The Attorney General of Uganda recently issued guidance that damages and monetary awards from litigation against the government should be paid directly to litigants, rather than their advocates. The Attorney General argued that this was to ensure transparency, amid concerns over advocates withholding significant portions of these payments from their clients. The Attorney General also emphasised that his office should not be used to enforce advocate-client fee agreements and that any awarded costs would be paid directly to the litigants.
However, a recent High Court decision in Kamau Eng. International Jansen v Rushokora, ruled that costs of a suit belong to advocates, not their clients. This article examines the legal intricacies, limitations, and entitlements of advocates and litigants concerning costs in legal proceedings.
The case
In Kamau Eng. International Jansen v Rushokora, a party conducted who dismissed his counsel chose to represent himself. Upon success, he filed a bill of costs in the same manner as an advocate. The bill of costs was taxed ex parte and allowed by court.
On appeal, the High Court set aside the taxation proceedings and ruled that there is no room in the Advocates Act for litigants to claim professional costs, even if they are the ones who paid for the legal services and costs.
The court clarified that litigants are not entitled to make profit in litigation but rather they are entitled to their disbursements expended during the trial. A litigant should not share in the professional remuneration with the Advocates, costs of a suit in real terms belong to the advocate of a successful party.
The rationale is that although party and party costs are awarded to a party, the mandate to file a bill of costs originates from the Advocates Act and is reserved only for Advocates. The successful litigant may recover court fees, reasonable expenses incurred for witnesses, and reasonable charges and fees paid to their advocate.
The court further held that the profit costs in respect of an advocate's work are simply paid over to the advocate. Whatever the litigant receives over and above his disbursements he must pass onto his advocate, and he cannot keep any part of it. If he or she does, the advocate will be sharing fees with an unqualified person and will be committing an offence. In fact, the advocate receives all monies, and he pays over to his client only what is due to him under the judgment of the Court.
Attorney General directs payments to litigants and not their advocates
The Attorney General has advised that decretal payments ought to be made directly to litigants and not their Advocates. He explained that government is not privy to the agreements advocates have with their clients and that therefore lawyers should enforce their agreements with their clients, without involving the government. This emerges amidst growing public concerns that Advocates unfairly retain large portions of the decretal sums received for their clients.
Case in point is Geoffrey Nangumya v Attorney General. The petitioner, an Advocate, faced disciplinary action by the Uganda Law Council for withholding client funds received after representing them in a lawsuit. The Council ordered repayment of the decretal sum to the client, allowing the petitioner to retain only the taxed costs. The High Court upheld this decision, citing professional misconduct. The petitioner filed a petition in the Constitutional Court, claiming constitutional violations and asserting a lien on the funds. The Constitutional Court ruled that Advocates have no right to withhold decretal sums which rightfully belong to their clients.
In the Kamau and Nangumya rulings, the Attorney General's advice is accurate in stating that decretal payments should be made directly to the litigants. However, this guidance is flawed in respect of payment of legal costs, which must be paid to the Advocate.
The Attorney General's directive stirred up controversy as it presents a direct risk to the Advocate should his client not remit the taxed costs. To mitigate this risk, Advocates have been including their remuneration terms in the court decree. It is common that these agreements often go beyond a claim for the taxed costs.
In Matovu & Matovu v Attorney General, the Court of Appeal ordered that 80% of the decretal sum be paid to the litigants and 20% be paid to their lawyers. Whereas the Court was moved to balance policy considerations, the order was with respect, erroneous as the full decretal sums are property of the client.
The upshot of the decision was that the 20% for the Advocate would be drawn from the clients` monetary awards and not limited to the taxed costs. The fee was by implication, a success fee prohibited by the Advocates Act. The law prohibits Advocates from sharing a damages award with a client, or from entering contingency or success fees arrangements. The High Court in Byenkya Kihika and Company Advocates v Fang Min, has held that agreements which provide for the sharing of a proportion of the proceeds of a judgment, whether by way of percentage or otherwise, either part or the entire amount of the Advocate`s fees, are champertous and illegal.
The decision is also inconsistent with the Nangumya decision. The Advocates should have filed their bill in accordance with the remuneration rules in the event they had a claim for unpaid costs.
The High Court wrongly followed the decision in Matovu & Matovu in GP Advocates v AG, with similar facts. GP Advocates and their litigants had agreed to 20% payment of the pension sum as their legal fees.
Consequently, if the Attorney General pays taxed costs to clients, clients must then pay the profit costs to their advocates. This, however, is a potential minefield and could lead to situations where clients fail to remit these costs to their advocates.
In line with Kamau and Nangumya, the Attorney General should reconsider his advice and direct decretal payments to go directly to litigants, while costs are paid directly to Advocates.
Conclusion
The costs of a suit belong to the Advocate who has a duty to reimburse the client for any professional fees and reasonable disbursements paid. As such, costs should be paid directly to the Advocate by a judgment debtor.
As reaffirmed by the Constitutional Court in Nangumya, the decretal sum, aside from costs, belong to the litigant and must be paid directly to the litigant, not to the Advocate. This distinction provides clarity in the handling of payments arising out of litigation, protecting the interests of both litigants and their Advocates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
