New Zealand Law Society - Lawyers Complaints Service: Lawyer breached 'fundamental obligation' to keep client informed

Lawyers Complaints Service: Lawyer breached 'fundamental obligation' to keep client informed

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A lawyers standards committee has censured a lawyer, B, for unsatisfactory conduct after he breached a “fundamental obligation” to keep one of his clients, Mr C, informed about proceedings he was involved in.

B was acting for Mr C and also for Mr D. Proceedings were commenced by an individual against the directors of a company. Mr C and Mr D were co-directors of that company.

B was instructed to act to defend the claim. Mr C signed an acknowledgement, including a delegation of authority giving “full authority” for conducting the case to Mr D.

The finding of unsatisfactory conduct was made in circumstances where B’s firm advised Mr C that he would be kept informed. Mr C’s interests also diverged from those of Mr D.

The committee considered whether B owed professional obligations to Mr C and, if so, whether he had fulfilled those obligations.

B argued that he had discharged the duty to communicate with Mr C by communicating with Mr D and the company of which they were both directors.

The standards committee said it could not agree with this submission. Mr C was a separate defendant and the correspondence was not addressed to him. There was no evidence that Mr C had asked that he be contacted at the company address. Rather some material showed that B’s firm had contacted Mr C by other means.

B also argued that the clear terms of the delegation of authority supported his view that Mr C had appointed Mr D as his agent for the purposes of all communications.

The standards committee rejected these submissions. It was not satisfied that the “acknowledgement” meant that B could satisfy his professional obligation to keep Mr C informed through his firm’s interchanges with Mr D.

The “acknowledgement” did not state that Mr C no longer wished to be kept informed or that Mr D was his proxy. Indeed, a file note showed B’s firm was of the view it would keep Mr C informed of key matters.

“Moreover once the interests of [Mr D] and [Mr C] began to diverge, [B] had a duty to expressly draw this to [Mr C]’s attention. Yet there was little awareness on the part of [B] or [his firm] that the interests of [Mr C] and [Mr D] had diverged,” the committee said.

B submitted that Mr C had not made any effort to keep in touch. The standards committee also dismissed this as a reason for B not communicating, on the basis that the duty to communicate was the lawyer’s duty, not the client’s.

The standards committee found that B had failed to comply with rules 3 and 7-7.1 of the RCCC, by failing to communicate with Mr C and failing to act in his best interests.

The standards committee also said that the manner in which B terminated Mr C’s retainer was a breach of rules 4.2.3-4.2.4 of the RCCC. This breach arose because of B’s error in believing Mr D could terminate the retainer on Mr C’s behalf.

Finally the standards committee observed that B, as solicitor on the record, had breached his duties to the Court under rules 5.36-5.38 of the High Court Rules to “vouchsafe the due prosecution of the case” by not keeping his client informed.

B’s breaches, individually and collectively, justified a finding of unsatisfactory conduct.

Because B had made a settlement payment to Mr C in the context of civil proceedings, the committee determined not to impose a fine. However, B was ordered to pay the Law Society $750 costs.

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