Background 

Ms D represented a client, Mr A, in a business dispute involving his brother, Mr B. The brothers were shareholders of a business, and Mr A was seeking to sell his interest with urgency.  

Ms D prepared a letter offering immediate sale of Mr A’s partnership interest and provided this to Mr B. Ms D then became aware that Mr B was a long-standing client of her firm. Due to the conflict of interest, the retainer with Mr A was terminated, and he was encouraged to contact Mr B to work out agreeable terms of sale.  

Ms D issued an invoice for the services she provided. The fee included time charged for receipt of a letter from Mr B which had not been disclosed to Mr A. Mr A requested time records and asked to see Mr B’s letter. Ms D refused but did discount the total amount of her bill. She required payment in a short timeframe before she would release the letter to Mr A.  

Issue 

Mr A complained that he was not advised of the conflict of interest at the appropriate time and that he was not provided with a copy of the letter from Mr B, despite being charged time for it. He explained that he was also not provided with assistance to find an alternative lawyer.  

Mr A argued that Ms D acted outside of her retainer by not allowing him to review the letter offering sale of his partnership interest before sending it to Mr B. He asserted that the fees charged were not fair and reasonable, and disclosure of the letter was contingent on payment of a fee that was in dispute.  

Not acting for more than one client where this is a more than negligible risk of being unable to discharge obligations  

Ms D initially conducted a check of the firm’s records which did not identify a conflict between Mr A and Mr B. The Committee noted this was likely due to a spelling error. Mr B went by a different name among family members and, when providing instructions, Mr A referred to him by this alternative name.  

The Committee noted that Ms D subsequently sent the letter to Mr B where she addressed him by his actual name. The Committee was of the view that at some stage before sending the letter, Ms D must have become aware of the correct name for Mr B but did not conduct a further record search after making the connection.  

The Committee considered that the conflict should have been readily discoverable and that Ms D was in breach of rule 6.1 of the RCCC.  

Promptly disclosing all information relevant to a matter 

Ms D did not disclose the letter from Mr B to Mr A. Instead, she summarised the contents during a phone call. Ms D did not report to Mr A that his offer of immediate sale had been rejected. Mr B had also given an alternate timeframe of 36 months. It was conveyed to Mr A that terms of sale could be agreed.  

The Committee considered this was important information to share with Mr A, as he was relying on an immediate sale to solve financial stress. Ms D’s failure to make Mr A aware of Mr B’s full response was a breach of rule 7 of the RCCC. 

Giving reasonable assistance after terminating retainer 

Rule 4.2.4 provides that a lawyer must give reasonable assistance to a client to find another lawyer. Ms D explained she did not do this for Mr A because he was not in the position to fund litigation. He also did not ask for help from her.  

The Committee concluded it was an error of judgment for Ms D to assume the financial circumstances of Mr A prevented him from engaging another lawyer. The onus was on her to offer help to find a lawyer, with this duty applying even where a lawyer has assessed a client does not require further legal advice. Accordingly, Ms D had breached rule 4.2.4 of the RCCC.  

Keeping client informed on progress of retainer 

During the retainer, Mr A made a specific request to Ms D to review the draft letter offering sale of his partnership interest. Despite this, Ms A did not offer him the chance to look at it, as she considered the matters in the letter to be straightforward. 

The Committee noted that it is always possible for a client to have a change of heart from their initial instructions. In matters involving family business arrangements, clients may have specific wishes about the wording the ensure an amicable exit. The Committee determined that it would have been prudent for Ms D to consult with Mr A before sending the letter and she had breached rule 7.1 of the RCCC.  

Promptly answering requests for information  

The Committee acknowledged that the firm was entitled to withhold the letter from Mr B until payment of the outstanding fees was made under an enforceable solicitor’s lien. However, the Committee found that Ms D had not considered her obligations under the Privacy Act 2020 when dealing with a response to a request for information.  

The Committee noted that Ms D did not provide Mr A with the relevant grounds for refusing to disclose the letter and did not inform him of the option to have this decision reviewed by the Office of the Privacy Commissioner. As a result, the requirements for responding to a request for information were not met in breach of rule 7.2 of the RCCC was breached.  

Penalty 

The Committee determined that Ms D breached rules 6.1, 7, 4.2.4, 7.1 and 7.2 the RCCC. These breaches amounted to unsatisfactory conduct.  

The Committee censured Ms D and directed her to apologise to Mr A. She was ordered to pay a fine of $5,000 and costs of $1,250.