New Zealand Law Society - Lawyers Complaints Service: Bill reduction ordered but censure cancelled

Lawyers Complaints Service: Bill reduction ordered but censure cancelled

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A lawyers standards committee determination to order a lawyer, D, to reduce his bill from about $30,000 to about $17,000, which D had already agreed to do, has been confirmed by the Legal Complaints Review Officer (LCRO).

However the LCRO (in LCRO 23/2012) also cancelled the censure the committee had imposed, although the finding of unsatisfactory conduct and costs order of $1,500 was confirmed.

D was instructed in April 2008 by a client to act on her behalf with regard to various issues concerning her son. The issues were in an area of law in which D did not have previous experience, but as an experienced practitioner, he judged it appropriate to act.

D went on leave from June 2008 and the file passed to an employee of D who continued to act until December 2008 when the firm’s instructions were withdrawn.

The client first complained in June 2010. She said she had not received a bill from D by the date of the complaint, she had been asked to agree to an amount without reviewing a draft account and she had not been kept appraised of costs as they accrued.

The standards committee issued its determination on 3 November 2010 and found that D’s conduct in not rendering a final account for more than 21 months after his instructions had ceased amounted to a breach of Rule 9.6 of the Conduct and Client Care Rules. The committee also found that D had not kept the complainant informed during the course of his retainer of the level of accruing costs.

The committee determined that D’s conduct constituted unsatisfactory conduct, censured him and ordered him to pay the Law Society $750 costs.

After receiving D’s account containing a fee of about $30,000 in January 2011, the client lodged a complaint about the fee and also referred to issues that had been addressed in the previous complaint.

The standards committee referred the bill of costs to a cost assessor, who recommended that D’s fee be reduced to about $17,000. The committee accepted the cost assessor’s report, censured D, and ordered that he reduce his fee to the amount recommended. The committee also ordered D to pay the Law Society $1,500 costs.

D sought the LCRO review of the standards committee finding that his conduct was unsatisfactory. He was concerned that the censure and the finding of unsatisfactory conduct were inappropriate in the circumstances, considering his efforts to ensure his fee was reasonable.

Before D had rendered his account, he had sought an opinion from an experienced practitioner, E, previously a costs assessor himself. E reviewed D’s files and advised that he considered the proposed account to be fair and reasonable.

The standards committee asked E to comment on the costs assessor’s report. E noted, that “regrettably, it seems to me that the costs assessor here has placed far too much emphasis on the time recording and time audit rather than (with respect) fully considering the other factors in Rule 9.1”. E then noted that D had indicated he would be prepared to accept the cost assessor’s ruling in order to bring finality to the matter.

“The relevance of [E]’s comments in the context of this decision is that an experienced practitioner such as [E] did not take issue with the quantum of [D]’s bill of costs, and that [D] had consulted with him prior to rendering his account,” the LCRO said.

“These factors are particularly relevant … with regard to the censure imposed by the standards committee, and the finding of unsatisfactory conduct itself.”

During a meeting with the costs assessor, attended by D and the client, D voluntarily proposed a reduction of the fee to $20,000. This was not acceptable to the client.

Following receipt of the report, D made the following proposal: “Although we do not agree with all of [the cost assessor]’s summations, we do not wish to argue over a few dollars and are prepared to accept his recommended fee [$17,000].”

“An option open to a standards committee where the difference between the fee charged and what the committee considers represents a fair and reasonable fee is not as significant as in the present instance, is to seek an undertaking from the lawyer to reduce his or her fee to the recommended figure and take no further action in respect of the complaint,” the LCRO said.

“However, the standards committees and this office must be careful not to allow lawyers whose bills are complained about, to ‘buy’ their way out of a finding of unsatisfactory conduct and in the present instance the difference between the fee charged and that considered by the committee to be a fair and reasonable fee, was too great for that to be an appropriate option.”

The LCRO also noted the “extraordinary lengths” D went to in an effort to ensure that the very scenario that had unfolded did not occur.

D’s time and attendances on the file had also been driven by a genuine desire to do the best for his client, the LCRO noted. “Somewhat ironically, this desire to do the best for his client has resulted in a higher level of attendances on the file than was accepted by the cost assessor as being necessary.”

The LCRO said he accepted without reservation that no part of D’s conduct could be impugned.

“For this reason, therefore, I consider that the censure imposed by the committee was wholly inappropriate.”

However, given the significant disparity between the fee charged, and the fee accepted by the committee as representing a fair and reasonable fee, the finding of unsatisfactory conduct must remain to avoid the perception that adverse findings in fee complaints can be avoided by agreeing to a reduced figure, the LCRO said.

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