A standards committee has sanctioned a lawyer who charged his clients $10 as a contribution to his firm’s Toitū Te Whenua Land Information New Zealand (LINZ) licence fee, describing it as a “disbursement”. The committee was satisfied that the $10 LINZ licence fee was not a payment to a third party on behalf of any client. By describing it as a disbursement, the lawyer had engaged in misleading conduct. The lawyer was found to have engaged in unsatisfactory conduct and was ordered to pay a fine of $2,000 and costs of $1,500.
The committee noted that a disbursement is a payment made to a third party and billed to the client as charged to the law practice. The committee observed that “an identifiable disbursement should only be included if it is reasonably or properly incurred or expected in relation to the transaction.”
Firms purchasing a licence to use a Landonline service pay a one-off establishment fee to LINZ. The firm then purchases annual digital certificates for its users to make unlimited transactions. These charges are not directly related to any one transaction.
The committee was satisfied that the $10 LINZ licence fee was not a payment to a third party on behalf of any client and that by describing it as a disbursement, the lawyer had engaged in misleading conduct and breached r 11.1 (now contained in r 10.9) of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC).
The committee considered that the basis for the fee had not been adequately explained in the firm’s terms of engagement and the lawyer had breached r 3.4(a) RCCC. The fee was described as “a contribution towards licence fees we pay to Land Information New Zealand”.
During its investigation the committee found that the firm had received considerably more through its $10 charge than it had paid to LINZ.
Lawyers practicing on their own account must administer their legal practices in a manner that adheres to their duty to their clients. They must also ensure that the reputation of the legal profession is preserved. The committee found that the lawyer had failed to administer his practice to ensure both these aspects and had breached r 11 RCCC.