Unsatisfactory conduct. Threatened disclosure for improper purpose
This is a summary of a decision by a Lawyers Standards Committee under the Lawyers and Conveyancers Act 2006. This summary was published in LawTalk 757.
A lawyer was found guilty of unsatisfactory conduct after threatening to make a report to the Securities Commission if the amount at the centre of a civil dispute was not paid. He was ordered to apologise to the complainant and to pay costs.
The lawyer’s clients were seeking repayment of a share subscription promoted by the opposing client. The lawyer wrote to the other client stating that if payment was not made within a certain time “our clients will need to look to their legal remedies, which include a civil claim and referring the matter to the Securities Commission.” Several weeks later the lawyer wrote again, stating that “our clients will refer this matter to the Securities Commission for investigation in the first instance”, unless payment was made within a further seven days.
The opposing client complained to the New Zealand Law Society that the lawyer had committed blackmail under s237 of the Crimes Act 1961. The Standards Committee noted also that the allegation raised the issue of a breach of Rule 2.7 of the Conduct and Client Care Rules, which states that: “A lawyer must not threaten, expressly or by implication, to make any accusation against a person or to disclose something about any person for an improper purpose.”
The lawyer objected that he had not in fact made any “threat”. He also said he was covered by the defence provided in s237, in that he had used a reasonable and proper means for effecting his purpose. For the same reasons, he said, there had been no breach of Rule 2.7.
The Standards Committee decided it should not address whether the Crimes Act had been breached, as the professional disciplinary process was not the appropriate forum for determining criminal liability.
However, the Standards Committee found the lawyer had breached the Conduct and Client Care Rules. There had been a clear threat to make a disclosure to the Securities Commission, and the threat had been made for an “improper purpose” – that is, to facilitate the settlement of a civil claim. The Standards Committee said that the lawyer’s clients may have had a legitimate claim, but the lawyer’s threat was aimed at promoting a speedy settlement outside the usual litigation process.
The Standards Committee accepted that the lawyer had intended to act in his clients’ best interests and that his breach was not wilful or reckless; the breach therefore did not amount to “misconduct” under s7 of the Lawyers and Conveyancers Act 2006. It found the lawyer guilty of unsatisfactory conduct, ordering him to apologise to the complainant and to pay costs of $1,000 to the Law Society.