by Choo Dee Wei
Published December 27, 2018
A patient goes to a doctor. The patient gets a diagnosis from the doctor. After the diagnosis, the patient thanks and leaves without paying for the doctor’s bill. The doctor then says “is this a joke?”
The majority of us all would never consider doing this. And if we were to ask ourselves why, it is likely that the doctor had spent time, attention and given his professional opinion. In return, the doctor is paid for his time, attention and expertise.
The scenario above is no different for lawyers. Clients would seek legal professional advice from lawyers be it suing or handling agreements (as examples). Once engaged, the lawyers would do the necessary work and thereafter issue an invoice for works done.
A typical invoice would contain 2 main areas: legal fees and disbursements. To differentiate between the two areas, legal fees would mean that fees paid to the lawyer for his/her work done whilst disbursements are out-of-pocket or sundries which is to be paid to entities or agencies.
As a fictitious example, Denise is in the business of supplying hand-made jewellery. Patricia ordered 100 of such items, each costing RM100.00 and therefore paid RM10,000.00 to Denise. However, Denise did not make delivery. Not only that, Denise did not even refund the RM10,000.00 to Patricia.
Understandably Patricia is furious. She decides to engage a lawyer (let’s call her Sue) to sue Denise. Sue spells out her legal fees (which does not include disbursements) and Patricia agrees to it. Sue then drafts the Writ and Statement of Claim and files it in Court. Sue issues her invoice in accordance to the agreement between her and Patricia.
Sue’s legal fees are for her time and expertise in drafting the Writ and Statement of Claim. The disbursements (which is separate from Sue’s legal fees) are for printing, photocopying travelling to meet Patricia and filing court fees (which in this instance would be RM100.00 for the Writ and RM8.00 for the Statement of Claim).
In a sudden turn of events, Patricia refuses to honour the invoice. Patricia retorts that since Sue is a lawyer, she should assist Patricia in the interest of justice and not be focussed on money. Patricia then offers a ‘compromise’ in that if Sue is so insistent on money, Patricia shall out of her kindness pay for the disbursements.
In summary, Sue tells Patricia the following:-
Payment of disbursements go towards actual costs incurred - for example, filing fees in court, that filing fees are paid to court and not to Sue;
The professional fees is to Sue for her work and time spent in drafting the writ and statement of claim;
If Sue had not spent time drafting the writ and statement of claim, there was nothing to be filed in court to begin with;
Sue’s law firm isn’t a non-profit organisation - the professional fees are Sue’s source of income, coupled with the fact that the professional fees were agreed prior to Sue commencing work; and
Sue poses a rhetorical question to Patricia: “You wouldn’t contemplate refusing to pay the doctor, plumber, locksmith or any tradesman for that matter, after work is done. Why then should lawyers be treated any differently?”
“Why then should lawyers be treated any differently?”