Background 

Ms A provided instructions to Ms X in relation to a family law matter. Mr Y, who was a junior staff solicitor, carried out most of the legal work. 

The matter involved the division of relationship property, with Ms A effectively buying out her former partner, Mr B’s, interest in a joint property. Mr Y prepared a schedule which consolidated two loans against the value of the joint property, despite a previous agreement that Mr B would be solely responsible for one of the debts. The schedule also incorrectly stated that a joint bank account belonged to Mr B.  

Another schedule, prepared by Mr B’s lawyer, was later shared with Mr Y and formed the basis for a settlement counteroffer. The schedule contained a higher valuation for the joint property and outlined that responsibility for Mr B’s loan would be taken on by Ms A. The schedule was not shared with or explained to Ms A. The parties eventually agreed to a settlement which contained a penalty provision and called for payment without prior approval of finance. Mr Y did not explain the implications to Ms A, and signed the memorandum of consent personally. Mr Y later left the firm, and the matter was picked up by another staff solicitor. 

Acting competently and in a timely manner 

The Committee considered whether Mr Y had breached his duty under rule 3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC). The Committee concluded that Mr Y made signficant errors by: 

• failing to provide Ms A with a copy of the schedule prepared by Mr B’s lawyer, 
• not alerting Ms A to the difference in valuation of the joint property in the schedule, 
• overlooking the fact that Mr B’s debt was to be retained by Ms A on settlement, 
• not discussing the inclusion of a penalty provision in the settlement, 
• failing to advise that any consent should be subject to the approval of finance, and 
• not arranging for Ms A to sign the memorandum and, instead, signing it himself.  

These errors consituted a breach of rule 3 of the RCCC.  

Letter of engagement 

The Committee noted that there was no letter of engagement provided to Ms A. Mr Y clarified that he was taught to provide a copy of the terms of engagement at the intial client meeting, but did not have a record to back this up. He explained that he was not required to keep a copy on his file. The Committee determined that Mr Y was in breach of rule 3.4 of the RCCC by failing to provide terms of engagement to Ms A.  

Disclosing all relevant information 

Mr Y had phone discussions with Ms A about the settlement offer and schedule from Mr B. The Committee did not consider that this suitably offset the obligation to disclose a copy of the schedule prepared by Mr B’s lawyer. The Committee found it “very problematic” that the final agreement held Ms A responsible for Mr B’s debt and committed her to a settlement payment without finance approval. It was clear to the Committee that Mr Y and his client had a different understanding about the nature of the settlement and concluded that this was a breach of rule 7 of the RCCC.  

Steps to ensure client understands nature of retainer 

The Committee accepted that Mr Y did actively inform Ms A about the progress of settlement negotations. Its greater concern was with the quality of advice leading up to those negotations. It was clear to the Committee that Ms A did not appreciate the financial implications of the settlement agreement. The Committee pointed to rule 7.2 of the RCCC, which provides that a lawyer must take reasonable steps to ensure a client understands the nature of the retainer, and concluded that Mr Y was in breach of this obligation.  

Promptly answering requests for information 

Mr Y conceded that he failed to respond to Ms A’s follow up inquiries after settlement and that she was not informed of his departure from the firm. Mr Y explained that he was dealing with a high case load and was of the understanding that another staff solicitor had taken over the file. The Committee noted that the situation was “unfortunately handled at a time when [Ms A] was under considerable stress” and found that Mr Y was in breach of rule 7.2 of the RCCC.  

Providing competent supervision and management 

In light of its findings against Mr Y, the Committee considered whether Ms X had provided competent supervision and management. The Committee was mindful that Mr Y was a junior practitioner handling a significant number of family law files. It noted that relationship property settlements can be complex and is an area requiring “instensive supervision.” The Committee commented that there was a number of incidents where Mr Y’s conduct fell short of the standards required as a result of his inexperience and the signifcant pressure he was under. The Committee concluded that the measures put in place by Ms X were insufficient to ensure proper supervision of the file. This was a breach of rule 11.1 of the RCCC.  

Penalty 

The Committee determined that Ms X and Mr Y’s breaches of the RCCC constituted unsatisfactory conduct. The Committee ordered Mr Y to apologise to Ms A and to pay a fine of $2,000 plus costs. Ms X was reprimanded, ordered to pay compensation of $12,000 to Ms A and directed to refund the fees charged. Ms X was also ordered to pay costs.