Lawyers should “respect the relationship between a conveyancing practitioner and his or her clients and acknowledge there should be no direct communication with the clients of a conveyancing practitioner,” The Legal Complaints Review Officer says.
“For that reason, I do not intend to make a finding of unsatisfactory conduct against [the lawyer] in this case, but future cases will attract an adverse finding and sanction.”
In LCRO 249/2014, the LCRO was reviewing a case where a licensed conveyancing practitioner, C, complained about a lawyer, L. They were acting for the parties in a property transaction.
L required settlement of the purchase to be effected by “remote settlement”, in accordance with the terms of contract the parties had entered into.
In accordance with the protocol for remote settlement recommended in the Property Law Section’s E-Dealing Practice Guidelines, L required the e-dealing to be released by C against his undertaking to remit the funds to her and declined to accept her undertaking to do so after receipt of payment from him.
C declined to settle on this basis as she stated that her client’s bank did not permit her to discharge the mortgage before receipt of the loan repayment funds.
Settlement did not take place because of the impasse between the parties.
Three days after settlement was scheduled, L issued a settlement notice and sent an email directly to C’s client. He also wrote to C’s client’s bank, which happened to be the same bank that was advancing funds to his client for the purchase.
In the email to C’s client, L advised that he had issued a settlement notice and that court proceedings would be issued against them if the settlement notice expired. He also advised that interest for late settlement was accruing.
In the letter to the bank, L advised that settlement had not proceeded. He also set out in detail the reasons why settlement had not proceeded and, in particular, the reason C advanced that she could not release the discharge of mortgage without receipt of funds from L.
L asked the bank to clarify its instructions to C and confirm that she could release the discharge of mortgage against L’s undertaking to remit the settlement monies upon receipt of the documents in the accordance with the PLS remote settlement protocol.
The LCRO considered that, in the circumstances, L’s conduct in contacting the bank could not be criticised. L was acting in his client’s interests in an attempt to resolve C’s objections to settlement in the manner suggested by L.
L advises settlement occurred in that manner and the transaction was settled. C complained that L acted unprofessionally.
The standards committee determined to take no further action in respect of the complaints. The committee gave the following reasons:
- The lawyer’s letter to the vendor’s bank was entirely appropriate in that it made clear to the recipient on whose behalf the lawyer was acting. It set out the situation factually, and proposed a reasonable resolution to enable the settlement to proceed.
- In order to protect and promote the interests of a client, a lawyer is entitled to communicate directly with any person, other than a person whom the lawyer knows is represented by another lawyer in that matter, for the purpose of advancing her or her client’s interests.
The “specific problem” which arises, the LCRO said, “is that an undertaking by a conveyancing professional is not enforceable by the court exercising its inherent jurisdiction over lawyers as officers of the court.”
C proposed that L should accept her undertaking to release the e-dealing in the same way the PLS Guidelines provide for settlement when both parties are represented by lawyers.
“If [L] had acted as [C] had wanted him to, he would have taken on himself whatever degree of ‘risk’ presented in doing so. Given the express directive by the Property Law Section not to accept an undertaking from a conveyancing practitioner, any adverse consequences which arose after assuming that risk would be visited on [L].
“There was no reason for [L] to act other than in accordance with the Property Law Section Guidelines,” the LCRO said.
However, in the course of attempting to resolve the issues, L communicated directly with the vendors and their bank.
“The principle which is encompassed in the rule against contacting another lawyer’s client is that a lawyer should not interfere with the relationship between a lawyer and his or her clients. To do so would expose the client to undue pressure without the filter that his, her or their own lawyer would apply to the communication.
“This principle is equally applicable to clients represented by a conveyancing practitioner, and I see no reason why the principle should not apply to all circumstances where a person is represented by a non-lawyer in a professional context.”
C’s email to the vendors asserted the vendors were incurring penalty interest and that C’s clients would issue court proceedings if the settlement notice expired.
The email “encouraged the vendors to take legal advice from a lawyer,” the LCRO said. “Implicit in this communication is the suggestion that the advice being provided to the vendors by [C] was deficient.”
It was “wrong” for L to interfere in the relationship of the vendors and C and make any suggestions to the vendors that they should instruct a lawyer to act for them.
“To excuse [L]’s conduct by taking the point that [C] was not a lawyer is adopting a particularly technical approach that does not recognise the general application of the principle behind rule 10.2” of the Conduct and Client Care Rules.
“I am conscious of the sometime fractious nature of the relationship between conveyancing practitioners and lawyers but am not aware of any previous circumstances such as this receiving any publicity to lawyers,” the LCRO said.
“In the circumstances, I therefore intend this complaint should be used in an educative manner and be communicated to lawyers to ensure they respect the relationship between a conveyancing practitioner and his or her clients and acknowledge there should be no direct communications with the clients of a conveyancing practitioner.
“For that reason,” the LCRO said, “I do not intend to make a finding of unsatisfactory conduct against [L] in this case, but future cases will attract an adverse finding and sanction.”
The LCRO confirmed the decision of the standards committee. The LCRO also ordered L to pay the Law Society $400 costs, being quarter of the total $1,200 for such a hearing in the office’s cost guidelines.