The lawyer concerned had an invoice amount reduced by half, was fined $1000 and was ordered to pay costs of $500 to the New Zealand Law Society | Te Kahui Ture o Aotearoa.
The Committee cautioned that “lengthy delays in invoicing can lead to considerable unfairness for clients. Consistent with the consumer-protection focus of the Lawyers and Conveyancers Act 2006, such delays will attract a disciplinary sanction.”
First invoice issued after a year
The complainant instructed a law firm to assist her in a family matter. The firm’s terms of engagement stipulated that it would send interim invoices, usually monthly, and upon completion of the retainer.
A year later, the complainant had become dissatisfied with the services provided and instructed new solicitors. The first firm advised the new solicitors that the complainant owed a significant amount in unpaid fees and supplied an invoice (the first invoice).
According to the complainant, it was not until this point that she ever saw the first invoice. She refused to pay.
The complainant complained to the Lawyers Complaints Service about the lawyer regarding various issues, but not specifically about fees.
Nearly two years later, the complainant received a further invoice from the firm for over $10,000. An attempt at negotiating a settlement took place but no agreement was reached. The complainant lodged a second complaint.
First invoice a breach of terms of engagement
The lawyer maintained that the first invoice had been handed to the complainant but could provide no evidence to support this. The Committee noted that the terms of engagement stated that the firm would “send” invoices to clients. It would therefore have expected the firm to send an invoice, particularly one for a significant amount, via some verifiable means such as email.
The Committee considered that, on the evidence available, the first invoice had not been provided to the complainant on the date it was rendered and that, even if it had been, this was still a year after the lawyer had been instructed.
The Committee defined issuing an invoice as meaning “both the rendering of an invoice and its contemporaneous provision to the client.”
It considered the delay was in breach of the firm’s terms of engagement and was also conduct which would be regarded by lawyers of good standing as being unacceptable. It therefore made a finding of unsatisfactory conduct on the part of the lawyer.
Standards Committee reduce second invoice by half
The second and final invoice was issued nearly two years after the retainer was terminated. The lawyer claimed that he was prevented from pursuing fees while the first complaint was being dealt with. This was presumably in reference to s 161 of the Lawyers and Conveyancers Act 2006 which prevents steps being taken to recover unpaid fees until a complaint has been finally disposed of.
Importantly, this section only applies when the complaint concerns the reasonableness of fees. The Committee noted that this was not the case with the first complaint and, in any event, did not explain why the lawyer waited a year after the complaint had been dealt with before issuing the final invoice.
The Committee considered that the delay was unacceptable and a breach of Rule 9.6 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.
It made a single finding of unsatisfactory conduct on account of the delays in issuing both invoices. It also ordered the second invoice be reduced to $5,000.
No overcharging, fee reduction to mitigate effects of delay
The second complaint included concerns about the reasonableness of the fees and suggested that the lawyer had been double charging. After reviewing the time records, the Committee did not agree the complainant had been billed twice for the same work. The Committee considered that the amount charged was reasonable. It emphasised in its decision that the reduction in fees ordered was to mitigate the effects of the delay in issuing the second invoice, and not reflective of any concerns about the level of the fees.
Reminder to deal with invoices in a timely manner
The lawyer was fined $1,000 and ordered to pay costs of $500 to the New Zealand Law Society | Te Kahui Ture o Aotearoa in relation to the finding of unsatisfactory conduct.
The Committee considered that the complaint served “as a useful reminder of the need to issue invoices in a timely manner so that clients are aware of their fee exposure and have certainty in their financial affairs.”
It also noted that that “an obligation to issue regular invoices during the retainer will often be found in a lawyer's terms of engagement. Upon the conclusion of the retainer, Rule 9.6 imposes an obligation to issue a final invoice in a timely manner.”