New Zealand Law Society - Tribunal orders fine, censure and compensation for failings in the lawyer-client relationship

Tribunal orders fine, censure and compensation for failings in the lawyer-client relationship

Two practitioners have been censured, fined, and ordered to pay compensation to a client for emotional harm arising from serious failings in the lawyer-client relationship.

In its earlier liability decision, the Lawyers and Conveyancers Disciplinary Tribunal found Mr Downing and Mr Reith each guilty of two misconduct charges and Mr Downing guilty of a further charge at the level of unsatisfactory conduct. The charges related to their treatment of a client, Ms L in an estate proceeding. When Ms L became unable to pay she signed a deed of acknowledgement of debt that gave Mr Downing and Mr Reith’s firm the ability to register a mortgage against Ms L’s property. Ms L understood the lawyers would continue acting in the meantime. Despite this, the firm sought payment of outstanding invoices and, when Ms L could not pay, it terminated the retainer. Ms L was left without representation in the face of an impending important judicial settlement conference. The Tribunal found the retainer had been terminated in breach of the Rules, and the actions of both practitioners in relation to the fee paying and security arrangements would be regarded as disgraceful or dishonourable by lawyers of good standing. Their roles in each episode amounted to misconduct. Mr Downing’s separate shortcomings in advising Ms L about the risk her proceeding might fail or fail to produce a worthwhile recovery were unsatisfactory conduct.

In its penalty decision, the Tribunal accepted the Standards Committee’s submission that the conduct was serious but not rising to the level where suspension was warranted. Aggravating features included a minor disciplinary history for each; the delay in discharging the mortgage over Ms L’s property. Mr Downing was assessed as lacking insight or remorse to a considerable degree. The Tribunal considered Mr Reith sincerely regretted his part, and was involved for a much shorter period than Mr Downing. In mitigation, the Tribunal noted Mr Downing’s lengthy career and service to the profession. Both practitioners had written off the balance of the outstanding fees which totalled nearly $40,000.

The Tribunal noted that Ms L’s “situation went from one of confident advice from her lawyer to decline settlement offers less than any with six figures to … being put in the disempowering position of ambush to sign a Deed of Acknowledgement of Debt”. And, “[s]he was put in the bewildering situation of thinking she had provided security for the debt and would be represented, then slightly over a month away from a judicial settlement conference was sent emails she experienced as confrontational, demanding payment”. The Tribunal ordered the practitioners to (jointly) pay $10,000 in compensation for emotional harm.

The Tribunal declined to order compensation for the legal fees Ms L paid. The practitioners had written off outstanding fees, and the remaining amount that Ms L had paid did represent value for money in the work the practitioners had performed. In terms of the statutory test, the Tribunal was also not satisfied that the fees she paid were a “loss” to Ms L, nor one that occurred “by reason” of the practitioners’ acts or omissions.

The Tribunal fined Mr Downing $10,000 and Mr Reith $7,000. They were jointly ordered to pay a significant contribution to costs. Both practitioners were censured.

Read the decision on the Tribunal’s website

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