India: Supreme Court Calls For Regulating Hefty Fees Of Lawyers

Recently, in a judgment pronounced by the Hon'ble Supreme Court in the case of B Sunitha v. State of Telangana, the Court advised the Government to check on the unethical practices followed by lawyers. The case brought into light the financial abuse that the victims of injustice have to go through by some members of the legal community.

Brief History

  • In July, 1998, B. Sunitha's (hereinafter referred to as the 'Appellant') husband died in a motor accident. A claim before the Motor Accident Claims Tribunal (hereinafter referred to as the 'MACT') was filed wherein one of the Respondents in the present case was the advocate for the Appellant. Compensation was also given in the said case.
  • The Respondent charged a fee of INR 10 Lakhs (USD 15590 approx.). Later on, the Appellant was forced to sign another cheque worth INR 3 Lakhs (USD 4677 approx.) on October 25, 2014, despite her informing that she has no funds in the account.
  • On November 2, 2014, the Appellant received an e-mail from the Respondent wherein it was claimed that the fees of the Respondent was 16% of the amount received by the Appellant.
  • On December 11, 2014, a complaint was filed before the Hyderabad High Court under Section 138 of the Negotiable Instruments Act, 1881, stating inter alia that the cheque which was issued in discharge of liability having been returned unpaid for want of funds, the appellant committed the offence for which she was liable to be punished.
  • The High Court summoned the Appellant to which she stated that there was no legally enforceable debt and the fee was an unreasonable amount and against the law. It was contended that the claim violated the Advocates Fee Rules and Ethics as fee could not be demanded on percentage of amount awarded as compensation to the Appellant.
  • The Respondent opposed this contention by stating that the professional fee was agreed upon by the Appellant and now having availed his professional services, she could not contest the claim for fee. It was further contended that Senior Advocates were engaged in the case by the Respondent and paid huge amount for their services.
  • It was further argued by the Appellant that the fee claimed was against Andhra Pradesh Advocates' Fee Rules, 2010 of Subordinate Courts, ethics and public policy and hit by Section 23 of the Contract Act.
  • The High Court dismissed the quashing petition. It was stated by the High Court that Advocates' Fee Rules are only for guidance and there was no bar to fee being claimed beyond what is fixed under the Rules.

Issue Raised

1. Whether fee can be determined with reference to percentage of the decretal amount?

2. Whether the determination of fee can be unilateral and if the client disputes the quantum of fee whether the burden to prove the contract of fee will be on the advocate or the client?

3. Whether the professional ethics require regulation of exploitation in the matter of fee?

Appellant's Arguments

  • It was contended that the charging percentage of decretal amount by an advocate is hit by Section 23 of the Contract Act, being against professional ethics and public policy. Thus, the cheque issued by the Appellant could not be treated as being in discharge of any liability by the Appellant.
  • It was also contended that it is a settled law that any fees claim made by the advocate based on the percentage of the amount received as a result of litigation is illegal.
  • The Appellant claimed that the signing of the cheque was an exploitation of the fiduciary relationship of the Advocate and the client.
  • Judgements such as In the matter of Mr. G., a Senior Advocate of the Supreme Court ((1955) 1 SCR 490 at 494), R.D. Saxena versus Balram Prasad Sharma ((2000) 7 SCC 264), V.C. Rangadurai versus D. Gopalan ((1979) 1 SCC 308) were produced to support the claim.

Respondent's Argument

  • The Respondent No. 2 supported the order of the High Court of Judicature at Hyderabad. .
  • It was contended that there was no legal bar to claim professional fee by the Respondent. Further, it was stated that since the cheque was dishonored, the statutory presumption was in the favor of Respondent.
  • It was claimed that the Appellant made out no ground for quashing the petition.

Court's Findings

  • While discussing about Professional Misconduct and whether the fees could be charged as a part of the decretal amount, the Court took into consideration certain judgements -
  • Re: KL Gauba1, wherein it was held that the fees conditional on the success of a case and which gives the lawyer an interest in the subject matter tends to undermine the status of the profession. The same has always been condemned as unworthy of the legal profession. If an advocate has interest in the success of the litigation, he may tend to depart from ethics.
  • In the matter of Mr. G.: A Senior Advocate of the Supreme Court2, it was held that the claim of an advocate based on a share in the subject matter is a professional misconduct.
  • In VC Rangadurai versus D. Gopalan3, it was observed that relation between a lawyer and his client is highly fiduciary in nature. The advocate is in the position of trust.
  • Thus, the Court was of the view that the application of the Respondent deserves to be quashed as it was against the public policy and a grave professional misconduct.
  • Further, it was stated by the Court that Respondent no. 2 prayed to withdraw the complaint to which it was replied that 'Having committed a serious professional misconduct, the Respondent No.2 could not be allowed to avoid the adverse consequences which he may suffer for his professional misconduct'.
  • Talking about the importance of the legal profession the Court stated that 'Undoubtedly, the legal profession is the major component of the justice delivery system and has a significant role to play in upholding the rule of law. Significance of the profession is on account of its role in providing access to justice and assisting the citizens in securing their fundamental and other rights.' The Court was of the view that it is the fundamental right of the poor to get justice and the exorbitant amount charged as fees by the Advocates is serious violation of this right.
  • Further, the observations made in the 131st Report of the Law Commission, 1988, were brought to light. These were:
    • Role of the legal profession in strengthening the administration of justice must be in consonance with the mandate of Article 39A to ensure equal opportunity for access to justice.
    • It was observed that like public hospitals for medical services, the public sector should have a role in providing legal services for those who cannot afford fee.
    • Referring to the lawyers' fee as barrier to access to justice, it was observed that it was the duty of the Parliament to prescribe fee for services rendered by members
  • of the legal profession. First step should be taken to prescribe floor and ceiling in fees.
  • Also, it was highlighted that 'Mandate for the Bench and the Bar is to provide speedy and inexpensive justice to the victim of justice and to protect their rights. The legal system must continue to serve the victims of injustice.'
  • Focusing on the sleeping nature of the system, the Court pointed out that though the 131st Law Commission Report was submitted in the year 1988, still no step is taken in the last 29 years.

Thus, in the judgement the Court expected and directed the authorities to look into the matter by introducing requisite legislative changes and put a cap on lawyers' fees so that access to legal services to get justice is warranted.

Footnotes

1 AIR 1954 Bom 478

2 (1955) 1 SCR 490

3 (1979) 1 SCC 308

For further information please contact at S.S Rana & Co. email: info@ssrana.in or call at (+91- 11 30562000). Our website can be accessed at www.ssrana.in

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