Judicial review of standards committee decision
The High Court has upheld a censure imposed on lawyer Jeremy James McGuire. The Court, however, remitted an aspect of the decision relating to the penalty imposed back to the Lawyers Standards Committee for further consideration.
In doing so, the Court commented on the statutory purpose of the Lawyers Complaints Service.
A standards committee had found that Mr McGuire failed to provide a competent appraisal and advice of the potential rewards and risks of proceedings in a personal grievance claim. The committee also found that the fees charged were unreasonable given the results achieved.
In addition to an unsatisfactory conduct finding and censure, Mr McGuire was ordered to reduce his fees for the personal grievance claim to $10,000 plus GST. He was also ordered to remit fees in relation to an interim reinstatement application.
Mr McGuire applied for judicial review of the committee’s decision.
In  NZHC 2484, Justice Patricia Courtney upheld the committee’s finding of unsatisfactory conduct and the censure.
Mr McGuire represented a client in a personal grievance claim in the Employment Relations Authority (ERA).
The ERA made an order for lost wages, which it reduced by 30% taking into account the client’s conduct. The net award was $15,575. It also awarded compensation for humiliation, hurt feelings and loss of dignity of $7,000. The client also received a $5,250 contribution to his costs. The total recovered was $27,825.
Mr McGuire rendered invoices totalling $26,170 for the ERA proceeding. He advised the client to appeal and, in the meantime, to apply for urgent interim reinstatement. He prepared draft affidavits for that purpose. The client and his wife were unhappy with the draft affidavits which included, among other things, confirmation that the couple was prepared to liquidate their assets if required to pay for any damages sustained by the employer as a result of the interim reinstatement application.
After obtaining a second opinion the client terminated Mr McGuire’s retainer.
Mr McGuire rendered a further fee of $6,441 for time in relation to the proposed appeal and interim reinstatement application.
Courtney J found that the standards committee was correct to treat a cost/benefit analysis as a matter reasonably arising in the course of carrying out the instructions for his client.
“The likely amount of compensation, the likelihood of reinstatement and the probable cost of the litigation are matters that a competent lawyer would regard as reasonably arising in the course of carrying out his or her instructions,” she said.
In terms of s 12(a) of the Lawyers and Conveyancers Act 2006, these were “matters that a member of the public is entitled to expect of a reasonably competent lawyer.
“Moreover, the committee’s conclusion is consistent with one of the core requirements of a lawyer as articulated in the preface of the [Lawyers and Conveyancers Act (Lawyers:] Conduct and Client Care Rules .
“As recorded earlier, ‘whatever services’ a lawyer is providing, he or she must discuss the client’s objectives and how they should best be achieved. In an employment context where the client has lost his or her employment, cost assumes particular significance and should have formed part of Mr McGuire’s discussion with [the client] as to how best achieve the latter’s objectives.
“It follows that even if [the client] did not ask for an estimate of cost, the likely cost of proceeding was a matter on which Mr McGuire should have advised,” Courtney J said.
However, the Court set aside the committee’s order that Mr McGuire reduce his fee to $10,000 and remitted that aspect to the committee for “further consideration of Mr McGuire’s assertion that [the client’s] primary concern was reinstatement and, if that was or was likely to have been the case, the effect of it on the decision as to Mr McGuire’s fee”.
The Court gave two main reasons for this decision. “First, even assuming that the reduction in the fee was intended to reflect the committee’s concern over proportionality, there is no explanation as to how the figure of $10,000 was reached.
“Secondly, even if [the client] had been properly advised of the risks and likely cost of proceeding he may still have elected to pursue his claim with the ERA. Indeed, on Mr McGuire’s account, this seems quite likely because of the importance of reinstatement to [the client]. Any reduction in the fee would need to reflect that possibility and would require an assessment as to the likelihood of [the client] choosing to proceed in any event.”
However, Courtney J found that the committee had been correct to order Mr McGuire to cancel his fees of $6,441 for time in relation to the proposed appeal/interim reinstatement application.
She noted that the draft affidavits that Mr McGuire prepared were “not prepared on the instructions of his client and could not have been charged for in any event.”
The complaints process
“The purposes of the [Lawyers and Conveyancers Act 2006] (LCA) include the maintenance of public confidence in the provision of legal services and the protection of consumers of legal services,” Courtney J said.
“To that end, the LCA imposes ‘fundamental obligations’ on lawyers, which include the obligation ‘to act in accordance with all fiduciary duties and duties of care by lawyers to their clients’.
“The LCA provides for the establishment of a complaints service to determine complaints made against lawyers.
“This includes the establishment of standards committees, whose functions include inquiring into and investigating complaints about the conduct and standard of service provided by legal practitioners. Standards committees are required to perform their duties and functions and exercise their powers consistently with the rules of natural justice.
“A standards committee has the power, after both inquiring into a complaint and conducting a hearing with regard to the complaint, to make various determinations, including a determination that there has been unsatisfactory conduct.
“‘Unsatisfactory conduct’ is relevantly defined as including: ‘… conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer’.
“As Clifford J noted in Lagolago v Wellington Standards Committee 2  NZHC 2867, the unsatisfactory conduct under s 12(a), which refers to the reasonable expectations of the public, is a consumer driven standard.
“This is reflected in the provisions for lay persons to be members of the disciplinary tribunal, the prohibition on legal complaints review officers being lawyers or conveyancing practitioners, and the jurisdiction of the standards committees and the tribunal to award, subject to the prescribed limit, compensation to clients of practitioners against whom complaints are established.
“The authors of Ethics, Professional Responsibility and the Lawyer observe that: ‘It is of note that the Act looks to the standards expected by a member of the public and what they are entitled to expect from a reasonably competent lawyer. This is an articulation of the well-established “reasonable consumer test”, which focuses not on the view of professional people (that is, a peer-based standard) as to proper standards but on the reasonable expectations of ordinary people. While in practice the two will frequently converge, the shift in focus is an important signal. …’
“And, as Duncan Webb commented in a 2007 article: ‘[T]his may mean that what is professionally required of lawyers is more than that required under the ordinary law of contract and tort’,” Courtney J said.
Mr McGuire has appealed the High Court’s decision.
Last updated on the 22nd December 2017