JurisdictionNew Zealand
Judgment Date11 July 2014
Date11 July 2014
Docket NumberLCRO 338/2012
CourtLegal Complaints Review Officer

CONCERNING an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006


CONCERNING a determination of North Island Standards Committee


LCRO 338/2012

Legal Complaints Review Officer

Review of a finding of unsatisfactory conduct — complaint that partner of law firm had failed to provide legal services as agreed by staff solicitor — complainant owed firm over $10,000 and had not provided security — complainant said that firm had agreed to await a successful judgement for its fees and this amounted to a no win no fee agreement — partner advised this was contrary to firm's usual policy and the retainer and refused to do further work without security — whether there was a contingency agreement — whether it was appropriate to make an adverse finding based on a disputed contract.


Mr PB has applied for a review of the determination by North Island Standards Committee in which it affirmed an earlier determination which it had recalled, and determined that Mr PB's conduct constituted unsatisfactory conduct in that “he had failed to act in accordance with the arrangements reasonably inferred by Mr PB from the terms of [a letter dated 24 March 2011]”. 1


Mr MK was the supervising partner of several solicitors in the firm of DE who had acted for Mr PB.


In November 2008 Mr PB instructed DE to act on his behalf in relation to a dispute with PSALimited and was provided with the firm's terms of engagement.


Initially the matter was dealt with on the basis that PSA had no defence to the claim against it by Mr PB and a statutory demand was issued. Although DE successfully defended an application to set the demand aside, it became clear that the

liquidation proceedings based on the demand would not succeed and it would be necessary for the matter to be progressed by way of proceedings in the District Court

By March 2011 Mr PB had incurred fees to the extent of $10,113.86 and the lawyer who was handling the file at the time (FH) wrote to Mr PB and outlined three options. In paragraph 2(c) of the letter he wrote: 2

We will prepare and do this claim for you on the basis that you agree to provide us with adequate security for all of our fees rendered and unrendered (if you have any) e.g. a mortgage over your property. Alternatively, you agree that our fees will be payable from the proceeds of the claim if you succeed at Court or settle beforehand. You will also need to pay all the disbursements such as filing fees when required.


With that letter Mr FH also included again the firm's terms of engagement.


Mr PB responded: 3

Let's run with option C thanks and ask the judge to award full costs when we win.


In early April Mr FH advised that he was in the process of drafting a notice of claim and an initial letter of demand. He left the firm shortly afterwards and the file was assigned to Ms RA. On 1 July 2011, Ms RA advised Mr PB that she had referred the drafts to Mr MK for checking.


After follow up communications Mr PB was advised that the file was still with Mr MK. Mr PB eventually made phone contact with Mr MK, following which Mr MK wrote to Mr PB. 4 He pointed out that Mr PB's debt to the firm had been overdue for a period in excess of 120 days and he was not prepared to undertake further work unless Mr PB provided security over his property.


In response, Mr PB referred to the letter from Mr FH dated 24 March 2011, and his response to that letter. He required Mr MK to adhere to what he understood the arrangement to be, namely that DE would be paid from the proceeds of a successful outcome of the litigation i.e. no success no fee. Mr MK declined to act on this basis.

Mr PB's complaints and the Standards Committee determination

Mr PB complained to the New Zealand Law Society Complaints Service in November 2011. His complaint was that Mr MK had refused to acknowledge the terms set out in Mr FH's letter and had declined to continue to act for him unless Mr PB provided security for the firm's fees.


The Standards Committee initially issued a determination on 16 August 2012 in which it reached the view that Mr MK “had failed to act in accordance with the arrangements reasonably inferred by Mr PB …”. 5


The Committee noted however “that it would not be appropriate to seek to compel Mr MK or his firm to resume acting for Mr PB in the circumstances that now pertained”. 6


Following receipt of the determination Mr MK noted the comment by the Committee (in paragraph 16) that no submissions had been received from him. He had in fact sent submissions on the morning of the day of the Standards Committee meeting but these had not been considered by the Committee in its deliberations.


The Committee therefore recalled its determination and set the matter down for a further hearing on the papers. Having reconsidered the matter, including Mr MK's submissions, it made the following observations: 7

The Committee carefully reconsidered this matter, and Mr MK's submissions. They did not consider that Mr MK had satisfactorily addressed the question of the interpretation of the relevant paragraphs in Mr FH's letter to Mr PB of 24 March 2012. The Committee also noted that there had been no invoices rendered during the course of the retainer; it was understandable that this conduct would have led Mr PB to infer that the fees would be paid out of the proceeds of successful litigation, particularly as no security was requested over his property.

Having reviewed the submissions, the Committee considered that the specific wording in the letter of 24 March 2011 could reasonably be seen to have overridden the general policy and usual billing procedure of DE in this instance.


Having made these observations, the Committee then reaffirmed its decision in the earlier determination that there had been unsatisfactory conduct on the part of Mr MK, imposed a fine of $500 and ordered Mr MK to pay the sum of $750 on account of costs.


Mr MK has applied for a review of that determination.

The review

A review hearing took place in Auckland on 3 July 2014. Mr MK attended in person accompanied by one of his partners, and Mr PB attended by telephone.


On the morning of the hearing, Mr PB sent through a series of emails which consisted of a number of attachments. Copies of these were provided to Mr MK at the

hearing. Following the hearing, Mr MK reviewed this material and subsequently indicated by email that “most of the documents are unrelated or unremarkable”. 8

I record specifically here Mr MK's advice at the hearing, that he would make copies of the firm's files available to Mr PB so that he can...

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