Auckland lawyers Timothy Burcher, David Short and John Macdonald have each been censured for failing to comply with rules governing the operation of a solicitor's nominee company.
Mr Burcher was suspended for nine months, from 23 December. Mr Short was suspended for three months, effective from 18 December.
Mr Burcher was primarily responsible for the daily management of the three lawyers' nominee company. He admitted two charges of negligence bringing the profession into disrepute, and misconduct in relation to two additional charges before the New Zealand Lawyers and Conveyancers Disciplinary Tribunal. In addition to the nine month suspension he was ordered to pay costs of $36,000 to the New Zealand Law Society and to reimburse hearing costs of $7,159.
Mr Short, a retired lawyer, admitted negligence bringing the profession into disrepute in both sets of charges and, in addition to his three month suspension, was ordered to pay costs of $23,000 to the Law Society and $4,772 to reimburse hearing costs.
Mr Macdonald, a litigation partner who the Tribunal said had "almost nothing to do with the company" only faced one set of charges, and also accepted he had "fallen short in his obligations" to ensure compliance with the rules. He admitted negligence bringing the profession into disrepute, was fined $8000, and was ordered to pay $6000 in costs to the Law Society and $2386 toward hearing costs.
Although there was no dishonesty involved in the lawyers' failure to comply with the solicitor's nominee company rules, the Tribunal commented; "it is the volume and period over which the breaches occurred which is of significant concern and indeed formed the basis for the prosecutions".
In addition there was a breach of the Conduct and Client Care Rules as there had not been a referral for independent legal advice as the circumstances required.
National Prosecutions Manager Mark Treleaven says compliance with the nominee company rules affords essential protections to the public. The rules allow investors to make properly informed decisions, while reducing the risk of adverse events impacting on their investments, he says.
"The rules for nominee companies are clear and precise and lawyers managing nominee companies must assiduously comply with them," Mr Treleaven says.
"The Tribunal's decision contains valuable lessons for solicitors in relation to the management of nominee companies, particularly relating to the potential liability of non-supervising partners."