Employee found to have engaged in misconduct for misappropriating client funds

The New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal) made penalty orders prohibiting a former employee of a law firm (Ms Y) from being employed by a lawyer or firm without the Tribunal’s consent after she admitted misappropriating client funds. Ms Y admitted a charge of misconduct for misleading her colleagues to obtain $1,376,000 of client funds from the firm’s trust account to settle the purchase of a property in her name. The Tribunal determined Ms Y’s conduct was “at the very highest end of the scale of misconduct”. In addition to the restriction on her future employment, Ms Y was ordered to pay costs.

While employed by a firm, Ms Y forged a client statement to obtain $170,000, which she used to pay a deposit on a property. She repeated her actions a second time to obtain a further $1,206,000 to settle the purchase. The firm discovered the transactions two months later and dismissed Ms Y following her admission of theft. Ms Y’s conduct was reported to the Police and she pleaded guilty to two charges of obtaining by deception. She was sentenced to 12 months home detention in relation to those charges.

Ms Y admitted to taking the funds because she felt pressured by her partner and his family to purchase a home. Ms Y reasoned that she would repay the funds before they were noted as missing on the basis she would have access to her Bitcoin investment (which she had unexpectedly lost access to prior to purchasing the property). Ms Y was charged with misconduct by a non-lawyer for engaging in conduct in the course of her employment that would, if it were conduct of a practitioner, render the practitioner liable to have their name struck off the roll. Ms Y accepted her actions amounted to misconduct.

In determining penalty, the Tribunal considered Ms Y’s conduct involved a degree of planning that could not be described as impulsive (even recognising the pressures weighing on Ms Y) which it considered was an aggravating feature. In mitigation, the Tribunal considered Ms Y had accepted responsibility for her actions and demonstrated that she understood the breach of trust involved. The Tribunal noted Ms Y paid full reparations to her former employer and the firm’s client (including legal fees, public relations fees, and legal fees of insurers) which was a highly unusual and significant mitigating factor. The Tribunal determined an order that no practitioner or incorporated firm may employ Ms Y in connection with their practice, otherwise than with the written consent of the Tribunal was proportionate and sufficiently protective in the circumstances. In addition to the restriction on her future employment, Ms Y was ordered to pay costs.