Unsatisfactory conduct: Lawyer failed to provide clear terms of engagement to client
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 768, 25 March 2011.
A failure to provide a letter of engagement led to a finding of unsatisfactory conduct in a case where the identity of the client was in issue.
Three parties were involved: the lawyer, a trust, and a debt collection company. The trust had engaged the company to collect an outstanding debt and the lawyer provided the relevant legal services. The lawyer invoiced the company, who then invoiced the trust. The trust complained about various aspects of the lawyer’s conduct and charges.
The lawyer told the Standards Committee he had a lawyer-client relationship with the company. Apparently his view was that he had no such relationship with the trust. The Committee disagreed, saying the lawyer had clearly been acting for the trust. He had taken instructions directly from it, he was recorded as “counsel acting” for the trust on court documents, and he had referred to the trust as “our client” in letters to the opposing lawyer.
The Committee said the case highlighted the need for clear terms of engagement to be provided to clients. The lawyer should have provided this information to the trust but had not done so, breaching Rules 3.4 and 3.5 of the Conduct and Client Care Rules. Further, the lawyer had preferred the company’s instructions over those of the trust – in particular when the company told him to stop working on the file until the trust had paid the company’s invoices – and this had placed him in a position of conflict.
The Standards Committee found the lawyer guilty of unsatisfactory conduct, in particular because of the failure to provide terms of engagement. It ordered him to pay the trust $6,000 in compensation, and to provide it with invoices for all the work he had done on its behalf. The Committee also ordered him to pay a fine of $3,000 and costs of $1,500 to the New Zealand Law Society.