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Tripartite Deed

Revised Tripartite Deed

This precedent Tripartite Deed has not been reviewed for some time. In view of the changes in the legislation and the development in the law, a revised precedent Tripartite Deed was drafted and it is now available to practitioners.

Certain changes to the Tripartite Deed were considered necessary, to make clear the rights and obligations on the part of both the previous and the new practitioners and the client involved.

The revised Deed was approved by the Ethics Committee of the Law Society. Practitioners should adapt the deed to suit their own purposes as the Law Society does not warrant the effectiveness of the Deed in any particular matter.

Download the precedent Tripartite Deed (PDF)

Download the precedent Tripartite Deed (editable Word doc)

For information about the revised Tripartite Deed, contact Marina Wilson on (02) 9926 0382 or by email at marina.wilson@lawsociety.com.au.

Satisfactory security

As to whether the Deed provides satisfactory security for the previous practitioner’s costs one should consider McColl JA’s judgment in Bechara t/as Bechara & Co v Atie & Anor [2005] NSWCA 268 at [64]

The expression “satisfactorily secured” should be understood, both by reference to the authorities dealing with possessory liens, and in its textual context, to refer to the provision, in lieu of payment, of something of monetary value which would ensure the satisfaction of the possessory lien.

And at 65:

Accordingly, in the case of litigation, as here, undertaken on payment only in the event of a successful outcome, that security would commonly, in my view, take the form of an agreement, to which both the former client and the substituted solicitor are parties, that the verdict or settlement monies would be retained by the substituted solicitors to the extent necessary to meet the former solicitor’s costs. While the test of what constitutes satisfactory security is clearly objective, it might be accepted that a solicitor whose services had been terminated would be entitled to feel uncomfortable with anything less

In this case, the previous practitioner also required an irrevocable authority from the client to the new practitioners to pay the previous practitioner’s costs as agreed or assessed from any verdict or settlement. This authority is then often forwarded to the practitioners for the other side.

Much has been said about how effective an irrevocable authority really is. For an irrevocable authority to amount to an assignment of future property, there has to be valuable consideration. Such consideration may be the agreement to continue to act or the agreement to transfer the file. Such an agreement must be explicitly stated in the authority. If the authority is given to the other party to the litigation/transaction/dispute and not to the client’s own practitioner, it is difficult to envisage what valuable consideration there can be. Hence the practitioner for the other party is not bound by the authority, even if the client’s own practitioner is so bound.

Accordingly, to ensure that the present practitioner and the practitioner for the other party does not disburse the money to the client, the former practitioner should give notice of a claim for an equitable lien (see Twigg & Anor v Kung & Anor [2002] NSWCA 220 para 36). Note that a lien can be effectively given at a time when the interest is still inchoate, at a time when no verdict yet given nor settlement yet occurred to which the lien could attach (see Twigg).

If the new practitioner or the practitioner for the other party disregards the lien and disburses the money, then he or she may be personally liable to the former practitioner for the reasonable amount claimed (see Firth v Centrelink & Anor [2002] NSWSC 564).

Practitioners should consider whether the Deed is appropriate where no money would result from the litigation, or transaction. In that case, there is no justification for the delay in payment of the former practitioner’s costs (see Tyneside Property Management Pty Limited & Ors v Hammersmith Management Pty Limited & Ors [2011] NSWSC 22).

Note that the Law Society precedent Costs Agreement provides that “If the agreement is terminated either by you or me/us, you will be required to pay my/our professional fees and charges for work done, and for expenses and disbursements incurred, up to the date of termination.”