Duty to the Client III: Fees, and What an Advocate May Not Charge

Rule 38: not less than the taxed fee

"An advocate shall not accept a fee less than the fee taxable under rules when the client is able to pay the same."

This is the rule students least expect, because it is a floor rather than a ceiling. Its two elements:

"Taxable under rules." Costs in litigation include the successful party's advocate's fee, and it is fixed by rules of court. Section 34(1A) of the Advocates Act requires the High Court to make rules fixing and regulating by taxation or otherwise the fees payable as costs by any party in respect of the fees of his adversary's advocate in the High Court and in the courts subordinate to it.

"When the client is able to pay the same." The rule does not stop an advocate acting free or cheaply for a client who cannot pay. Rule 46 positively encourages it: free legal assistance to the indigent and oppressed is one of the highest obligations an advocate owes to society.

Why a floor? Because undercutting is competition for work, and rule 38 sits in Section IV with rule 36 on advertising for that reason. A profession in which advocates competed on price would solicit rather than serve, and the client would choose on cost rather than on fitness.

Rules 11 and 12 on the fee

Two rules already met carry fee obligations.

Rule 11 requires acceptance at "a fee consistent with his standing at the Bar and the nature of the case". That is an objective standard and it stops an advocate escaping the cab-rank principle by quoting an impossible figure.

Rule 12 requires that on withdrawal he "shall refund such part of the fee as has not been earned." Mandatory.

The lien: there is none

This is the most important practical thing in the chapter and the answer is the opposite of what most students assume.

R.D. Saxena v. Balram Prasad Sharma, (2000) 7 SCC 264, decided 22 August 2000 by K.T. Thomas J.

Facts. The appellant was legal adviser to the Madhya Pradesh State Co-operative Bank and conducted its cases. On 17 July 1993 the Bank terminated the retainership and asked for its files back. Instead of returning them he sent a consolidated bill for Rs 97,100 and said the files would be returned only when his dues were settled. The Bank denied liability, the dispute was unresolved, and the files never left his hands although the cases were pending. The Bar Council of India debarred him for eighteen months, fined him Rs 1,000 and directed the return of the files, without deciding whether a lien existed.

Held. An advocate has no lien over the litigation papers entrusted to him by his client for his unpaid fees. Files containing copies of records cannot be equated with the goods referred to in section 171 of the Contract Act; an advocate keeping files does not amount to goods bailed, because there is neither a delivery of goods nor a contract that they be returned or disposed of on the accomplishment of a purpose; and "goods" in section 171 bears the meaning it has in the Sale of Goods Act.

Why it matters. The client's file is not security. It contains the client's case, and withholding it can lose him the litigation, which is exactly the harm the profession exists to prevent. The advocate's remedy for his fee is to sue for it like anybody else.

What follows in practice. Return the file, then pursue the fee separately. Refusing to return it is not leverage; it is a step towards a disciplinary proceeding, as it was for the appellant in that case.

What an unpaid advocate may actually do

A student should be able to say what the position is, not merely what it is not.

• Withdraw, under rule 12, if non-payment is sufficient cause, on reasonable and sufficient notice, refunding the part of the fee not earned.
• Sue for the fee as a debt.
• Appropriate money already in hand. Rule 28 allows the advocate, after the termination of the proceeding, to appropriate towards the settled fee any sum remaining unexpended out of money paid to him for expenses, and rule 29 allows a deduction where the fee was left unsettled. Those are accounts rules and belong to Module IV.
• What he may not do: keep the file, adjust the fee against an unrelated personal liability under rule 23, or take a share of the proceeds under rule 20.

A worked example

Neha is retained by a builder for a fee of Rs 1,50,000, of which Rs 50,000 is paid in advance and Rs 20,000 is sent separately for court fees and stamp expenses.

The builder proposes instead that Neha take ten per cent of whatever the suit recovers. She must refuse. Rule 20 forbids stipulating for a fee contingent on the results, and equally forbids agreeing to share the proceeds.

The builder says another advocate will do it for a third of the taxed fee. Neha may not match it if the client is able to pay. Rule 38 forbids accepting a fee less than the fee taxable under the rules where the client is able to pay it, and the taxed figure comes from rules the High Court makes under section 34(1A).

The relationship breaks down after six months and Neha withdraws. Under rule 12 she needs sufficient cause, must give reasonable and sufficient notice, and must refund the part of the fee not earned. Of the Rs 50,000, if half the work was done, half is unearned and goes back.

The builder demands his files. Rs 80,000 of the fee is unpaid. She must return them. R.D. Saxena holds there is no lien over the client's litigation papers, because they are not goods bailed within section 171 of the Contract Act. Her remedy is to sue.

Of the Rs 20,000 for expenses, Rs 12,000 was spent. Under rule 28, after the termination of the proceeding she may appropriate the unexpended Rs 8,000 towards the settled fee due to her. Note the condition: after the termination, and towards a settled fee.

The builder separately owes Neha Rs 30,000 for a flat deposit unconnected with the case, and suggests setting it off. Rule 23 forbids adjusting the fee against a personal liability that does not arise in the course of her employment as an advocate.

What beginners get wrong

There is no lien on the client's papers. R.D. Saxena is unambiguous.

Rule 38 is a floor, not a ceiling. It forbids charging less than the taxed fee where the client can pay.

Rule 38 does not forbid free work. Its condition is "when the client is able to pay", and rule 46 encourages free assistance to the indigent.

Rule 20 forbids two things. A fee contingent on the result, and an agreement to share the proceeds.

Refunding on withdrawal is mandatory, not a matter of grace.

Rules 28 and 29 are not a lien. They allow appropriation from money already lawfully in hand for expenses, after the proceeding ends.

Quick revision

• Rule 20: no fee contingent on the results of litigation and no agreement to share the proceeds. Reasons: independence, conflict on settlement, fomenting litigation, and an interest in the subject matter.
• Rule 38: no fee less than the fee taxable under rules where the client is able to pay. The taxed fee comes from High Court rules under section 34(1A).
• Rule 11: a fee consistent with his standing at the Bar and the nature of the case. Rule 12: on withdrawal, refund the unearned part.
• Rule 23: no adjusting the fee against a personal liability to the client arising outside the employment.
• NO LIEN: R.D. Saxena v. Balram Prasad Sharma, (2000) 7 SCC 264. Litigation files are not goods within section 171 of the Contract Act, keeping them is not goods bailed, and "goods" bears its Sale of Goods Act meaning.
• The unpaid advocate may withdraw under rule 12, sue for the fee, and appropriate unexpended expense money after the proceeding ends under rules 28 and 29. He may not keep the file.

Test yourself

1. What does rule 20 forbid, and give two reasons for it. It forbids stipulating for a fee contingent on the results of litigation and agreeing to share the proceeds. Because it gives the advocate a personal financial stake in the outcome, which is inconsistent with his position as an officer of the court, and because it puts him in conflict with his client over whether to accept a settlement.

2. Rule 38 is unusual. Why? Because it fixes a floor rather than a ceiling: an advocate shall not accept a fee less than the fee taxable under the rules when the client is able to pay it. It prevents competition on price, which would turn the profession into a trade soliciting work.

3. Does rule 38 stop an advocate acting free of charge? No. It applies only where the client is able to pay the taxed fee. Rule 46 positively describes free legal assistance to the indigent and oppressed as one of the highest obligations an advocate owes to society.

4. Does an advocate have a lien on his client's files for unpaid fees? No. In R.D. Saxena v. Balram Prasad Sharma the Supreme Court held that litigation papers are not goods within section 171 of the Contract Act, that an advocate keeping files does not amount to goods bailed since there is neither delivery of goods nor a contract for their return on accomplishment of a purpose, and that "goods" there bears its Sale of Goods Act meaning.

5. What may an unpaid advocate lawfully do? Withdraw under rule 12 if non-payment is sufficient cause, on reasonable and sufficient notice, refunding the unearned fee; sue for the fee as a debt; and, after the proceeding terminates, appropriate under rule 28 any sum remaining unexpended out of money sent for expenses towards the settled fee, or deduct under rule 29 where the fee was left unsettled.

6. Where does the "taxed fee" in rule 38 come from? From rules made by the High Court under section 34(1A) of the Advocates Act, which requires it to make rules fixing and regulating by taxation or otherwise the fees payable as costs by a party in respect of the fees of his adversary's advocate, in the High Court and in the courts subordinate to it.