“Will the Real Lawyer PLEASE Stand Up!” – The FWC’s gripe with paid agents

Paid agencies and agents are becoming increasingly prevalent as representatives in Fair Work Commission (FWC) matters. A paid agent is an agent who charges or receives a fee to represent a person in the matter other than a lawyer.

Currently, section 596 of the Fair Work Act 2009 (FWA) provides that a paid agent may represent a person in a matter before the FWC on the condition that they have received permission from the FWC.  While engaging a paid agent (as opposed to a lawyer) may appear appealing to a person (an Applicant) from a cost-effective perspective, more often than not, the Applicant is at a significant disadvantage and their prospects of success often hindered due to paid agents not possessing the qualifications and expertise of a lawyer.

This has sparked the FWC’s increasing criticism of paid agents and their practices with demands for more robust regulation of the currently unregulated industry. See Paid Agents Working Group established | Fair Work Commission (fwc.gov.au)

 

What is the difference? What are the risks?

The conduct of lawyers is regulated by professional and ethical conduct rules as well as statutory requirements. Among others, this regulation imposes an obligation for a lawyer to act in the best interests of their client, follow their client’s instructions (where lawful and competent) and provide clear, competent and timely legal advice and services to their client.

In contrast, no regulatory framework exist which governs paid agents.  This has led to the FWC exercising its discretionary power to uphold its paramount obligation of ensuring it operates in a fair and transparent nature.

 

What does this really mean?

Let’s take a look at some notable cases which highlight the risks of engaging paid agents.

Samuel Howell v Elite Elevators Corporation Pty Ltd [2023] FWCFB 265

In this matter, the Applicant was represented by ‘Employee Dismissals’ who submitted an application for Unfair Dismissal with the FWC on his behalf. This paid agent represented the Applicant on a ‘no win no fee’ basis.

A conciliation occurred in this matter prior to proceeding to a conference before Commissioner Allison (the Commissioner). Both the Applicant and his paid agent attended the conference, and the parties reached a settlement agreement in which the agreed standard FWC terms of settlement were read out and explained by the Commissioner.

Shortly thereafter, the agreed terms of settlement were emailed by the Commissioner in writing for signature. Following the conference, the Applicant emailed the Commissioner requesting clarification as to how he should sign the terms of settlement. To which, the Commissioner responded that they had already received the signed terms of settlement, however the Applicant’s name was omitted from the execution block and the execution had not been witnessed as required.

Following this, the Applicant notified the Commission that he had not received a statement of service or any of the agreed financial compensation amount, both of which were pursuant to the agreed terms of settlement. After investigation by the Commission, the Applicant received an invoice from his paid agent for an outstanding balance of $4,490 which already included the total financial settlement amount. This amount had been paid directly to the Applicant’s paid agent and, the Applicant ultimately did not receive any financial compensation. In fact, he owed his paid agent the amount of $4,490 as the paid agent’s fees significantly exceed the total financial settlement amount paid by the Employer. It is important to note that that the total fees incurred for the Paid Agent exceeded $4,490, leaving the Applicant in a significantly worse position financially than he was prior to engaging the paid agent.

Shortly thereafter, the Applicant’s paid agent filed a Form F50 notice of discontinuance with the FWC for this matter indicating that the Applicant wholly discontinued the matter as part of the settlement agreement. This form was signed by the paid agent on behalf of the Applicant. Upon receiving this notice, the Applicant stated that he was “horrified by this outcome” and advised of his intention to file a formal complaint against the Paid Agent.

The matter was then escalated for investigation by the President of the FWC who found that the Applicant did not give any instructions to discontinue the matter to his paid agent. In other words, the paid agent filed the notice of discontinuance on behalf of the Applicant without the Applicant’s authorisation.

The President determined that the notice of discontinuance was invalid and relisted the matter for a hearing.  After collecting and reviewing evidence which included correspondence between the Applicant and his paid agent, the President made the following findings:

• The Paid Agent sent an email (which the Applicant was not included in) to the Employer requesting that the funds be paid directly into the Paid Agent’s trust account without the Applicant’s knowledge;
• The Paid Agent terms of engagement email to the Applicant contained several misleading and deceptive claims;
• The email placed a tight deadline on the Applicant to agree to the email and its terms regardless of the statutory deadlines it refers to or else they would not represent his case;
• The professional fee (of $4,490 plus GST) which the Applicant would be required to pay the Paid Agent upon success is said to be subject to a “no win no fee guarantee” however this was never explained to the Applicant;
• The terms of engagement are a six (6) page document clearly drafted by a lawyer which would be difficult to understand as a layperson; and
• The provisions around the “no win no fee guarantee” are complex and if the Applicant won his case, it would likely result in the Applicant not receiving any money, which was not explained to the Applicant.

Ultimately, the President recommended that the Paid Agent repay the financial settlement amount to the Employer for the Employer to repay this directly to the Applicant and also indicated that the Paid Agent should not recover its fees from the Applicant.  Further, the President emphasised that the paid agent had engaged in misleading and unethical conduct and went a step further to highlight some other 30 cases where the same paid agent had engaged in similar wrongdoings.

The above case is just one of hundreds of unfortunate stories where both employers and employees have been stung by the shortfalls of paid agents. In response, the FWC has established a ‘Paid Agents Working Group’ which will be tasked with policing paid agents and hopefully achieve a regulatory scheme which governs paid agents and lawyers alike.

If you require assistance with a FWC matter please reach out to our Workplace team on 02 6188 3600 for an obligation free discussion on how our lawyers can assist you with your matter.

 

*This article was prepared with the assistance of Isabella Turner*