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Engaging solicitors and legal counsel and negotiating rates

Information for insolvency practitioners on engaging solicitors and legal counsel and negotiating the best rates.

Last updated 14 May 2020

Legal and policy obligations imposed on the Deputy Commissioner of Taxation (DCT) require that all spending proposals must make efficient, effective, economical and ethical use of Commonwealth resources.

The DCT will normally seek to negotiate the best possible rates with the insolvency practitioner. They will require the insolvency practitioner to negotiate the best possible rates with their solicitor and legal counsel.

The DCT will require the practitioner to engage solicitors and or legal counsel based on value for money.They will need to take into account the nature and complexity of the action, the tasks required to be undertaken and the level of knowledge, skills and experience that are required to achieve the desired outcome in each case.

The DCT may suggest solicitors and legal counsel or provide a short list for the insolvency practitioner to consider. Ultimately, as the indemnifying creditor, the DCT will need to be satisfied of the solicitors and legal counsel to be engaged and the rates they propose to charge in order for the indemnity to be approved. However, the DCT will work with insolvency practitioners to resolve any difference of opinion.

The same applies to other experts of any nature that may need to be engaged by an insolvency practitioner during the course of litigation and pursuant to the terms of a Deed of Indemnity.

The DCT may require insolvency practitioners, through their solicitors, to engage a legal counsel who is prepared to charge daily and hourly rates. This will be at their Commonwealth rate as set by the Attorney-General's Department (AGD), Office of Legal Services Coordination (OLSC), pursuant to the Legal Services Directions 2017External Link (in particular Appendix D – Engagement of counsel) which is issued by the AGD.

The approval of an indemnity and entering into of a Deed of Indemnity does not remove any legal obligations that may be imposed on insolvency practitioners to seek creditor, committee of inspection, or court approval of their remuneration, or any other amounts where approval is required to be obtained before being paid.

Where such approval is required, the DCT will only pay amounts that have been properly approved and only up to the limits specified in the Deed of Indemnity. For example, if creditors, the committee of inspection, or the court approves a lesser amount than has been provided for in the Deed of Indemnity, the DCT will only pay the lesser approved amount.