ADVOCATES

AND
MONEY
IN UGANDA
 “Why do you want to be a lawyer?”

• Legal Practice as a Path to Riches

• The Myth of the Lawyer Wealth
• Many lawyers work long hours in high-pressure
situations with little to show for their efforts in
terms of material gain.
• Other advocates, particularly those who have
just completed their educational requirements,
find it very difficult to find remunerative legal
work.
 Cont’d
• Many advocates stretch their finances to put on
such appearances and fail to build up real
wealth.
• Right Motivations for a Career in Law
• You need to be motivated by more than
financial gain. Otherwise, you are likely to be
disappointed.
• It is about service to a system of justice and
service to people.
 Financial Pressures on the Legal
Practitioner
• The Desire for Instant Success
• “Keeping Up with the Joneses”
• Perceived Just Desserts - Many lawyers feel they
are smarter than other members of society and
deserve more.
• Viewing Clients as Economic Opportunities. Many
advocates view clients as economic opportunities
to be exploited. Money-hungry lawyers encourage
their clients to undergo expensive but unnecessary
legal procedures.
 Cont’d
• The Struggle to Make a Living - Common
needs including decent housing, a suitable
wardrobe and transport.
• Developing a budget. The budget should be
realistic and in line with available financial
resources.
• Young lawyers should also avoid unnecessary
expenses and focus on needs rather than
wants.
 Cont’d
• Family and Community Pressure
• Many advocates in Uganda face financial
pressure from families and home communities.
• Cash Flow Pressure and Other People’s Money
• Cash flow is a business’s ability to access money
when it needs the money.
• Cash flow problems are particularly acute in a
place like Uganda where credit can be difficult to
obtain and interest rates are exceedingly high.
 Cont’d
• When an advocate needs cash to pay bills and
other pressing concerns, the advocate may be
tempted to access funds held in trust for a
client or other third party.
 Fees for Legal Services
• An advocate is entitled to be paid for the legal
services the advocate provides.
• The fee an advocate is entitled to charge is
regulated by the Advocates (Remuneration
and Taxation of Costs) Rules, SI 367-4.177
• Every advocate is required to charge fees in
compliance with the scales of fees set out in
the Rules.
 Minimum Fees for Legal Services
• Rule 4, sec.74(1)g and h provide for rules
against “undercutting.”
• The rules are intended to avoid unfair
competition and ensure adherence to
professional standards in legal practice.
• It is an offence for an advocate to engage in
undercutting.
 Fees in Excess of the Minimum Fees
• The fee scales in the Rules are floors and not
ceilings.
• Advocates may charge fees above the scale as
long as those fees are reasonable especially
matters of exceptional complexity, matters of
high importance and matters where
exceptional dispatch (speed) is required.
 Cont’d
• The test for excessive fees is a matter of
degree.
• According to Regulation 28(2) of the
Advocates (Professional Conduct) Regulations
advocates may not charge fees that are
“excessive or extortionate.”
• What amounts to excessive and extortionate is
left for the fact finder to determine.
 Fees Taxed as Costs
• Party to-party costs should be charged on
scale.
• The Court/Taxing Master has wide discretion
in fixing fees when taxing costs. In Patrick
Makumbi & Another v. Sole Electronics
(U) Ltd, Civil Application No. 11 of 1994
(Supreme Court of Uganda),
 Cont’d
• The Court noted inter alia: “that there is no
mathematical or magic formula to be used by
the Taxing Master to arrive at a precise figure.
• Each case has to be decided on its own merit
and circumstances.
 Cont’d
• For example, a lengthy or complicated case
involving lengthy preparations and research
will attract high fees, amount of the subject
matter involved may have a bearing.
 Cont’d
• While a successful litigant should be fairly
reimbursed the costs he has incurred, the
Taxing Master owes it to the public to ensure
that costs do not rise above a reasonable level
so as to deny the poor access to Court.
• However, the level of remuneration must be
such as to attract recruits to the profession.”
 Retainers
• An advocate may be engaged on retainer
basis.
• When a retainer is provided, the advocate
should be careful to keep those funds in a
separate account and only take down the
retainer to the extent that fees or costs
accrue.
 Cont’d
• In accordance with regulation 8 (3) of the
Advocates (Professional Conduct) Regulations,
an advocate shall return the portion of the
retainer in excess of the value of the work
done and disbursements made on behalf of
the client.
Fees in Connection with Land Transactions

• The Advocates (Remunerations and Taxation of

Costs) Rules lay down various scales for charging
fees for the vendor’s and purchaser’s advocates.
• Rule 14(a) provides that subject to rule 19 of
these Rules, the scale of charges by an advocate in
respect of conveyancing and general business
shall be regulated in respect of sales, purchases,
mortgages and debentures completed, the
remuneration shall be that prescribed in the First
Schedule to these Rules.
 Cont’d
• The Second Schedule regulates fees in respect of
leases, agreements for lease or conveyances
reserving rents or agreements for the same
completed.
• Under the First Schedule, the vendor’s advocate,
purchaser’s advocate, mortgagor’s advocate or
mortgagee’s advocate is entitled to charge 15% on
the first 1,000,000/=; 10% from 1,000,000/= to
10,000,000/= and 5% where the value is over
20,000,000/=
 Cont’d
• In practice, many clients are not willing to pay the
stipulated fees as per scale. This is more common
where the transaction is over 100,000,000/=.
• Many lawyers often find themselves in an ethical
dilemma when charging fees in such transactions.
• Lawyers that are hungry for business are often
willing to charge less than the fee amount
stipulated by the Rules.
 Cont’d
• When there is a disconnection between practice
and rule it is often a good time to reassess the rule.
• In this instance perhaps the fee schedule did not
contemplate the dramatic increases in real property
values that have occurred since its adoption.
• As a result, legal fees have risen to very high
amounts that might not reflect the value of the
legal work that needs to be done to accomplish
such transactions.
 Cont’d
• Another special ethical consideration in land
cases are situations where the advocate’s fee
is paid with real property.
• Given the high cost of legal fees in land
transactions, parties to the land transaction
might ask the advocate to agree to payment
through receipt of a portion of the subject
land.
 Cont’d

• Here the advocate should take steps to make

sure that the value of the land is in line with
the amount owed for legal services.
• It is wise to engage an assessor to establish
the market value of the portion of land the
advocate is to receive.
 Non-Monetary Fee Payments
• The Advocates (Remuneration and Taxation of
Costs) Rules envisage that fees should be paid
in monetary terms.
• Similarly, the advocate should strongly
encourage their clients to pay their legal fees
in cash.
• In practice, however, some clients may not
have access to cash but may have access to
property that has substantial monetary value.
 Cont’d
• It is common for such clients to suggest
alternative means of payment.
• Property proffered as a non-monetary
payment should be appraised by a neutral
third party.
• The appraisal will help to ensure the advocate
is not paid below scale and that the client is
not overcharged.
 Cont’d
• The appraisal also prevents clients and others
from coming back and accusing the advocate
of taking advantage of a client’s inability to
access cash.
• The appraisal ensures that the parties enter
the transaction with their eyes wide open.
 Contingent Fee Arrangements
• Contingent fee arrangements are agreements
that enable lawyers to receive a percentage of
a recovery a client makes in a legal action.
• The agreements are called “contingent”
because the lawyer does not receive a fee
unless the client makes a recovery in the
matter either through settlement, award or
judgment
 Cont’d
• Regulation 26 prohibits contingent fee
arrangements.
• The rationale against contingent fee
arrangements is that it enables some lawyers to
extract very large fees that are sometimes well
beyond what they would earn if they were being
paid by the hour.
• Contingent fee agreements are more lucrative to
lawyers when the damages to the client are high.
 Cont’d
• Despite the ban on contingent fee
arrangements, the Advocates Act provides
mechanisms for facilitating legal work through
anticipated payments derived from the
subject matter of the legal work.
• These statutory allowances enable clients that
might not otherwise be able to afford legal
representation to access justice.
 Cont’d
• However, such arrangements merely provide
for the eventual payment of the cost of the
legal services provided and do not enable
advocates to reap a defined percentage of a
legal recovery.
• Section 51 of the Advocates Act sets out the
procedure for such agreements. Specifically,
Section 51(1) provides as follows:
 Cont’d
• (1) An agreement under section 48 or 50 shall
• (a) be in writing;
• (b) be signed by the person to be bound by it;
• (c) contain a certificate signed by a notary public
(other than a notary public who is a party to the
agreement) to the effect that the person bound
by the agreement had explained to him or her
the nature of the agreement and appeared to
understand the agreement.
 Cont’d
• A copy of the certificate shall be sent to the
secretary of the Law Council by prepaid
registered post.
• Non-compliance with Section 51(1) renders
such an agreement with a client
unenforceable and such an advocate shall be
guilty of professional misconduct.
Terminating the Advocate/Client Relationship for Non-
Payment

• Failure to pay the fees in accordance with the

fee arrangement is grounds for termination of
the advocate client relationship.
• The advocate also has the right to collect
unpaid fees through legal action.
 Client funds
• Advocates are accountable for all money they
handle on behalf of clients.
• Serious consequences follow failure to
account for a client’s money. An advocate who
fails to account for client funds is subject to
disciplinary proceedings before the Law
Council in Uganda.
 Cont’d
• The Advocates Accounts Rules require every
advocate to keep proper account of clients’ money.
• Advocates are required to pay client’s money into
the client account separate.
• An advocate who contravenes or fails to comply
with any of the Advocates Accounts Rules or the
Advocates Trust Accounts Rules shall be guilty of
professional misconduct and of any offence against
the provisions of this part of this Act.
 Cont’d
• In addition, Regulation 8 (1) of The Advocates
(Professional Conduct) Regulations makes it
unlawful for an advocate to use money held
on behalf of his client for the benefit of
himself or of any other person.
• Such an advocate could be charged with theft.
 Management of Trust
Accounts
• An advocate-trustee should establish a
separate trust account on which all money
due to the trustees under the trust is to be
kept.
• This account should be set up separate from
the client account as required by the
Advocates Accounts Rules in the 1st Schedule
to the Act.
 Cont’d
• The account is to be kept at a bank in the
names of the trustees of the trust.
• Such account must be kept solely for money
subject to a particular trust of which the
advocate is advocate-trustee.
• It is preferable to keep the account at a bank
that has minimum operation charges so that
the trustees do not lose money in unnecessary
bank charges.
 Peripheral Transactions Involving
Advocates and Clients
• There are certain transactions that raise special
ethical issues for the advocate.
• Among these are property transactions with
clients, wills where an advocate is a beneficiary
and advancements of funds by
advocates to clients
• If not well handled, such instances may result
into conflicts between the client and advocate.
 Wills and Testamentary Instruments
• Before a client instructs an advocate to draft or
prepare a will for him or her, he or she will normally
have a high level of trust in the advocate/attorney.
• An advocate instructed to prepare a client’s will
must take caution to ensure that he or she does not
breach this trust.
• He or she must maintain a high level of
secrecy and confidentiality in relation to the
contents of the will.
 Cont’d
• There is no statute or regulation that expressly
forbids advocates from being listed as
beneficiaries in a will that they have assisted
in drafting for a client.
• However, the practice is not advisable and
should be avoided when possible.
 Cont’d
• It is preferable to have an independent
advocate prepare the will where a client
notifies the assisting advocate of the client’s
desire to name that advocate as a beneficiary
to the will.
 Cont’d
• An advocate is prohibited from using “his
fiduciary relationship with his clients to his
own personal advantage.”
• A court probating a will that lists the drafting
attorney as a beneficiary will apply scrutiny to
the bequest.
Business Transactions with Clients
• In some instances, an advocate may enter into
a business transaction with a client.
• The client may propose or offer to sell
something to the advocate or buy something
from him or her.
• In most of such transactions, the advocate
may be more knowledgeable than the client
with regard to the legal requirements of the
transaction.
 Cont’d
• The advocate should ensure that he or she
does not take advantage of the client or
exploit their position.
• The advocate should take reasonable steps to
ensure that the price is fair and that the client
has an opportunity to seek independent
advice, if he or she so desires.
 Cont’d
• Section 74 (1) (j) of the Advocates Act makes it
an offence for an advocate to deceive or
mislead any client or allow him or her to be
deceived or misled in any respect material to
the client.
• An advocate should never engage in a
business that is incompatible with his practice
at the Bar.
 Monetary Advancements

• At times a client may request an advocate to

lend him or her money upon such terms as
may be agreed upon.
• Such requests raise special concerns given the
ethical rules concerning the advancement of
funds.
• Regulation 27
 Cont’d
• A loan to a client could be considered an end
run around this provision particularly if there
is an expectation that the loan will be paid off
after the resolution of a matter that the
advocate and client believe will result in a
financial benefit to the client.
 Conclusion

• Money matters are important matters in legal

practice.
• Advocates must act beyond reproach in the
way they handle financial matters.
• Advocates must be guided by their fiduciary
duty to clients and their status as
professionals and officers of the court.
 Cont’d
• While advocates are entitled to make a living,
advocates must be concerned with more than
making money in order to meet their special
obligations to clients, courts and society.