Unsatisfactory conduct. Payment of third party fees
This is a summary of a decision made by a Lawyers Standards Committee under the Lawyers and Conveyancers Act 2006. This summary was published in LawTalk 746.
A lawyer was found guilty of unsatisfactory conduct after a firm of valuers he had instructed on his client’s behalf was forced to bring proceedings against him to recover their fees. The Standards Committee ordered the lawyer, who eventually paid the fees in full, to also pay compensation to the valuers and costs to the New Zealand Law Society.
The Conduct and Client Care Rules 2008 make a lawyer personally responsible for paying the fees, costs and expenses of any third parties whom the lawyer instructs on a client’s behalf, unless there is an arrangement to the contrary (Rule 12.2). In this case the lawyer had engaged the valuers to provide a written valuation and then to give written evidence and appear in court as a witness. The initial letter of instruction from the lawyer said: “I agree to pay your reasonable charges.”
However, the lawyer did not pay the valuers’ first invoice, for $4,500 in February 2008, until eight months later. The second, in March 2008 and also for $4,500, was not paid until February 2009, and only after the valuers had started proceedings to recover the amount.
In their complaint to the Law Society, the valuers claimed $3,563.50 as compensation for their legal fees in attempting to recover the debt, for interest on the debt and for their own loss of time.
In response to the complaint, the lawyer said he had paid the first invoice at the end of the trial in question. As for the second invoice, the lawyer said it was confusing and, since it was for the same amount as the first invoice, he had not realised it was separate from the first one. He also thought the second invoice was unreasonable given the amount of work involved.
The Standards Committee, deciding the case on the papers, found the lawyer guilty of unsatisfactory conduct under the Lawyers and Conveyancers Act 2006. Because the valuers’ invoices were issued before the 1 August 2008 commencement date of the act and not paid until after that date, the Standards Committee found the lawyer had breached both Rule 12.2 of the Conduct and Client Care Rules and its equivalent in the old Rules of Professional Conduct.
The Standards Committee ordered the lawyer to pay $2,248.50 in compensation to the valuers and $500 in costs to the Law Society.