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A Standards Committee found that a barrister sole practised as a solicitor when acting for a franchisee on the sale of its business, in breach of the Conduct and Client Care Rules. The Committee censured the barrister, ordered him to cancel his fees of close to $50,000 and fined him $7,500.
The matter arose from a complaint by the client, who had engaged the barrister to assist on the sale of its business operated under a franchise agreement. The director of the client was a social acquaintance of the barrister. Settlement of the sale was protracted with settlement pushed out several times, eventually to eight months after the originally scheduled date. Shortly before that extended date, the barrister advised that, as a barrister sole, he did not have a trust account and the mechanics of settlement would need to be undertaken by a solicitor. By that stage, the client was unhappy with the entire situation and engaged new lawyers to complete settlement. The client then complained about the barrister’s conduct and his fees, set out in 17 invoices totalling close to $50,000 plus GST and disbursements.
At a hearing on the papers, the Committee considered a series of issues it had been directed to consider by the Legal Complaints Review Officer. The crux of the matter was whether the barrister had carried out work that, as a barrister sole, he was prohibited from doing. Rule 14.2 of the Conduct and Client Care Rules restricts the work that may be carried out by a barrister sole. It provides that a barrister sole must not, among other things, “practise as a solicitor” (rule 14.2(a)) or “carry out the transactional aspects of conveyancing” (rule 14.2(b)).
The barrister asserted that he did not do “the conveyancing” in the matter. The Committee noted that his interpretation of “conveyancing” appeared to be very narrow, perhaps limited to the mechanics of settlement (such as transfer of funds). It noted that that is not correct, with a broad definition in the Lawyers and Conveyancers Act 2006 (Act). The transaction the barrister worked on included the sale of a business and assignment of a lease, clearly within that definition. The barrister contended that he was engaged only in relation to negotiating franchisor approval, but the file clearly showed his involvement went beyond that.
The Committee noted that rule 14.2(b) does not however refer simply to conveyancing but to the “transactional aspects of” conveyancing. The Committee said:
It is not easy to determine where the framers of the RCCC intended the line to be drawn, nor is it easy to determine where the line should be drawn now by lawyers’ standards committees. One view would be that all conveyancing work, by its very nature, is transactional.
Ultimately, the Committee did not consider it necessary to determine that issue. That was because of “the certainty provided by r 14.2(a), that is, the prohibition on barristers sole practising as solicitors”.
In considering what constituted “acting as a solicitor”, the Committee examined Auckland District Law Society v Dempster. It also reviewed the barrister’s file and noted that, while the barrister had not made arrangements for settlement nor effected settlement, he “had done everything else”. That included (but was not limited to) perusing and advising on the sale agreement; liaising with the business broker, purchaser’s lawyers and the landlord (as well as the franchisor’s lawyers); dealing with satisfaction of conditions (not only the franchisor consent condition); changes to the settlement date; communicating about the deposit; and receiving and perusing the deed of assignment. Referring to the Dempster decision, the Committee concluded that it was clear that the lawyer had “carried out a combination of tasks that, taken together, constituted acting as a solicitor”. The Committee said the barrister:
…undertook attendances and other work of a kind ordinarily done by a solicitor in connection with such a transaction. He was involved from the beginning and throughout the transaction until just prior to settlement and was in fact the only lawyer for the vendor from the beginning of the transaction…right up until one week…before…settlement.
The Committee considered that the lawyer had practised as a solicitor in relation to “(at least) a large part of the work”, in breach of rule 14.2(a). Accordingly, it determined that there had been unsatisfactory conduct on his part in terms of s 12(c) of the Act.
Because of that, the Committee also concluded that he was not entitled to charge the fees he had invoiced. The Committee did not consider it necessary or appropriate to isolate the time spent on work that the barrister, as a barrister sole, may have been entitled to do, such as “true negotiations with the franchisor’s lawyers”. It said this was because:
…it was the combination of tasks he undertook (and his sole carriage of the matter from the beginning of the transaction…until one week before settlement), even though that included work on obtaining franchisor approval, that was problematic.
The Committee concluded that, as he was not entitled to charge for this work, that was in effect a breach of rule 9. That rule requires lawyers to charge not more than a fee that is fair and reasonable for the services provided. The Committee went on to say that, if it were wrong in its determination on the barrister’s entitlement to charge fees, it would consider that his fees exceeded a fair and reasonable fee in breach of rule 9 in any case.
The Committee also concluded that the barrister’s conduct did not meet the required standards of competence and diligence. It referred to the “entirely unsatisfactory situation” the client had been left in. The Committee noted that, if it had not made a finding that he should not have undertaken the work at all, it would have made a determination of unsatisfactory conduct in relation to his lack of competence.
The Committee also considered the intervention rule. The barrister asserted that he had an instructing solicitor. However, the only evidence of that he could provide was an email exchange right at the end of the retainer that was more consistent with the law firm having only just been asked to act. The Committee noted that, for work he had been permitted to carry out (for example, relating to disputes with the franchisor), the barrister should clearly have had an instructing solicitor. It found that he breached r 14.4 in that regard, which constituted unsatisfactory conduct.
For clarity, the Committee set out what the barrister should have done in the circumstances. It said he should have ensured that there was a clear engagement of instructing solicitors at the very outset, with terms of engagement sent from those lawyers to the client. It said he should have been involved only to a limited extent (working on difficulties in obtaining franchisor approval) with the instructing solicitors involved throughout in the ‘nuts and bolts’ of the transaction.
In considering what penalty was appropriate, the Committee concluded that the lawyer’s conduct involved “relatively fundamental failings that warranted a significant fine”. It censured the lawyer, fined him $7,500 and ordered him to pay $2,500 in costs. It also ordered him to cancel his fees of close to $50,000 plus GST and to refund all sums that had already been paid by the client.
The Committee also concluded that publication of the facts of the matter was desirable in the public interest and directed publication of this summary.
 Auckland District Law Society v Dempster  1 NZLR 210.