New Zealand Law Society - Lawyers Complaints Service: Lawyer’s actions were to protect clients’ interests

Lawyers Complaints Service: Lawyer’s actions were to protect clients’ interests

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A lawyers standards committee has determined to take no further action against a lawyer, B, after considering a complaint laid by a conveyancing practitioner, C.

C’s complaint stated that they were aware of two recent occasions where B had instructed his purchasing clients to only proceed with making an offer to buy the selling clients’ property “if our selling client terminates their engagement with us as conveyancers, and instead appoints a lawyer to act for them”.

C also stated that on “repeat occasions [B/B’s employing firm] has intentionally interfered with the relationship between our firm and our clients by inflicting unnecessary pressure on our client to appoint a lawyer”.

In the two transactions complained of, B had sent an email to his clients advising that his purchaser clients would need to use a solicitor in order to complete a remote settlement. In both cases, B’s clients disclosed the emails to the vendors in the transactions.

Starting point

The standards committee noted that the “starting point” was the familiar concept of binding and enforceable undertakings which are a routine and essential feature of conveyancing practice between lawyers.

“Difficulties arise in the settlement of transactions where a party (vendor or purchaser) is either self-represented or is represented by a non-lawyer and therefore cannot give an undertaking capable of being summarily enforced by the High Court.

“That was the issue in this case where the vendors in the two transactions were represented by a conveyancing practitioner,” the committee said.

In the first transaction complained of, B admitted that the wording of a sentence in the email he sent to his client had some “shortcomings”. However, the email was a summary of advice he had given in a 30-minute conversation with his client, where his advice was that a solicitor would need to be involved for the settlement aspect of the transaction, and only for that aspect.

In the second email, B had informed his client that he had dealt with the conveyancing firm before and that they had a law firm they could instruct to receive settlement funds via internet transfer. The email advised B’s client to ask the vendor whether they would agree to a further term of sale, such as “the vendor agrees to instruct a solicitor to complete the settlement of this transaction”.

The vendor subsequently advised B and his client that they had engaged the services of a solicitor to manage the conveyance.

B’s supervising partner told the committee that his firm took care about addressing the difficulties that were arising in settlements with non-lawyers (as reflected in the guidance from the Property Law Section), and the inability to complete a secure settlement on the basis of a conveyancing practitioner’s undertaking.

The firm had adopted a policy between the first and second email B had sent. A summary of the firm’s policy was that:

  • all communications with conveyancing practitioners are to be respectful;
  • transactions in which conveyancing practitioners act for purchasers can proceed on the basis that a same day cleared payment process is used;
  • where the conveyancing practitioner is acting for a vendor, politely refuse to settle against the conveyancing practitioner’s undertaking. The conveyancing practitioner is to be advised that the lawyer understands their:
  • position and does not want to impede their ability to do their job;
  • obligations to their mortgagees and they will appreciate the lawyer’s obligation to their client and the client’s mortgagee;
  • a local agent will be appointed or the lawyer will invite the conveyancing practitioner to nominate a local solicitor agent to deliver a bank cheque and sight the release of the eDealing into the firm’s control. Where the conveyancing practitioner is local the firm has arranged for one of its legal executives to settle in person.”

Privileged communication

An “essential point”, the committee said, was that the emails were privileged between the lawyer and his purchaser clients. This was not a case of B communicating directly with the conveyancing practitioner’s clients.

B was attempting to deal with the situation addressed in the Property Law Section guidelines, which state unequivocally that: “A lawyer should not seek, accept or need to rely on an undertaking from a non-lawyer”.

“In our view, there would need to be a clear demonstration of professional impropriety before imposing discipline on a lawyer for the content of privileged communications with his or her client, where that communication was subsequently disclosed to another party by the client,” the committee said.

While the committee accepted that there was some justification for the complainant’s objection when the first email came to her attention, it did not consider that it crossed the line of professional irresponsibility.

Similarly, the committee did not regard the email in the second transaction as disclosing professionally culpable conduct.

“This was an attempt by the practitioner to explain to his client the sort of difficulties … where he was addressing the prospect of a settlement with a conveyancing practitioner whose undertaking he could not accept.

“He did so for the purpose of protecting his client’s interests, as he was obliged to do,” the committee said.

“Overall, we accept that [B]’s approach, with the support of his firm, was not motivated to obstruct or interfere with the role of conveyancing practitioners, or by anti-competitive objectives, but was intended to protect and enhance the interests of the firm’s clients.”

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