In Bechara t/as Bechara & Co v Atie,1 McColl JA considered the expression "satisfactorily secured”.2 Her Honour noted:
The expression "satisfactorily secured” should be understood, both by reference to the authorities dealing with possessory liens, and in its textual context, to refer to the provision, in lieu of payment, of something of monetary value which would ensure the satisfaction of the possessory lien. Like should be replaced with like …3
The test of what constitutes "reasonable security” is an objective one.4
A general undertaking to pay the former solicitor’s costs and disbursements as agreed or assessed is probably not "reasonable security” if proffered by the substituted solicitor as it does not satisfactorily serve the first solicitor’s possessory lien. It would not, without more, provide an equivalent in monetary value to the first solicitor’s claim for costs and disbursements.5
An undertaking by the former client to pay into court the proceeds of any judgment or settlement obtained will not be reasonable security: a former client not being an officer of the court cannot be visited with the sanctions that could fall on the head of a substituted solicitor.6
Rule 15.1.1(ii) contemplates a tripartite agreement whereby the verdict or settlement monies will be retained by the substituted solicitors to the extent necessary to meet the former solicitor’s costs and disbursements – this would be "reasonable security”.7
McColl JA stated that where a solicitor accepts an engagement to undertake litigation on behalf of a client on the basis that payment of professional costs will only be required in the event of a successful outcome, and the client terminates the engagement, then reasonable security would commonly take the form of a tripartite agreement to which the former client, former solicitor and the substituted solicitor are parties, with the verdict or settlement monies to be retained by the substituted solicitor to the extent necessary to meet the former solicitor’s costs.8
1 Bechara t/as Bechara & Co v Atie [2005] NSWCA 268, [64] (‘Bechara’).
2 This is the expression used in the repealed Legal Profession (Solicitors) Rule 2007 (Qld). Compare with the term "reasonable security” used in ASCR r 15.
3 Bechara (n 1) [64].
4 Ibid [65].
5 Ibid [67].
6 Stark v Dennett [2007] QSC 171, [29] (Douglas J).
7 Bechara (n 1) [65].
8 Ibid [66].