TYPES OF FEES
Under Rule 52(1) of the Rules of Professional
Conduct, 2007, a lawyer shall charge professional fees for his services
which shall be reasonable and commensurate with the service rendered.
The types of fees are –
1.
Scale fee
– These are fees charge for non-contentious work.
2.
Fixed
fee – These are fees charge with a
fixed rate for a specific work.
3.
Appearance
fee – These are fees charged by legal practitioners for appearing in court.
4.
Hourly
rate fee – These are fees charged for every hour a legal practitioner
renders his service or services.
5.
Percentage
fee – These are fees charge with a given percentage based on the value of
transaction.
6.
Contingent
fee – These are fees charged for recovery of debt whether it is contentious
or non-contentious. It is prohibited under Common Law – Abdallah v. Barlat (1931) 1 WACA
137; Wright v. Legal Practitioner Disc. Committee (1940) 7 WACA 17. However,
it is permissible under section 50 of
the Rules of Professional Conduct, 2007, as long as it is not vitiated by fraud,
mistake or undue influence, or contrary to public policy, or not in a criminal
case.
RULES AND PRINCIPLES GUIDING BILL FOR PROFESSIONAL SERVICES
A legal practitioner under the
various Land Instrument Preparation Laws and also under the Legal Practitioners
Act, 1975, has exclusive right to prepare documents dealing with transfer of
interest in land in Nigeria and it is a punishable offence under the Laws and
Act for a person other than a legal practitioner to prepare such documents.
Section 22(1)(d) of the Legal Practitioners Act, 1975 provides
thus:
“Subject
to the provisions of this section, if any person other than a legal practitioner
prepares for or in expectation of reward any instrument relating to the grant
of probate or letters of administration, or relating to or with a view to
proceedings in any court of record in Nigeria,
He is
guilty of an offence and liable, in the case of an offence under the above
paragraph to a fine of an amount not exceeding N200 or imprisonment for a term
not exceeding two years or both such fine and imprisonment, and in any other
case to a fine of an amount not exceeding N100.
From the above, it means that any
person aside a legal practitioner who prepares an instrument will be guilty of
an offence and liable to a fine of N200 or N100 or imprisonment of 2 years.
Instrument in relation to
immovable property means any document which confers, transfers, limits, charges
or extinguishes any interest in the property.
Where a solicitor prepares a
document, and acts in property transfers, the client is to pay the legal practitioners
his adequate remuneration for services rendered.
A solicitor can either be paid
his fees in advance or he is to rely on terms of any agreement between him and
the client. In situations where he has not received his fees, and there was no
agreement between both parties, the solicitor is required to submit his bill of
charges – F.B.N Plc. v. Ndoma-Egba (2006) All FWLR (Pt. 307) 1012 at 1034.
The major method of billing by
solicitors in Nigeria is gearing, which
“… normally starts with the payment of a consultation fee and or a deposit on
account and thereafter a full and final bill of charges is presented to the
client or agreed upon between the two parties.
A solicitor is prohibited from
doing the following where he is charging and enjoying his fees –
1.
Share legal fees with a non-lawyer. Rule 3(1)(c) & Rule 53 of the Rules of
Professional Conduct provides for this with its exceptions.
2.
Enter into an agreement for, charge or collect
an illegal or clearly excessive fee. A fee is clearly excessive when after a
review of the facts, a person of ordinary prudence would be left with a
definite and firm conviction that the fee is in excess of a reasonable fee for
the services rendered or to be rendered.
3.
Where the services to be rendered is based on a
retainership, a solicitor who accepts a retainer shall not in the case of a
general retainer, advise on or appear in any proceedings detrimental to the
interest of the client paying the retainer during the period of the retainer;
and in the case of a special retainer, accept instructions in any matter
forming the subject matter of the retainer which will involve advising or
arguing against the interest of the client paying the retainer.
RETAINERSHIP
Rule 43 of the Rules of Professional
Conduct has to do with retainer. It is a payment made to the legal practitioner by a client, and could be
general or special.
1. GENERAL RETAINER – This exists where a legal practitioner is instructed to handle all
problems in an area of law or on every area of law during an agreed period of
time. Under the general retainer, the
legal practitioner is precluded from accepting to advice in or appear in any
proceedings detrimental to the interest of the client paying the retainer
during that period.
2. SPECIAL RETAINER – This exists where the legal practitioner is instructed to handle a
single matter, for example, where a legal practitioner is instructed to represent
a client in a lease transaction to draft the lease agreement and obtain
Governor’s consent.
CHARGING FEES
A legal practitioner cannot charge
arbitrary fees, but only fees that are in the provisions of the law. The fees a
legal practitioner can charge are regulated by the Legal Practitioners Act,
1975 and the Rules of Professional Conduct.
The Legal Practitioners Remuneration Committee
is empowered by Section 15 of the Legal Practitioners Act, 1975 to make orders
regulating fees of legal practitioners.
In furtherance of the power, the Committee passed the Legal
Practitioners (Remuneration for Legal Documentation and Other Land Matters)
Order 1991. The Order contains
remuneration of legal practitioners in land matters and other legal
documentation matters.
CONTENTS OF A BILL OF CHARGES
The Legal Practitioners Act, 1975
provides that a bill of charges must contain the following –
1. The Principal items to be charged.
2. Particulars of the principal items.
3. The date on which the principal
items were incurred.
4. The signature of the solicitor
issuing the bill on behalf of the firm.
5. The date on which the bill of
charges was issued. The bill must be served personally or by reregistered post
or left at the client’s
last address known to the legal practitioner.
6. The matters to which the bill of
charges relate; and
7.
The
name of the client to whom the bill of charges is being issued.
PROCEDURE FOR RECOVERY OF PROFESSIONAL FEES
Section 16(1) of the
Legal Practitioners Act provides that, subject to complying with certain
conditions, “a legal practitioner shall be entitled to recover his charges by
action in any court of competent jurisdiction” – Mabogunje v. Odutika (2003) 1
NWLR (Pt. 802) 570; Abubakar v. Manulu (2001) 8 NWLR (Pt. 714) 717.
The fee owed by a client to a
solicitor is called ‘debt’ which is recoverable. The procedure for recovering
such fees is neither exclusive nor exhaustive since apart from court action,
the solicitor may decide to recover his fees by any of the methods of
persuasion, mediation, conciliation, or negotiation. The reason being it is
advisable to always seek for alternative dispute resolutions before litigation
(court action).
The disadvantages of using
litigation instead of alternative dispute resolutions are –
1.
It strains the relationship with the client.
2.
It discourages potential clients from briefing
the solicitor since they may be afraid of being sued by the solicitor in the
event of them being involved in the same situation.
3.
It consumes time, energy and resources for both
the client and the solicitor.
In recovering charges, a
solicitor may charge 10% per annum as interest on his disbursement and cost.
According to section 16(2) of the Legal Practitioners Act, three important and
mandatory things which a solicitor must do to recover his charges from a
defaulting client may arise which are –
1.
He must prepare a bill of charges which should
set out the particulars of the principal items of his claim.
2.
Service of bill on the client.
3.
He must allow a period of one month to expire
from the date of delivery before the action is commenced.
BILL OF CHARGES
The solicitor must prepare a bill
for the charges containing particulars of the principal items included in the
bill and signed by the solicitor (if it is a firm, by one of the partners or in
the name of the firm) – section 16(2)(a)
of the Legal Practitioners Act.
There is no specification on how
the prepared bill of charges should look like, but it should most likely be in
the form of an invoice or statement containing the charges, and must be signed
by the solicitor preparing the bill.
The rule on preparing detailed
particulars of charges may be summarised as follows –
1.
A solicitor should endeavour to prepare a
detailed bill of charges with all the particulars of work done, cost, expenses
and disbursements.
2.
Where the bill of charges does not contain the
particulars, it should be objected to by the client otherwise he will be deemed
to have waived his right.
3.
Where the bill does not contain detailed
particulars and it is objected to, the court will hold that the bill does not
comply with the requirement of the Legal Practitioners Act, and cannot sustain
an action for recovery of professional charges.
The following should constitute
the particulars of the principal items of the bill of charges –
1.
The bill of charges should be headed to reflect
the subject matter. If it is in respect of litigation; the court, the cause and
the parties should be stated.
2.
The bill of charges should contain all the
charges, fees and professional disbursements for which the legal practitioner
is making a claim. Professional disbursements include payments which are
necessarily made by the legal practitioner in pursuance of his professional
duty such as court fees, witness fees, etc, if paid by him.
3.
Charges and fees should be particularized, for
example –
a)
Perusing documents and giving professional
advice;
b)
Conducting necessary (specified) inquiries or
using a legal agent in another jurisdiction for a particular purpose;
c)
Drawing up the writ of summons and statement of
claim or defence;
d)
Number of attendances in court and the dates;
e)
Summarised statement of the work done in court,
indicating some peculiar difficult nature of the case (if any), so as to give
an insight to the client as to what he is being asked to pay for; and
f)
The standing of the solicitor at the bar in
terms of years of experience and/or rank with which he is invested in the
profession – Savannah Bank of Nig. Plc. v. Opanubi (2004) All FWLR (Pt. 222) 1587 at 1610.
4.
It is required to give sufficient information in
the bill to enable the client to obtain advice as to its taxation and for the
taxing officer to tax it. It is therefore necessary to indicate against each of
the particulars given in the bill of charges a specific amount, taking into
account the status and experience of the legal practitioner and the time and
efforts involved.
SERVICE OF BILL ON CLIENT
The bill of charges must have
been served on the client personally or left for the client at his last known
address or sent by post addressed to the client at his last known address – section 16(2)(a) of the Legal Practitioners
Act.
The reason is to give the client
an opportunity to settle the bill of charges, if the charges are
unobjectionable.
There are three (3) ways by which
the service may be effected –
1.
By personal service. This means that the bill of
charges may be physically and personally handed to the client.
2.
By leaving it at the client’s last known
address. This address may be the last business or residential address known by
the client rather than being assumed.
3.
By post to the client’s last known address.
A PERIOD OF ONE MONTH MUST EXPIRE AFTER DELIVERY
After delivery of the bill to the
client by whatever means mentioned above, the period of one month beginning
with the date of the delivery of the bill must expire before an action is
instituted to recover the charges.
One month in this context does
not mean thirty days or thirty-one days, rather it means a calendar month. Section 18 of the Interpretation Act states
that ‘month’ means calendar month reckoned to the Gregorian calendar. A
calendar month is a complete month in the calendar and in computing it; one
must look at the present calendar rather than counting days. A calendar month
ends upon the same day in the next ensuing month having the same number as that
on which the computation began, that is, the corresponding day in the next
month. But if the next ensuing month has not the same number as that on which
the computation began, then the calendar month ends on the last day of the next
ensuing month, for example March 31 to April 30.
There are, however, circumstances
which may make the court reduce or lessen the period of one month within which
a solicitor is expected to wait after service of the bill, before the
commencement of the action against the client – section 16(3) of the Legal Practitioners Act. These are –
1.
That the solicitor delivered a bill of charges
to the client;
2.
That on the face of it, the charges appear to be
proper in the circumstances; and
3.
That there are circumstances indicating that the
client is about to do some act which would probably prevent or delay the
payment to the legal practitioner of the charges.
The place of institution of
action is the State High Court. But it must be the High Court where the legal
practitioner in question usually carries on his practice or usually resides or
in which the client in question usually resides or has his principal place of
business or, in the case of a legal practitioner authorized to practice by
warrant, the High Court of the State in which the proceedings specified in the
application for the warrant were begun – section
19(1) of the Legal Practitioners Act.
A summary of the above procedure
is as follows –
1st step – The legal practitioner prepares a bill of
charges.
2nd step – The bill of charges is signed by the legal
practitioner (if it is a firm, by a one of the partners or in the name of the
firm).
3rd step – The bill of charges must be served on the
client personally or by post to his last known address.
4th step – The legal practitioner must wait for one
month before proceeding to court.
5th step – Where the client defaults in paying the fees,
the legal practitioner takes writ against the client at the High Court where
the firm operates.
WHEN FEES MAY BE TAXED
Section 17 of the Legal Practitioners Act provides for the
application for the taxation of bills of charges delivered by the legal
practitioner to the client.
Section 17 provides that as a general rule, where an application
for the taxation of a bill of charges is made to the court by a client within
one month from the date on which the bill of charges was delivered to him, the
court shall order the bill to be taxed and that no action to recover the
charges shall begun until the taxation is completed.
However, where a direction for
providing for security is given under section 16(3) and security is not given
in accordance with the direction, an order for taxation shall not be made.
Section 17(2) also provides that the court may, if it thinks fit on
an application made after one month of the delivery of the bill of charges by
the legal practitioner or the client (except where he had failed to give
security as directed), order that the bill be taxed and also order that until
the taxation is completed, no action to recover the charges mentioned in the bill
shall be begun and any such action already begun shall be stayed.
However, section 17(3) of the Legal
Practitioners Act provides that no such order shall be made –
(a)
in any case, after the period of twelve months
from the date on which the bill in question was paid;
(b)
except in a case where the court determines that
there are special reason for making such an order, if twelve months have
expired since the date of the delivery of the bill or if judgment has been
given in an action to recover the charges in question.
PROCEDURE FOR TAXATION
Section 18 of the Legal Practitioners Act provides for the
procedure for taxation.
Section 18(1) provides thus –
“The
taxation of a bill of charges shall be in accordance with the provisions of any
order in force under section 15 of this Act; and where no such order is in
force or any item falling to be taxed is not dealt with by the order, the
charges to be allowed on taxation of the item shall not exceed such as are
reasonable having regard to the skill, labour and responsibility involved and
to all circumstances of the case”.
The procedure for taxation is
governed by the rules of court and the taxation takes place before a taxing
officer who may be the Chief Registrar of the Court, or any other suitable
person appointed by the Court for the purpose.
The taxing officer may, where he
deems it appropriate, refer the taxation to the court, he shall so refer it,
and the court may –
a)
Proceed itself to tax the bill and notify to the
taxing officer the amount declared and stated in his certificate; or
b)
Refer the taxation back to the taxing officer
with its discretion in the matter.
On completion of the taxation of
a bill, the taxing officer shall forthwith declare the amount due in respect of
the bill and shall file in the records of the court a certificate signed by him
stating that amount; and any party to the taxation shall be entitled, on
demand, to have issued him free of charge an office copy of the certificate – section 18(4) of the Legal Practitioners Act.
If any party to the taxation is
dissatisfied with the determination other than the amount notified by the
court, he may within 21 days from the date of determination or filing, appeal
to the court – section 18(5) of the Legal
Practitioners Act.
If the amount determined by the
court as charges is less than the amount of the bill by one-sixth of the bill
or more, then the legal practitioner is liable to pay the cost of the taxation;
otherwise, it is the client that will pay the cost – section 18(7) of the Legal
Practitioners Act.
ETHICAL ISSUES
1.
Rule
48(2) of the Rules of Professional Conduct – A lawyer shall not enter into
an agreement for, charge or collect an illegally or clearly excessive fee.
2.
Rule
3(1)(c) of RPC – A lawyer shall not share legal fees with a non-lawyer.
CALCULATING PROFESSIONAL FEES
For example, you acted for Chief
Adebayo in the sale of property in Ibadan which was sold for N100,000; and for
him and the bank in the mortgage transaction with Zenith Bank of his property
in Lagos for N100,000; and for him and the lessee in the lease of his property
at Kaduna for a rent of N100,000 per annum. The lessee paid for one year.
Using the scale, calculate fees for each transaction.
|
Transaction conducted
|
For the 1st N1,000 per N100
|
For the 2nd and 3rd N1,000
per N100
|
For the 4th and each subsequent N100
up to N2,000 per N100
|
For the remainder without limit per N100
|
|
Vendor’s legal practitioner for conducting a sale
of property by public auction when the property is sold
|
N22.50k
|
N5.62k
|
N3.75k
|
N2.80k
|
|
Mortgagor’s legal practitioner for deducing
|
N22.50k
|
N22.50k
|
N11.25k
|
N2.50k
|
|
Mortgagee’s legal practitioner for investigating
title to leasehold property, preparing and completing mortgage
|
N22.50k
|
N22.50k
|
N11.25k
|
N2.50k
|
SCALE II (LEASES)
|
Transaction
|
Amount
|
|
|
|
Where the rent does not exceed N100
|
N37.50k on the rental but not less than N25.00k
in any case
|
|
|
|
Where rent exceeds N100 but does not exceed
N1,000
|
N37.50k in respect of 1st N100 of rent
|
N25.00k in respect of each subsequent N100 of
rent or part thereof
|
|
|
Where the rent exceeds N1,000
|
N37.50k in respect of 1st N100 of rent
|
N25.00k in respect of each N100 of rent or part
thereof up to N1,000
|
N12.50k in respect of every subsequent N100 or
part thereof
|
Fees for acting for Chief Adebayo in the sale of the property
1st step
1000/100 x 22.50/1
= 10 x 22.50 = N225.00k
2nd step
2000/100 x 5.62/1
= 20 x 5.62 = N112.40k
3rd step
17000/100 x
3.75/1 = 170 x 3.75 = N637.50k
4th step
80000/100 x
2.80/1 = 800 x 2.80 = N2,240.00k
5th step
Add the total of step 1, 2, 3 and
4, that is, N225 + N112.40 + N637.50 + N2240 = N3,214.90k
Fees for acting for both parties in the Mortgage
A. Fee for mortgagee (Full
payment)
1st step
1000/100 x 22.50/1
= 10 x 22.50 = N225.00k
2nd step
2000/100 x 22.50/1
= 20 x 22.50 = N450.00k
3rd step
17000/100 x
11.25/1 = 170 x 11.25 = N1,912.50k
4th step
80000/100 x
2.50/1 = 800 x 2.50 = N2,000.00k
5th step
N225 + N450 + N1912.50 + N2000 = N4,587.50k
B. Fees for mortgagor (Half
payment)
1st step
1000/100 x 22.50/1
= 10 x 22.50 = N225.00k
2nd step
2000/100 x 22.50/1
= 20 x 22.50 = N450.00k
3rd step
17000/100 x
11.25/1 = 170 x 11.25 = N1,912.50k
4th step
80000/100 x
2.50/1 = 800 x 2.50 = N2,000.00k
5th step
N225 + N450 + N1912.50 + N2000 = N4,587.50k
Divide the Sum Total by 2 (because it is half payment) = N4,587.50/2
= N2,293.75k
The amount the solicitor is
entitled for acting for both mortgagee and mortgagor in the above transaction
is N6,881.25k (that is, the total
amount of the full payment of the mortgagee, and the total amount of the half
payment of the mortgagor – N4,587.50k +
N2,293.75k = N6,881.25k).
Fees for acting for both lessor and lessee
A. fee from Lessor (Full
payment)
1st step
For 1st N100 = N37.50k
2nd step
For 1st N1000
900/100 x 25/1
= 9 x 25 = N225.00k
3rd step
For balance of rent above N1000
99000/100 x
12.50/1 = 990 x 12.50 = N12,375.00k
4th step
Add up the entire sum in step 1,
2, and 3 above, that is, N37.50 + N225 + N12375 = N12,637.50
B. Foe fees from Lessee
(one quarter of lessor’s fee)
1st step
For 1st N100 = N37.50k
2nd step
For 1st N1000
900/100 x 25/1
= 9 x 25 = N225.00k
3rd step
For balance of rent above N1000
99000/100 x
12.50/1 = 990 x 12.50 = N12,375.00k
4th step
Add up the entire sum in step 1,
2, and 3 above, that is, N37.50 + N225 + N12375 = N12,637.50
Divide the Sum Total by 4 (because it is one quarter of lessor’s
fee) = N12,637.50/4 = N3,159.38k
The amount the solicitor is
entitled for acting for both Lessor and Lessee in the above transaction is N15,796.88k (that is, the total amount
of the full payment of the mortgagee, and the total amount of the half payment
of the mortgagor – N12,637.50k +
N3,159.38k = N15,796.88k).
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