277Effect of failure to disclose

277 Effect of failure to disclose (1) If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Note Under s 302 (Costs of costs assessment), the costs of an assessment in these circumstances are generally payable by the law practice. (2) A law practice that does not disclose to a client or an associated third party payer anything required by this division to be disclosed may not bring a proceeding against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under division 3.2.7. (3) If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed and the client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party payer may also apply under section 288 (Setting aside costs agreements) for the costs agreement to be set aside. (4) If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, the amount of the costs may, on an assessment of the relevant legal costs, be reduced by an amount considered by the Supreme Court to be proportionate to the seriousness of the failure to disclose.

(5) If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to the client only because the retained law practice failed to disclose relevant information to the first law practice as required by section 270 (2) (Disclosure if another law practice is to be retained), subsections (1) to (4)— (a) do not apply to the legal costs owing to the first law practice on account of legal services provided by it, to the extent that the non-disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information; and (b) do apply to the legal costs owing to the retained law practice; (6) In a matter involving both a client and an associated third party payer, if disclosure has been made to 1 of them but not the other— (a) subsection (1) does not affect the liability of the person to whom disclosure was made to pay the legal costs; and (b) subsection (2) does not prevent proceedings being maintained against the person to whom the disclosure was made for the recovery of the legal costs. (7) Failure by a law practice to comply with this division can be unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian-registered foreign lawyer involved in the failure.