Lawyer fined for failing to appropriately manage capacity issue and conflict of interest

Failing to recognise and appropriately manage issues with capacity and conflict of interest has led to a $3,000 fine for Huntly lawyer Alan Wilson. Mr Wilson acted for both sides in a property transaction where there was a clear divergence of interests between the parties. He failed to recognise the potential issues with the client’s capacity and that he was prevented from acting for both sides in the transaction. When he realised his error, Mr Wilson was remorseful and accepted a charge of negligence. The New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal) commended Mr Wilson for his "exemplary and cooperative" response to the charge adding that “the Tribunal can respond compassionately, even when a practitioner makes a significant error… An honest, decent lawyer who makes a mistake, even a foolish one, should be encouraged for their positive response to professional discipline”.

By way of background, Mr Wilson was instructed to transfer property from an elderly client to the client’s son. The Tribunal noted that the proposed transaction should have raised concern about the elderly client’s mental state. While Mr Wilson took the precaution of speaking to the elderly client, whom he knew, alone, Mr Wilson he did not recognise any capacity issues. He only learned later that the client had been diagnosed with dementia He also failed to recognise that he could not act for both parties in the transaction. As a result, the elderly client’s home was transferred to the son without the elderly client having the benefit of independent advice. Other members of the elderly client’s family were forced to bring proceedings to restore the elderly client’s position.

The Tribunal determined “the rules plainly prohibited Mr Wilson acting for father and son in these circumstances” and that the transaction deprived his elderly client of his home and placed him at the mercy of one of his children as Mr Wilson did not suggest a retention of life interest to protect his elderly client. It considered Mr Wilson's conduct was at the lower end of the scale in terms of negligence but agreed his "shortcomings were significant".

Mr Wilson readily admitted the negligence charge and in response voluntarily reimbursed the elderly client’s family’s legal costs of $27,000. Mr Wilson also completed further training concerning conflicts and capacity and in recognition of the risk isolation in a small community (since his former law partner died) creates, he arranged regular collegial support from a fellow practitioner. The Tribunal commended Mr Wilson for his "exemplary and cooperative" response to the charge noting these "insightful steps" were considered significant mitigating factors in determining appropriate penalty. The Tribunal noted that censure and a higher fine would ordinarily follow for conduct of this kind but considered Mr Wilson had "fulsomely demonstrated his remorse and has already taken sensible steps to avoid this kind of mistake in future". Mr Wilson was fined $3,000 and ordered to pay costs.