New Zealand Law Society - Instructing solicitor failed to pay barrister

Instructing solicitor failed to pay barrister

Published on 8 February 2019

[Names used in this summary are fictitious.]

An instructing solicitor failed to provide a lawyers standards committee any evidence that he entered into an agreement that he would not be responsible for a barrister’s fees, the committee found.

The instructing solicitor, Zamiel, had therefore breached rule 10.7 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC).

Rule 10.7 states that “a lawyer who, acting in a professional capacity, instructs another lawyer, must pay the other lawyer’s account promptly and in full unless agreement to the contrary is reached, or the fee is promptly disputed through proper professional channels. This rule applies to the accounts of barristers’ sole and foreign lawyers.”

In breaching the rule, Zamiel’s conduct was unsatisfactory, the committee found.

The barrister, Baffin, agreed that he would render invoices to the client, who would then pay him direct. However, it appeared that the client stopped paying Baffin’s invoices.

Baffin continued work on the retainer and the client’s appeal concluded in early 2017. Baffin subsequently rendered a final account, including a 50% reduction in the fees.

After Baffin complained to the Lawyers Complaints Service, a standards committee invited the parties to explore the possibility of resolving the complaint by negotiation, conciliation or mediation.

Baffin agreed to mediation but Zamiel declined mediation because “it was unlikely to achieve any resolution as the issue of [Baffin]’s fees were between [Baffin] and [the client] alone.”

It was accepted that Baffin’s terms of engagement contained an express requirement that the instructing solicitor “is and remains personally liable” to Baffin for any fees.

Zamiel, however, said that it was “expressly or impliedly agreed” that he was not liable for the fees.

The committee said that Zamiel presented no evidence to show that such an agreement – whether express or implied – was ever reached with Baffin. If there was such an agreement, the committee considered that Zamiel would have retained a record of such, given that the default position under the RCCC was that Zamiel was otherwise liable for the payment of [Baffin’s] fees.  

Further, even if an agreement had been reached, Zamiel still had a professional obligation under rule 10.7.1 to use reasonable endeavours to recover Baffin’s fees from the client if the fees remained unpaid. However, contrary to that rule, Zamiel proposed that any recovery of the fees was Baffin’s responsibility.

“With respect, [Zamiel] appeared to have misunderstood the rationale behind the rule and professional obligations,” the committee said. “The rule is necessary as a barrister sole is not entitled to sue for the recovery of fees whereas an instructing solicitor can.”

Having made a finding of unsatisfactory conduct, the committee ordered Zamiel to pay Baffin $89,387, and to pay $500 costs.

Zamiel applied for a review by the Legal Complaints Review Officer (LCRO).

The LCRO (in LCRO 64/2018) upheld both the committee’s finding of unsatisfactory conduct by Zamiel and the $500 costs order.

However, the LCRO reversed the committee’s determination that Zamiel rectify his error and make a payment to Baffin. The LCRO noted that after the committee made its determination, the client lodged a complaint about the level of Baffin’s fees.

“In the circumstances, it seems to me that the only practical approach is to reverse the committee’s money order,” the LCRO said.

“The same standards committee is inquiring into [the] fees complaint and it will eventually determine whether [Baffin]’s fees were fair and reasonable, and whether there is a balance still owing to him.”

The LCRO also ordered Zamiel to pay the Law Society $1,200 costs.