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Letter of demand for fees found to be professional misconduct

October 25th, 2010 · No Comments

A solicitor represented himself unsuccessfully before Western Australia’s State Administrative Tribunal in Legal Profession Complaints Committee v MLS [2010] WASAT 135, being found guilty of three counts of professional misconduct and three of unsatisfactory professional conduct.  The Tribunal’s summary of its own findings is reproduced at the end of this post. The solicitor told a Magistrate on an ex parte application for an intervention order against his client that the client had a criminal record, which the solicitor knew the client did not have.  Hardly surprising that that conduct was found to be misconduct.  More interesting, perhaps, is the finding that an unduly aggressive demand for fees was found to amount to professional misconduct.  It said, in effect — If you do not pay me $2,000, I will sue you, get default judgment, and bankrupt you for 5 years.  The problem was that the client had a rather good defence: the solicitor had not sent him a bill for the $2,000 disbursement.  The Tribunal found misconduct, explaining at [53]ff:

‘As    noted    earlier,    the    10 January 2008 letter faxed from the practitioner to the first client included the following:

… Unless reimbursement of such is now effected to me as earlier demanded, I will proceed, on Monday 14 January 2008, to sue you for in respect of that disbursement. Legal proceedings in that regard would culminate in an interlocutory judgment as against you in respect of which I would then issue a Bankruptcy Notice.

Your failure to comply with that Bankruptcy Notice would inevitably result in my Creditor’s Petition for your sequestration, on this occasion for a period of not less than five years.

The significance of the reference to sequestration ‘on this occasion for a period of not less than five years’ is that the practitioner was aware that the first client had previously been made a bankrupt for the usual period of three years.

The practitioner conceded, under cross-examination, that this part of the letter was intended to put pressure on the first client to pay the $2,000 disbursement. However, the practitioner denied that he was guilty of professional misconduct by sending the letter.

We find that the threats and demands made in the extract from the letter set out above were improper for three reasons. First, the matter concerned a sum of only $2,000 in circumstances where the client had previously paid much larger sums to the practitioner for legal fees and had, in his facsimile dated 8 January 2008, said that he would pay the $2,000 promptly and as soon as the matters referred to in the facsimile were addressed by the practitioner.

Secondly, the threats and demands made in the letter were improper, because the practitioner’s threat to commence immediate proceedings was in breach of s 230(1) of the [Legal Practice Act 2003 (WA)].

Thirdly, the threats and demands made in the letter were improper, because the letter, being from a legal practitioner to a lay person, suggested that the first client would have no defence at all to the practitioner’s claim, whereas the first client clearly had a defence because of the breach of s 230(1) of the 2003 Act. In response to a question to this effect put by Mr Herron, counsel for the LPCC, the practitioner said that the first client was ‘no stranger to litigation’ and ‘a sophisticated client’. However, as this Tribunal said in Legal Practitioners Complaints Committee and Segler [2009] WASAT 91 at [54] and [56]:

Legal practitioners enjoy particular privileges in our society. Those privileges carry with them responsibilities. Communications by a lawyer concerning matters of law bear special force by reason of the qualifications and authority of the author. …

… Even if Mr Groves had a level of professional sophistication greater than the average citizen, it is reasonable to expect that he would take the threat by a lawyer as a serious matter of concern. His professional background might well lead him to assume that such a threat would not be made without adequate foundation. …

We find, therefore, that the practitioner engaged in professional misconduct by sending a letter to the first client that included improper threats and inappropriate demands.’

Here is the Tribunal’s summary of its decision more generally:

‘The Tribunal determined that [the solicitor] is guilty of unsatisfactory professional conduct:

• by suing his client, DC, for recovery of a disbursement (counsel’s fees) without having served the client with a bill for the disbursement and failing to discontinue those proceedings, contrary to s 230(1) of the Legal Practice Act 2003 (WA);

• by failing to comply with a written request dated 18 January 2008 from DC’s new solicitor to lodge four bills of costs, dated 10 January 2008 with a taxing officer, contrary to s 237(1) of the Legal Practice Act 2003; and

• by failing to advise his client, NC, that he had received an itemised bill of costs and to seek NC’s instructions as to whether [the solicitor] should serve on the firm that had issued the bill of costs, a written notice of intention to have the bill taxed within 30 days of service of the itemised bill, that is, on or before 5 October 2007.

The Tribunal also determined that [the solicitor] is guilty of professional misconduct:

• by sending a letter containing improper threats and inappropriate and threatening demands to his client, DC

• in order to advance his own interests, by knowingly and intentionally misleading Magistrate Musk on 11 January 2008 during the hearing of an ex parte application filed by and on behalf of [the solicitor] for an interim violence restraining order against DC by asserting that DC had a criminal record when that was not the case; and

• by failing to file a statement of defence by 27 December 2007 on behalf of his client, NC, and by failing to inform NC that he had not filed a statement of defence by 27 December 2007, or at all, failing to inform NC that his former solicitors were entitled to apply for default judgment without further notice, and failing to serve a copy of the notice of change of address for service on NC or to inform him that he had ceased to act for him.’

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Tags: Discipline · Professional fees and disbursements · The suit for fees