New Zealand Law Society - Full client file must be transferred

Full client file must be transferred

Published on 5 July 2019

[All names used in this article are fictitious]

A lawyer who failed to provide the entire client file to his former client’s new lawyer has been censured and fined $2,500 by a lawyers standards committee.

The lawyer, Drood, also failed to hold money exclusively for the person who paid him, and to only pay the money to that person or as that person directs.

Drood represented his client, Finching, on charges in the District Court, where he sought a sentence indication on behalf of Finching.

After Finching changed lawyers, all charges against her were dismissed due to a lack of evidence.

Her new lawyer, Jellyman, lodged a complaint about Drood with the Lawyers Complaints Service. His complaint included four allegations:

  • Drood had failed to transfer Finching’s entire file to him;
  • Drood had breached trust account regulations by deducting money held in trust without appropriate authorisation and by refusing to transfer money to Finching’s new solicitors;
  • Drood demanded an exorbitant retainer from Finching in advance; and
  • Drood had been negligent in accepting the Police accusation against Finching, and in representing to the court that Finching was guilty.

The committee noted that Drood acknowledged that he had not provided Jellyman with all documents.

Drood’s failure to provide Jellyman with the entire client file constituted a breach of rule 4.4.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC), and amounted to unsatisfactory conduct, the committee found.

“It was inappropriate for a practitioner to select what parts of a client’s file to transfer to the client’s new legal representative,” the committee said.

Further, Drood’s deduction of monies held in trust for Finching breached s 110(1)(b) of the Lawyers and Conveyancers Act 2006 (LCA) and also amounted to unsatisfactory conduct, the committee found.

The committee was satisfied that Drood’s engagement letter did not expressly provide that Drood could deduct his fees from the funds he held on trust for Finching. Finching had also instructed Drood to transfer all the trust monies to her new solicitor and removed Drood’s authority to deal with her trust monies.

The committee also considered whether an $85,000 retainer was professionally acceptable in the circumstances.

A cost assessor’s report commissioned by the committee noted that while Drood’s time records were inadequate, Drood’s submissions on behalf of Finching were detailed. The report also found that the quantum of the retainer was not unreasonable and that the invoice ultimately issued by Drood was not contrary to rule 9 of the RCCC.

On the material before it, the committee said it was unable to resolve the factual issues relating to the complaint that Drood had been negligent or incompetent in his representation of Finching.

Drood said he had been acting on instructions when he accepted, on Finching’s behalf, the Police accusation against her, and in seeking a sentence indication. Finching, however, disputed this assertion

The committee noted that Finching’s instructions were not recorded in writing, and that Drood ought to have done that.

The committee also considered the outcome following Finching’s change of legal representation – namely no conviction and a court order of $50,000 costs against the Crown.

In the circumstances, the committee was of the view that there was insufficient basis to warrant further investigation of this particular aspect of the complaint.

As well as the censure and fine, the committee ordered Drood to pay $1,000 costs.