Stephen Warne on professional negligence, regulation and discipline around the world

The Australian Professional Liability Blog random header image

Too broad a range of estimates of total costs causes NSW solicitor great grief

November 30th, 2016 · No Comments

Frontier Law Group Pty Ltd v Barkman [2016] NSWSC 1542 is an ex tempore decision of Justice Slattery in an urgent application to extend the operation of a caveat lodged by solicitors over their client’s property.  The application failed in part because the solicitors did not prove, even to the prima facie level required in such an application, that the money said to be owing and secured by the equitable charge which was the subject of the caveat was in respect of fees invoiced under the costs agreement referred to in the caveat.  That is not particularly interesting except as schadenfreude.

Two things are interesting though, given that the costs agreement was probably entered into in 2012 and so the Legal Profession Act 2004 (NSW) almost certainly applied (even though the Court looked also at the situation under the Legal Profession Uniform Law (NSW)):

  • First, the Court found that the range of estimates of total legal costs was so wide as not to comply with the relevant disclosure obligation.
  • Secondly, the Court appears to have treated the extension application as the commencement of proceedings for the recovery of legal costs, such that the statutory preconditions to such proceedings needed to be, but were not, proven to be satisfied by the lawyers.

I cannot think of another authority which states so plainly that some estimates are so imprecise as to render them non-compliant with the obligation to give a range of estimates of total legal costs.  But now we have it: a decision of the Supreme Court of NSW under a legislative scheme of which Victoria is also a part and which is likely to be followed as a matter of comity in Victoria.

What the Court said is: [Read more →]

→ No CommentsMore articles on: Costs agreements · costs disclosure defaults · Professional fees and disbursements · Solicitor client bills of costs · The suit for fees

$5,000 fines in lawyers’ disciplinary prosecutions

November 22nd, 2016 · No Comments

In this post, I noted the New South Wales Court of Appeal’s review of fines in solicitors’ disciplinary proceedings. I did my own little survey of Victorian cases recently in order to justify to the VCAT a joint submission as to penalty following a plea.

How naughty does a lawyer have to be to cop a fine of $5,000 in a disciplinary prosecution where that is the principal penalty (often paired with a reprimand, and costs of about $5,000)?  This naughty:

[Read more →]

→ No CommentsMore articles on: Discipline · VCAT

NSWCA surveys fines in NSW lawyers’ discipline decisions over a decade

November 14th, 2016 · No Comments

Russo v Legal Services Commissioner [2016] NSWCA 306 was the subject of my previous post. The Court engaged in a comparatively sophisticated review of disciplinary outcomes in like cases.  The purposes of this post is to reproduce that review and comment on the variables which ought to be taken into account in any proper survey of past outcomes.

To survey penalties in like cases has always been an important part of sentencing and should be an important part in imposing disciplinary sanctions.  Barbaro  (2014) 253 CLR 58; [2014] HCA 2 and Cth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 326 ALR 476 do not suggest to the contrary.  They say that the purpose of a survey of like sanctions is to promote consistency in penalties but not the establishment of a range of available sanctions deviation from which is appellable.  Buchanan JA observed in R v Macneil-Brown [2008] VSCA 190, (2008) 20 VR 677 at [130]:

‘counsel can best assist a sentencing judge, not by advancing what they consider to be sentences at the lower or upper limits of a sound sentencing discretion, but by making submissions as to the existence and nature of aggravating and mitigating circumstances and providing some guide to the manner in which other judges have approached like cases by supplying sentencing statistics and citing passages from decided cases which bear upon aspects of the instant case.’

I would submit that any survey of fines as a disciplinary sanction must take into account, as an important aspect of the analysis, the financial situation of the person or persons liable to pay it.  The specific deterrence of a fine will vary greatly from one practitioner to another.  Practitioners who struggle, for personal reasons, are more likely to get themselves into trouble in the first place, and to exacerbate it by less than perfect intercourse with the Legal Services Commissioner.  Their financial situations often deteriorate too.  Specific deterrence may be achieved by imposition of a fine much smaller than would be imposed on a flourishing practitioner raking it in.  General deterrence will also be achieved if the Tribunal is transparent in taking account of financial circumstance.  In such a case, the Tribunal might indicate the kind of fine which might have been imposed had the practitioner enjoyed an average post-tax income.

Furthermore, the costs burden borne by the practitioner ought also to be taken into consideration.  Costs and fine are inter-related in this way: Environment Protection Authority v Barnes [2006] NSWCCA 246 at [88] (Kirby J speaking for the Court) applied by analogy in LSC v Bechara [2009] NSWADT 313. The extraordinary costs practitioners are liable to in Victoria following disciplinary prosecutions would very often be more than adequate to achieve specific and general deterrence.  If you are prosecuted and reprimanded, made the subject of an editorial on the front page of the Commissioner’s website, and have to cough up $40,000 in unrecoverable solicitor-client costs reasonably incurred and costs liability to the Legal Services Commissioner, that is going to make you think just as hard about doing it again as any comparatively trivial fine you might cop.

Finally, one must be astute to inflation.  In my experience, people tend to exaggerate the effect of inflation when considering older fines.  Here is a calculator which assists in measuring in today’s dollars a fine imposed some years ago.

For some reason, notwithstanding that NSW is now a part of the legal profession uniform law, the other participant in which is Victoria, no Victorian fines were part of the survey.  That strikes me as unusual, since there is a whole statutory office the purpose of which is to promote interstate uniformity in the application of the Uniform Law: the Commissioner for Uniform Legal Services Regulation.  Russo’s Case was decided under the old legislation which the LPUL replaced, and which legislation in fact governed the prosecution was one of the issues on appeal.  Interestingly, apparently because it was thought that there were no relevant differences between the two regimes, that question was not decided.

This is what the NSWCA said about its survey of fines, and about the appropriate fine in this case: [Read more →]

→ No CommentsMore articles on: appeals · Discipline · Legal Profession Uniform Law · Misconduct · Professional fees and disbursements · Professional regulation · Solicitor client bills of costs · The suit for fees · Trust money · Uniform Legal Services Council and Commissioner

NSW solicitor who didn’t pay counsel’s fees struck back on

November 13th, 2016 · No Comments

Salvatore Russo, a solicitor of 29 years’ standing, was struck off NSW’s roll of solicitors on 16 April 2016 by NCAT.  He had received payment from his client for counsel’s fees but not paid counsel for years. Then he was high-handed in response to the client’s entreaties when counsel sued the client directly.  The Court of Appeal found a denial of procedural fairness by NCAT.  The Tribunal had telescoped the questions of liability and penalty into one hearing.  It had failed to give Mr Russo sufficient notice of the fact it was considering striking him off despite the fact by the end of the trial, the Commissioner was not seeking such an outcome any more. Now he’s been struck back on by the NSW Court of Appeal, a fine of $20,000 substituted for his misconduct: Russo v Legal Services Commissioner [2016] NSWCA 306.  (In fact, the striking off never came into operation, because he got a stay along the way.) [Read more →]

→ No CommentsMore articles on: appeals · Discipline · Legal writing · Misconduct · Professional fees and disbursements · Trust money · trust monies

Legal Services Commissioner’s new decision making powers

October 11th, 2016 · No Comments

The Victorian Legal Services Commissioner has published a report on his new proactive regulation of the profession.  It tells how risk profiles of practices are being constructed with the assistance of academics to target trust audits and audits of firms more generally (a new thing for law practices which are not ILPs).  It also tells about the exercise of the power to make binding decisions, and alerted me to the fact that the Commissioner now publishes redacted versions of costs determinations at this page. The report says: [Read more →]

→ No CommentsMore articles on: costs disputes · Discipline · Legal Profession Uniform Law · Legal Services Commissioner · National Profession Uniform Law · Professional fees and disbursements · Taxations

D3 and D4 settle with P and take over P’s case against D1 and D2 (-not)

October 7th, 2016 · No Comments

Taylor v Hobson [2016] QSC 226 is a strange old case. Plaintiffs sued defendants for damages alleging they had been misled into purchasing a business.  They sued the vendors and the vendors’ solicitors, alleging that each of the vendors and the solicitors had made misleading representations.  The solicitors (through their insurer) settled with the plaintiffs.  The solicitors promised to pay  a settlement sum to the plaintiffs and the plaintiffs promised to let lawyers appointed by the solicitors’ insurer act for them and run the plaintiffs’ case for them, with a view to recovering damages from the vendors and giving those damages to the solicitor defendants.  It was a creative form of litigation funding, if you will.  But it was a bit too creative for the Supreme Court of Queensland.

The insurer was to appoint new solicitors, not the solicitors which had been representing the solicitor defendants in the proceeding.  Nevertheless, the Court stayed the case as constituting an abuse of process for so long as the defendant-appointed solicitors were running the plaintiffs’ case.  The parties to the settlement might now amend it so as to remove the element of control over the plaintiffs’ case, therefore. The case may continue, and that aspect of the settlement deed which required the plaintiffs to give to the solicitor defendants the proceeds of their claim against the vendors might still have its operation.

→ No CommentsMore articles on: Abuse of process · Negligence

Applications to stay disciplinary decisions pending appeal

October 5th, 2016 · No Comments

I had to convince the Legal Services Commissioner to consent to a stay of orders suspending my client pending an appeal he has brought from VCAT the other day.  Happily the Commissioner consented.  For next time, I squirrel away this re-statement by the New South Wales Court of Appeal of the application to this class of case of the law governing applications for stays in civil proceedings pending appeal in Griffin v Council of the Law Society of New South Wales [2016] NSWCA 275.  (I reported on the first instance decision here, and this latest decision reveals that the solicitor has applied for the removal of his appeal to the High Court so it can rule authoritatively on the application of the freedom of political speech to criticism of the third arm of government, the judiciary.) [Read more →]

→ No CommentsMore articles on: appeals · Discipline · Legal writing · Suspension

Judicial review of decisions to dismiss disciplinary complaints

October 3rd, 2016 · No Comments

A man was acquitted of criminal charges.  The prosecution’s appeal failed.  He complained about the police’s lawyers’ conduct to South Australia’s Bureau de Spank, the Legal Practitioner Conduct Commissioner.  The Commissioner dismissed the complaint.  There was a statutory right of appeal in respect of some but not all categories of decisions at the conclusion of a disciplinary investigation.  Dismissals of complaints were not decisions which attracted a right of appeal.  Furthermore, the Commissioner argued, the man had a right  essentially to prosecute the lawyers privately for misconduct as an ‘aggrieved person’ under s. 82(2)(d), Legal Practitioners Act 1981 (SA).

The Commissioner applied unsuccessfully for the summary dismissal of the judicial review application.  The Court found that even though in any ordinary prosecution which would have followed a disciplinary complaint, the parties would be the Commissioner rather than the complainant on the one hand and the lawyer on the other, the complainant’s connection as the object of the alleged misconduct to the subject matter of the complaint was sufficient to give him standing (or, more precisely, to avoid summary termination of his proceedings on the basis of lack of standing).  And that was so notwithstanding the statutory scheme for appeals which conspicuously excluded him from its tenderness and notwithstanding any right he may have privately to prosecute the lawyers.  The decision is reported as McLeod v Legal Profession Conduct Commissioner [2016] SASC 151.

The situation in Victoria is impacted, in respect of complaints to the Victorian Legal Services Commissioner to which the Legal Profession Uniform Law apply  by part 5.6 of chapter 5 (ss. 312 – 314).  Decisions of the Victorian Legal Services Commissioner under chapter 5 are ‘final, except as provided by this Part’.  The Commissioner is empowered to review his own decision but only at his absolute discretion.  And lawyers have a right to appeal to a person who is presumably intended to be VCAT from a disciplinary sanction imposed administratively by the Commissioner or a compensation order imposed by him for $10,000 or more.

As to the law in relation to the same question in Queensland, see Murphy v Legal Services Commission [2016] QSC 174.

→ No CommentsMore articles on: appeals · Discipline · judicial review · Legal Services Commissioner · National Profession Uniform Law

Third party payer taxations where client bankrupt: WASCA

October 3rd, 2016 · No Comments

In Iron Mountain Mining Ltd v K & L Gates [2016] WASCA 166, the appellant, a listed company, had indemnified one of its directors against the legal costs of lawyers defending the director in criminal charges.  Companies can do this on the basis that the director must repay the costs if he pleads or is found guilty, since it is illegal to indemnify a costs liability incurred as an officer of the company if the costs are incurred in defending or resisting criminal proceedings in which the person is found guilty: ss. 199A-C Corporations Act 2001Note Printing Australia Ltd v Leckenby [2015] VSCA 105; (2015) 106 ACSR 147 [65]. The company paid more than $500,000 in respect of the fees prior to the guilty plea.

The director went bankrupt.  The company applied for taxation of the director’s solicitors’ fees.  By that time, the director had pleaded guilty to some of the charges.  The company was a non-associated third party payer; it promised to pay the lawyers’ fees, but its promise was made to the director and not to the lawyers. The Court found that the right given to third party payers to seek taxation did not adjust the interests of the client and the lawyers; it only adjusted the interests between the third party payer and the client: [Read more →]

→ No CommentsMore articles on: Professional fees and disbursements · Solicitor client bills of costs · Taxations

Does a subrogated claim give rise to a general res judicata if an insured’s loss is partly insured and partly uninsured?

September 5th, 2016 · No Comments

In De Armas v Peters [2015] NSWSC 1050, the Supreme Court of NSW declined to grant leave to appeal from a decision of the Local Court.  The Local Court had allowed a man to sue for the cost of repairs to his car, even though he had previously sued her for car hire costs he incurred while those repairs were being undertaken.  And even though, in that first case, the Local Court had found him to be the negligent driver, not the woman.  Impossible?  There was of course a twist.  The first suit was brought with the involvement of a car hire company from whom the man had hired the car he used while his car was being repaired. No doubt they had told him that the car would be at no cost to him and the cost of the hire would be recovered by the car hire company’s solicitors from the negligent driver.  The second suit was brought by his insurer, having stepped into his shoes through the law of subrogation.  The man’s losses were partly insured and partly uninsured, hence his deal with the car hire company to which he was probably referred by his repairer.  And the woman’s insurer had not taken any defence of abuse of process in either proceeding before she obtained judgment in the first.  You can watch a discussion between AAMI’s solicitor and barrister about the decision on the excellent BenchTV here. [Read more →]

→ No CommentsMore articles on: Abuse of process · Civil Procedure Act 2010 (Vic) · Insurance · Legal writing · Litigation estoppels · Negligence