charged too much.
Partnership Disputes
For individuals who wish conduct business together, entering into a partnership remains one of the most popular structures to jointly conduct a business.
Partnerships have a number of advantages that are desirable to persons wishing to conduct businesses together:
- It is easy to establish a partnership;
- Partnerships have low start-up costs;
- Partnerships allow the persons involved to contribute more capital, knowledge, expertise, and experience to the business and any one individual can contribute;
- A partnership increases the capacity of the business to borrow monies needed to develop the business;
- There is limited external regulation, mostly from the relevant state partnership acts.
There are also disadvantages to a partnership that should be carefully considered before parties use a partnership structure as a means of conducting business together. These include:
- Unlimited liability for the debts of the partnership business;
- Each partner is jointly and separately liable for all partnership debts;
- Subject to specific partnership legislation, partnerships are in essence a business relationship between persons conducting business together. Relationships may deteriorate and become stressed over time as the personal and business goals of the partners change or personalities clash. This may lead to serious disagreements and disputes about the objectives and management of the partnership business and the sharing of partnership profits or losses;
- Each partner is an agent of the partnership and any and all partners are liable for the actions of any other partner;
- If any one partner wishes to exit the partnership, it may require a costly valuation of the partnership assets and businesses in order to allow the remaining partners to pay out the exiting partner for the value of his or her share of the partnership. This may be a costly process.
Disputes may arise for a number of reasons including:
- One partner underperforms or acts in a way that unreasonably increases a partnership debt or losses, or exposes other partners to a risk of liability for legal claims;
- One of the partners breaches his or her duty of trust to the other partners by taking profits or benefits for which he or she is not entitled;
- Conflicts of interest in which one partner prefers his or her own interest (e.g., operating a separate business) to the interests of the partnership.
Although a dispute between partners may be resolved by the one party exiting the partnership and being paid out for the value of the retiring partner’s share in the partnership, a serious dispute between the partners may lead to the dissolution of the partnership and an appointment by the Court on an interim basis of a receiver to preserve the value of the assets in the partnership business pending the resolution of the partnership dispute or even to sell the partnership assets and business to a third party.
The best way to manage partnership disputes is to have from the start, before the partnership business commences, a carefully drafted partnership agreement, and a deed of dissolution of partnership which is agreed to take effect on certain events, annexed to the partnership agreement.
Seek legal advice as early as possible
If a partnership dispute arises in the course of carrying on the partnership business, it is important to seek legal advice as early as possible about how to resolve the dispute, or if the dispute cannot be resolved, the best strategy for dissolving the partnership.
