A Costs Agreement 16 Days Too Late: Law Firm Loses Its Charge, Its Lien, and Pays Costs on Appeal

In AF Lawyers & Pirani [2026] FedCFamC1A 155, the Full Court dismissed an appeal by a law practice that had intervened in family law property proceedings to recover unpaid legal fees from its former client. The law firm tried to rely on its costs agreement, charging clauses over real property, and an asserted fruits of litigation lien. The appeal failed because the firm did not provide compliant costs disclosure and a costs agreement “as soon as practicable” after receiving instructions. The consequence was severe: the costs agreement was void under the Legal Profession Uniform Law 2014 (NSW), the charging clause could not be relied upon, there was no fruits of litigation lien, and the law firm was ordered to pay the second respondent’s appeal costs of $35,666.08.

🧩 Facts and Issues

Facts:

The appeal arose out of financial proceedings between Ms Pirani and her estranged husband under s 79 of the Family Law Act 1975 (Cth). Two law firms had acted for Ms Pirani at different stages and later intervened in the property proceedings to recover alleged unpaid legal fees. The appellant, AF Lawyers, acted for Ms Pirani from 24 April 2023 to 7 September 2023. The second respondent acted from 24 August 2023 to 17 September 2024.

AF Lawyers sought declarations that it had a fruits of litigation lien, that its lien had priority over the second respondent’s claim, that its debt was secured by an equitable charge over the Suburb J property, and that other parties should be restrained from transferring assets to Ms Pirani before its costs were paid. Its claim depended on clauses in its costs agreements: clause 20 for the lien and clause 33 for the charge.

The second respondent also claimed unpaid fees of $466,168.95 plus interest, and asserted its own charge over the Suburb J property. Ms Pirani opposed both firms’ claims.

At first instance, the primary judge dismissed AF Lawyers’ claim because it had not provided its costs disclosure and agreement to Ms Pirani as soon as practicable. The firm was first retained on 24 April 2023, but did not provide compliant costs disclosure and a costs agreement until 10 May 2023, 16 days later. The primary judge found that contravened s 174(1)(a) of the LPUL, making the costs agreement void under s 178.

Issues:

1. Did AF Lawyers provide costs disclosure and a costs agreement as soon as practicable?
2. If not, was the costs agreement void under s 178 of the LPUL?
3. Could the charging clause survive even if the costs agreement was void?
4. Did AF Lawyers have a fruits of litigation lien over Ms Pirani’s retained property?
5. Did Ms Pirani obtain or recover any “fruit” of the litigation to which a lien could attach?
6. Did the Court need to determine priority between AF Lawyers’ claimed charge and the second respondent’s charge?
7. What was the practical consequence for the law firm?

⚖️ Applicable Law – Legislation, Regulations, Rules

Family Law Act 1975 (Cth)

• s 79 — property settlement proceedings between spouses.

Legal Profession Uniform Law 2014 (NSW)

• s 174 — obligation of a law practice to disclose the basis on which legal costs will be calculated and an estimate of total legal costs.
• s 174(1)(a) — disclosure must be made as soon as practicable after instructions are initially given.
• s 174(3) — the law practice must take all reasonable steps to satisfy itself that the client understands and consents to the proposed course of action and proposed costs.
• s 178 — consequences of failing to comply with costs disclosure obligations, including that the costs agreement is void.
• ss 192 and 194 — issues concerning bills and notices.

Legal Profession Uniform General Rules 2015 (NSW)

• r 72A — possible amelioration of the consequences under s 178 if the law practice establishes the required conditions.

📌 Precedents Relied On

• Metwally v University of Wollongong — a party cannot raise a new argument on appeal that it failed to raise at trial.
• Robinson Helicopter Co Inc v McDermott — appellate challenge to factual findings requires showing the finding was glaringly improbable, contrary to compelling inferences, or demonstrably wrong.
• Bingham v Bevan — considered the effect of non-compliance with LPUL costs disclosure obligations.
• Ex parte Patience; Makinson v The Minister — classic explanation of a solicitor’s equitable lien over money recovered through litigation.
• Grogan v Orr — considered solicitor liens in the context of family law property proceedings.
• Jackson v Richards — important authority rejecting a broad lien merely because a solicitor helped a client preserve property.
• Australian Receivables Ltd v Tekitu Pty Ltd — considered when funds may be characterised as recovered or preserved through litigation.
• Sun Alliance Insurance Ltd v Massoud, Bennett & Bennett, and Fowles & Fowles (No 2) — adequacy of reasons.

🧠 Analysis

Issue

Was AF Lawyers entitled to enforce its costs agreement, charging clause or fruits of litigation lien against Ms Pirani’s property, despite having failed to provide compliant costs disclosure and a costs agreement until 16 days after being retained?

Rule

A law practice must give costs disclosure and a costs agreement as soon as practicable after receiving instructions. This is not a mere technicality. The purpose of the disclosure regime is to ensure the client can make informed choices about legal options, likely costs, and the consequences of agreeing to pay or secure those costs.

If the law practice contravenes the disclosure obligations, s 178(1)(a) provides that the costs agreement is void. A law practice may avoid the full consequence only if it satisfies the conjunctive requirements of r 72A, including reasonable steps to comply, rectification within time, and that the contravention was not substantial and would not reasonably have affected the client’s decision.

A solicitor’s fruits of litigation lien generally attaches to money or property recovered through the solicitor’s efforts. It does not automatically attach merely because a client successfully resists a claim and retains property they already owned.

Application

1. Sixteen days was not “as soon as practicable”

AF Lawyers first saw Ms Pirani on 24 April 2023. She was provided with a client information sheet and two estimates of costs during the conference, but those documents did not comply with the statutory disclosure requirements. The compliant costs disclosure and costs agreement were not provided until 10 May 2023, 16 days later.

The firm argued that the work was urgent, intensive and complex. It said Ms Pirani’s position required protective action, investigation, urgent interlocutory preparation and information about counsel’s fees before a proper estimate could be given.

The Full Court accepted that “as soon as practicable” depends on all surrounding circumstances and is not to be construed narrowly. But the Court agreed with the primary judge that the circumstances did not explain why compliant disclosure could not have been provided earlier.

During the 16-day period, the firm conducted six conferences, telephone attendances, searches, a property attendance, and drafted an application, affidavit and financial statement. The Court held this did not support the proposition that the firm was so consumed by urgent work that it was precluded from complying with its statutory disclosure obligations.

2. The early estimates did not save the firm

At the first conference, Ms Pirani was apparently given two large fee estimates: one of approximately $1 million or more, and another of more than $1.5 million excluding disbursements and counsel’s fees. But neither estimate complied with the LPUL disclosure obligations.

That was important. Providing a rough or informal estimate is not the same as giving statutory costs disclosure. The client information sheet also did not help because it expressly disclaimed that it was a costs estimate and did not contain the required information about Ms Pirani’s rights. The Full Court rejected any suggestion that the firm’s efforts before 10 May 2023 could be regarded as conscientious compliance.

The problem was therefore not just delay. It was delay in providing the legally required disclosure that allows the client to understand the proposed course, costs, rights and consequences.

3. The firm could have given disclosure and updated it later

A key practical point was that the firm did not explain why it could not provide disclosure early and then update it later if necessary. The Court noted that s 174(1)(b) permits updated disclosure and costs estimates. In fact, AF Lawyers later updated its costs agreement on 5 August 2023.

This weakened the firm’s excuse. If the case was urgent and uncertain, the firm could still have provided compliant initial disclosure and then revised it as the matter developed.

The Full Court held that the primary judge’s finding was open on the evidence and was not glaringly improbable, contrary to compelling inferences, or demonstrably wrong.

4. The primary judge’s reasons were adequate

AF Lawyers argued that the primary judge failed to give adequate reasons. The Full Court rejected that.

The primary judge had identified the time between retainer and disclosure, considered the urgency and intensity of the work, considered the work performed and costs incurred, and concluded that those matters might explain why disclosure was not immediately prioritised but did not establish why earlier disclosure was not practicable.

That was enough. A judge does not need to spell out every detail of reasoning if the pathway is discernible.

5. Rule 72A did not rescue the costs agreement

AF Lawyers tried to rely on r 72A to avoid the consequences of non-compliance. The difficulty was that, at first instance, it had not fully pursued the required arguments under r 72A, other than one aspect concerning rectification.

The three requirements under r 72A are conjunctive. AF Lawyers had to establish all of them. The primary judge found that the steps taken fell short of what was reasonable, that one requirement about rectification was satisfied, but that the firm had not addressed whether Ms Pirani would not reasonably have made a different decision had compliant disclosure been provided earlier.

The Full Court held that AF Lawyers was precluded from raising on appeal a point it did not properly argue at trial. That is the Metwally problem: a party cannot wait until after losing and then run a new argument that should have been put below.

6. The charging clause fell with the costs agreement

AF Lawyers argued that even if the costs agreement was void, the charging clause should survive. That charging clause purported to charge real property, including the Suburb G property in the first agreement and both Suburb G and Suburb J properties in the later agreement.

The Full Court rejected the firm’s position. The Court accepted that the purpose of the LPUL disclosure regime is to ensure a client can make informed decisions about legal options and costs. That purpose necessarily extends to understanding whether legal costs may be secured against the client’s property.

The Court reasoned that it would conflict with the statutory scheme if a law practice could fail to comply with its disclosure obligations but still enforce a clause charging the client’s property, particularly where the client may not have been properly informed of the financial consequences. The obligation under s 174(3) required the firm to take reasonable steps to ensure the client understood and consented to the proposed course and costs, including the property-security consequences.

So the charging clause could not be used to secure the firm’s claimed costs.

7. No fruits of litigation lien arose because there was no “fruit”

AF Lawyers also claimed a solicitor’s fruits of litigation lien. The problem was that Ms Pirani did not recover money, obtain a judgment in her favour, or receive property through the litigation. She merely retained property she already had.

The primary judge had found that although Ms Pirani resisted her husband’s claim for property adjustment, she was unsuccessful in securing an adjustment in her own favour. Her claim was dismissed. She obtained no monetary judgment and no property recovery. Therefore, there was no relevant fruit of litigation to which a lien could attach.

AF Lawyers argued that preserving property should be enough, especially in family law proceedings where the whole property pool may be under consideration. The Full Court rejected that broader approach. It preferred the reasoning in Jackson v Richards and Australian Receivables, drawing a distinction between recovering a fund or property through litigation and merely resisting a claim against existing property.

The Court was not prepared to extend the solicitor’s lien without authority. There were no proceeds of sale, no order realising Suburb J, no recovered fund, and no successful cross-claim by Ms Pirani producing property or money.

8. The priority argument became irrelevant

AF Lawyers also argued about priority between its claimed charge and the second respondent’s charge. But that issue only mattered if AF Lawyers had a valid charge or lien. It did not.

The primary judge had not decided priority between competing charges because AF Lawyers’ charge failed first. The Full Court said the complaint was misconceived. There was no need to determine priority where only the second respondent held security over the Suburb J property.

Conclusion

AF Lawyers’ appeal was dismissed. None of its 15 grounds had merit. The Full Court upheld the finding that AF Lawyers failed to provide compliant costs disclosure and a costs agreement as soon as practicable, meaning the costs agreement was void under s 178. The charging clause could not be relied upon, the fruits of litigation lien failed because there was no recovered fruit, and the priority dispute did not arise.

The appellant was ordered to pay the second respondent’s costs fixed at $35,666.08 within 30 days. Ms Pirani, being self-represented, did not seek costs.

🧠 Take-Home Lesson

This case is a major warning for family law practitioners about costs disclosure and security clauses.

A law firm cannot treat costs disclosure as paperwork to be fixed later after urgent work has already commenced. Even in a high-conflict, high-value, urgent family law property case, the statutory disclosure obligations remain central. If disclosure is not provided as soon as practicable, the costs agreement may be void, and the firm may lose the very charging clause it hoped would secure payment.

The case also limits the reach of a solicitor’s fruits of litigation lien. A lien is not created simply because the solicitor helped the client resist someone else’s claim. There must be identifiable fruit: money, property, proceeds, judgment, settlement, or some objectively recovered benefit produced by the solicitor’s work. Merely keeping what the client already owned is not enough.

The blunt practical lesson is this: if a solicitor wants to secure fees against a client’s property, the client must first be properly informed — early, clearly, and in compliance with the LPUL.