Introduction
The issue of whether attorneys are permitted to recover costs in successful pro bono litigation has been debated, without resolution, for years. As a general rule in ordinary matters, fees and disbursements are awarded to a litigant and not the attorney. In a pro bono matter the litigant would have incurred disbursements only, and it is the attorney who is out of pocket for the fees. It is therefore only the disbursements incurred by a client that are generally recoverable. There has been less certainty with the fees portion of the costs. It was accepted that it was not advisable for attorneys rendering pro bono assistance to attempt to recover the fee portion of a costs order but that they could only recover disbursements actually incurred by their clients. The basis for such reasoning was that the recovery of fees on pro bono matters would jeopardise its pro bono status. In addition to this, the Attorneys Act, 1979 is the only piece of legislation which has broached the topic. Section 79A of the Act stipulates that only law clinics may recover fees. It remains silent on whether or not attorneys may recover fees. The only other mechanism for recovering pro bono fees is through High Court Rule 40(5) which allows for successful litigants who sue in forma pauperis to recover costs. This does not apply to matters taken on by attorneys on a voluntary basis. A similar provision is found in Rule 53 of the Magistrates Court Rules for litigants suing pro deo. This however does not cover litigation in the higher courts.
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Why is clarification on the issue of costs required urgently?
There are several reasons as to why time has come that the issue surrounding the recovery of pro bono fees requires clarification. Firstly, noble aspirations aside, law is a business. Profits must be made in order to survive and thrive. Offices have to be maintained and staff paid. Resources cost money. Against this background, it is easy to understand that the billable hour, paying clients and fee targets are king. The restriction on recovering costs discourages practitioners from litigating pro bono. Consideration has to be given to the issue of costs because being able to recover both fees and disbursements, is an important tool in encouraging practitioners to take on pro bono work without having a crippling effect on business.
A second reason for clarification on the issue is that litigation in South Africa is adversarial, with complex rules of procedure, and the costs involved are more often than not prohibitive. Disputes are generally only settled after protracted periods and success of litigation often rests on the time and resources channeled into it. Whilst from the point of view of the generally accepted rule a pro bono client is supposed to pay for the disbursements incurred in the litigation process, in practice, however, pro bono clients are often so poor that they cannot even cover disbursements. Without incurring disbursements, the success of such litigation would be jeopardized. The responsibility to shoulder the costs of such disbursement therefore generally falls on the practitioner, a burden which can be challenging.
In addition to this challenge, the inability to recover costs on pro bono matters poses the risk that opposing parties can litigate against a pro bono client with impunity. This could make way for frivolous or vexatious litigation resulting in the attorney wasting time on unnecessary litigation at the expense of fee paying or other pro bono matters. In addition to this, the current stance does not prevent costs being awarded against the indigent litigant if unsuccessful. In this regard, adverse costs orders against unsuccessful indigent litigants can result in the perpetuation of the cycle of poverty.
Since the imposition of compulsory pro bono schemes by both the Cape Law Society and the Law Society of the Northern Provinces, clarity on the question of recovering pro bono schemes is urgently required. [LW to elaborate]
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A shifting approach to costs by the higher courts
Fortunately in recent times, the courts have started providing some clarity on issues surround costs. Whilst not directly on point for pro bono matters where an individual's rights alone are being protected, the Constitutional Court settled the question of costs awards in matters that affect the public interest in the case of The Trustees for the Time Being of the Biowatch Trust v The Registrar, Genetic Resources and Others (2009 (6) SA 232 (CC)). The court found that while the awarding of costs is discretionary, the general principle is that a successful party is entitled to costs. The Biowatch judgment considered the issue of costs in constitutional matters and deviated from this general principle. The court recognised that adverse costs awards may create a disincentive to litigants acting in the public interest, and clarified the rules regarding costs awards in constitutional matters. Firstly, a party successful against the state is entitled to costs, but a losing party against the state in a legitimate constitutional claim is not made to pay the state’s costs. In this case, each party will bear its own costs. Secondly, if the matter is between two private parties, the successful party is entitled to costs unless exceptional circumstances exist which allow a departure from the general principle. The fact that the matter is in the public interest is considered when determining whether these exceptional circumstances exist. The courts have thus effectively protected public interest litigation from the deterrent effect of adverse costs orders which could be crippling for practitioners who have funded the cost of such public interest litigation themselves.
The Labour Court in Zeman v Quickelberge and Another1 confronted the confusion around awarding costs to pro bono litigants and went as far as to award costs to the pro bono litigant on the attorney-client scale. The court began by considering the question whether it would be proper to award costs generally in such matters, and quoted favourably the unreported judgment of Lorna Naude v BioScience Brands Ltd (C 842/08, 11 March 2010, unreported) in which costs were awarded to a successful pro bono litigant.
The court in Zeman stated that pro bono clients are at a disadvantage in that they are generally only awarded costs sufficient to cover disbursements. This enables the opponent to “litigate with impunity, discourages settlement and militates against the public interest.” Further, it is unfair because there is no constraint on the opposing party to obtaining an order for costs against the pro bono litigant. The defendant in Zeman had acted in such an unconscionable manner that the court saw fit to order an adverse costs order on a scale higher than the usual party and party scale.
The argument that the recovery of costs would nullify the pro bono nature of the services rendered was rejected, as the court noted that allowing costs to be recovered may increase access to justice by encouraging attorneys to take on pro bono work.
The judgment clarifies the fact that costs may be recovered on the attorney-client scale in pro bono matter as well, as long as the usual requirements regarding the justification of such an award are met. The Zeman judgement is to be commended for its firm approach to the issue of costs in pro bono matters. Whatever costs are awarded against a pro bono litigant remains a matter in the discretion of the court hearing the matter.
The North Gauteng High Court also seems to be shifting its approach to pro bono costs orders. In the pro bono matter of RM Pearse NO & D Thathana v The Minister of Safety & Security (C37551/2008, 13 April 2010, unreported) when making a settlement an order of court, included in its order the plaintiff's costs and costs of counsel and experts, all of whom had acted on a pro bono basis. Whilst this is not precedent setting, it indicates a change in attitudes. Hopefully the higher courts will start setting precedents along these lines in the near future.
- Zeman v Quickelberge and Another (C45/2010) [2010] ZALC 122
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The future of pro bono costs
Looking forward, section 94 of the Legal Practice Bill, 2010 explicitly provides for the recovery of costs - inclusive of fees - where legal services have been rendered free of charge. In such cases, the pro bono litigant is deemed to have ceded his/her rights to costs to the legal practitioner. The Legal Practice Bill will therefore when it is promulgated finally resolve the longstanding debate. In the meantime, or until such time as binding precedent is set in the higher courts, it is suggested that at the outset of the matter (should you be shouldering not only your fees as well as disbursements) you enter into a cession agreement with your client which stipulates that should your client be awarded costs in the form of both fees and disbursements (such as in the scenario of RM Pearse NO & D Thathana v The Minister of Safety & Security) the right to such award be ceded to you. The Law Society of the Northern Provinces (LSNP) provides a useful agreement (found on the pro bono section of its website) for the cession from client to attorney of costs, which indicates that attorneys are allowed to enter into agreements with clients whereby any costs recovered are ceded to the attorney. Where costs are successfully recovered either through court order or through cession, it is suggested that these costs be held in a separate business account in order to fund the disbursements of future litigation. This will in turn have the desired effect of increasing access to justice and decreasing the burden of practitioners to fund litigation.
Whilst the practice is that costs order can be recovered in successful pro bono litigation, neither the courts nor the Legal Practice Bill have dealt with the issue of adverse costs order against unsuccessful pro bono litigants litigating in respect of their individual rights. Practitioners therefore need ensure that when undertaking pro bono litigation, the merits of the matter should be strong and that the client is not litigating frivolously and vexatiously. In addition, practitioners must ensure that pro bono litigation is attended to diligently and to the best of one's ability. Litigation handled poorly, which could result in an adverse costs order, could have the severe consequences of perpetuating the client's cycle of poverty.
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