If there is no legal liability to pay legal costs then this is likely to be contrary to the Australian Solicitors Conduct Rules 2012 (Qld) (‘ASCR’). Rule 4 details various ‘fundamental ethical duties’ including being honest in all dealings in the course of legal practice. Rule 34.1.1 states that a solicitor must not make any statement which grossly exceeds the legitimate assertion of the rights or entitlements of their client and which misleads or intimidates the other person. Rule 8 states that a solicitor must follow their client’s lawful and proper instructions.
Solicitors need to be especially careful how they word their letters following the case of Australian Competition and Consumer Commission v Sampson [2011] FCA 1165 (‘Sampson’). The issue in that case was misleading and deceptive conduct contrary to s 52 Trade Practices Act 1974 (Cth) (now s 18 of the Australian Consumer Law). You must make sure that you do not misrepresent or overstate the consequences of non-payment of an alleged debt.
The Queensland Legal Services Commission refers to the Sampson decision in ‘Regulatory Guide 7- The Application of the Australian Consumer Law to the Provision of Legal Services’.1
1 Legal Services Commission, ‘Regulatory Guide 7 – The Application of the Australian Consumer Law to the Provision of Legal Services’ (2013) <https://www.lsc.qld.gov.au/publications/regulatory-guides/7.-the-application-of-the-australian-consumer-law-to-the-provision-of-legal-services>.