New Zealand Law Society - Lawyers Complaints Service: Fined for breaching trust account regulations

Lawyers Complaints Service: Fined for breaching trust account regulations

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A lawyer, C, has been censured and fined $4,000 by a lawyers standards committee for contravening the Trust Account Regulations and failing to honour an undertaking to the NZLS. The committee also ordered C to successfully complete a Trust Account Supervisor training programme within 12 months, and provide confirmation of this to the Lawyers Complaints Service.

The committee conducted an own-motion investigation after receiving a report from the New Zealand Law Society Inspectorate. That report, dated 26 February 2015, stated that C had filed neither monthly nor quarterly trust accounts certificates since filing a monthly certificate for August 2014 on 14 September 2014.

The Lawyers and Conveyancers (Trust Account) Regulations 2008 require lawyers who operate a trust account to file monthly certificates by the 10th working day following the relevant month. They also require filing of quarterly certificates by the 10th working day of the end of the quarters ending March, June and September and, for December, by the 15th working day in January following.

The Law Society Inspectorate sent C reminder notices on 19 October 2014, 20 November 2014, 23 December 2014, 29 January 2015 and 20 February 2015.

The Inspectorate followed up those reminders by email on 16 February 2015, by leaving a voicemail message on 17 February 2015 and by telephone calls to C on 16 February 2015 and 20 February 2015, both of which were not returned.

Undertaking given

In response, C emailed to Law Society on 20 February 2015 stating: “I have been in court today and undertake to have it done by Monday 23 February 2015”. In a letter to the Lawyers Complaints Service C:

  • accepted that he did not file his trust account certificates within the required time frame;
  • explained that he was anxious to avoid a further complaint and stated that he believed he would be able to resolve an issue he faced by reversing payments but that his trust account software did not allow him to do so; and
  • denied that his trust account was overdrawn.

C explained that he had met with a Law Society Inspector with whom he was able to resolve the issue that was preventing him balancing his trust account for September 2014. He stated that his trust account had subsequently been balanced for all of the remaining periods and that the issues that caused the problems had been remedied.

In acknowledging that he was at fault by failing to complete the certificates required, C stated that he had a “mental block” around the issue. He informed the committee that the issue had been resolved and that his office now had a better understanding of the process required for the trust account to be balanced on a more regular basis.

The committee said it regarded C’s admitted contraventions of the Trust Account Regulations with concern, and it described the contraventions as “serious”. It determined that these contraventions of the Trust Account Regulations were unsatisfactory conduct.

The committee also noted that C, in his response to the issue, provided the Law Society an undertaking that he would file his certificates by 23 February 2015. C acknowledged that he did not comply with his undertaking.

Noting that C had admitted failing to comply with the undertaking, the committee determined that this was unsatisfactory conduct.

“It is also of concern to the committee that [C] has previously been found to have contravened the [Trust Account] Regulations, which led to a finding of unsatisfactory conduct against him.”

As well as the censure, fine and order that C complete a Trust Account Supervisor training programme, the committee ordered him to pay the Law Society $1,000 costs.

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