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Lawyers forced to deter litigation in court

Lawyers forced to deter litigation in court

Lawyers now have to advise clients on how to avoid litigation in court. Norton Rose dispute resolution partner Ashley Tsacalos explains.

Lawyers now have to advise clients on how to avoid litigation in court. Norton Rose dispute resolution partner Ashley Tsacalos explains.

A new duty now falls upon lawyers to advise clients to take “genuine steps” to resolve disputes before litigation in federal courts.

Lawyers will have a duty to advise clients of the requirement to file a “genuine steps” statement and assist a client to comply with this requirement under new legislation which received its Second Reading in Parliament on 16 June 2010 (see section 9).

The Attorney-General, the Hon Robert McClelland MP, has introduced the Civil Dispute Resolution Bill 2010 (Cth) (the Bill) which seeks to ensure that parties take “genuine steps” to resolve a civil dispute before proceedings are commenced in the Federal Court of Australia or the Federal Magistrates Court.

In another major implication for lawyers acting for parties involved in civil proceedings before federal courts, when exercising a discretion to award costs, a judge or Federal Magistrate may take account of any failure by a lawyer to comply with the duty imposed by section 9. In addition, if a lawyer is ordered to bear costs personally because of a failure to comply with section 9, the lawyer must not recover the costs from the lawyer’s client.

The interaction between the duty imposed by the proposed legislation and the legislation governing the legal profession in terms of professional conduct will be interesting to monitor as time goes by.

The proposed legislation will result in lawyers being required to become more proactive in terms of exploring alternative forms of dispute resolution before civil proceedings are commenced in federal courts. In addition, lawyers will need to advise and assist clients in relation to taking “genuine steps” to try and resolve the issues in dispute between the parties before civil proceedings are commenced and then outline these steps in the form of a “genuine steps statement” or, at the very least, be in a position to provide reasons as to why no such steps were taken.

Under the proposed legislation, when a party commences proceedings in the Federal Court or the Federal Magistrates Court, it will be “required to file a statement saying what steps they have taken to resolve their dispute or, if they have not taken any steps, the reason why”. This will be known as a “genuine steps statement”. Any statements filed must demonstrate that “genuine steps” were taken by both parties to resolve the dispute prior to reaching the courts.

The Bill does not prescribe specific actions that demonstrate “genuine steps” to resolve a dispute. Instead, the parties are given a wide discretion to attempt to resolve their disputes, and the courts will have regard to these steps filed in the statement to the court before allowing proceedings to commence. This broad discretionary power is designed to “ensure that the focus is on resolution and identifying the central issues without incurring unnecessary upfront costs”.

The rules of the respective court may also make provision in relation to the form of genuine steps statements, the matters to be specified in genuine steps statements and the time limits applicable. The Bill applies to all civil proceedings other than excluded matters under Part 4.

According to the Bill’s Explanatory Memorandum, the Bill “encourages the resolution of civil disputes outside of the courts and seeks to improve access to justice by focusing parties and their lawyers on the early resolution of disputes”. During a speech on 17 May 2010, the Attorney-General stated that “courts, parties and lawyers all have a role to play” in achieving the objective of appropriate dispute resolution processes and that the Bill will complement “the active case management powers introduced in the Federal Court last year which promote the timely, inexpensive, and efficient resolution of disputes”.

The Bill has been introduced under a government initiative towards providing greater access to justice and draws on recommendations from the National Alternative Dispute Resolution Advisory Council (NADRAC) in its November 2009 report, The Resolve to Resolve – Embracing ADR to improve access to justice in the federal jurisdiction.

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Lawyers forced to deter litigation in court
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