Here is Commissioner McMurdo’s Summary and Recommendations from the Final Report, published yesterday, of the Royal Commission into the Management of Police Informants.
Reproduced below is what it says about regulation of the legal profession. There will be more complaints about barristers in the future. Victorian barristers would be well advised to take out the top up insurance available to members of the Victorian Bar which includes a primary layer insurance against defence costs of disciplinary investigations including by the Victorian Legal Services Commissioner. Continue reading “What the Gobbo royal commission recommended about regulation of the legal profession”
Associate Justice Lansdowne has released for publication an edited transcript of reasons her Honour gave in Chan v Falls Creek Alpine Resort Management Board for not approving a proposed compromise of the claim of a person under a disability. The citation for the decision is  VSC 314. ‘Disability’ in this sense is a term of art and extends to the disability of being a minor.
The plaintiff, through his litigation guardian, had proposed a compromise in terms which were expressed as an amount for the claim and an amount for his costs. Her Honour pointed to Sztockman v Taylor  VR 572 which suggests that such compromises are to be discouraged lest the plaintiff’s solicitors be attracted to an offer which is comparatively favourable in relation to costs but comparatively unfavourable in relation to the claim. That raises a conflict between interest and duty which is inherent in any compromise structured this way, but which is comparatively impermissible because of the disability of the plaintiff and the important role played by the parties’ lawyers in assisting the Court to evaluate the reasonableness of the compromise, a judicial function which is not a feature of compromises of claims by people not under a disability. Another reason for the discouragement of such compromises is that the judge approving the compromise is ill-equipped to assess the reasonableness of the proposed compromise in relation to costs.
Following the non-approval of the compromise, the deal was renegotiated such that the settlement sum was expressed on an all-in basis as the total of the separate sums originally proposed by way of compromise of the claim and of costs. That sum was to be paid to the Senior Master and the plaintiff’s solicitors were to apply to the Senior Master for costs. The renegotiated proposed compromise was approved by the Court.
America’s excellent Professional Responsibility Blog, to which I have added a link in my blogroll, is published by Professor Alberto Bernabe of Chicago. He has gathered together the answers, in America at least. In the latest eruption of lust in connection with legal practice, which involved only an attempt, the Indiana Supreme Court just told the attorney to take a break for 90 days. Despite the fact, that is, that his retainer by the husband was in relation to matrimonial disputes with the wife. The Professor’s latest contribution to the ever-enjoyable debate about sex with clients is here. The Texans are all angst-riddled about whether to prohibit the practice. The Professor also recently published another in his series of ‘How Not to Practice Law‘: ‘Ask Client to Pay Fees with Drugs‘.
An ICAC enquiry resulted in a finding that a senior lawyer at NSW Maritime was corrupt following Operation Vargus: their report is here. That agency oversees marine safety and strategy in all things to do with the sea for the State Government. Tonette Kelly was moonlighting, working a 100 client, $120,000 a year private conveyancing business while employed full-time. She procured NSW Maritime to purchase professional liability insurance for her, understated her income in her insurance application (so as to lower the premium), engaged other employees of the legal department for reward on her conveyancing files, lied about her activities, and forged a document in her cover up. She had in fact sought permission from her employer to do about 1 hour’s work a week during work hours, but her moonlighting expanded beyond her employer’s understanding. Now the NSW Legal Services Commissioner has suspended her practising certificate on the basis of the ICAC findings, and ICAC has suggested the possibility of criminal prosecution for misconduct in public office. NSW Maritime has changed its mind about paying for her defence.
This is tough stuff; damning evidence against Ms Kelly — 4,568 faxes sent from her employer’s fax machine — were seized in a raid on her home. I have heard of nothing like it by Legal Services Commissioners, and have my doubts about whether, in Victoria, such a matter would be referred to the police so as to allow them to carry out a similar raid. This involved government corruption, the eradication of which is undoubtedly an important end, especially in NSW, but the social ills generated by lawyers behaving badly, especially in litigation, must be right up there in terms of societal undesirability, worthy too of vigorous investigation. In fact, this is a rare instance of the stipes going up against the big end of town. The involvement of whistleblowers may explain the curiosity.
This is a post about David v David  NSWCA 8 (the decision at first instance is at  NSWSC 855). Karl Suleman has been good to professional negligence lawyers. He procured other Assyrians to invest in excellent sounding supermarket trolley schemes. ‘Give me $50,000’, he said to one investor, ‘and shopping trolleys will pay you $1,350 a fortnight for 10 years’. That is a return of 600%. Something must not have worked out the way it was supposed to, because the punters lost their dough and Karl went to jail. The punters sued their lawyers, and any other lawyers on the horizon. Continue reading “Conflict of duties and the limited retainer”
Reproduced below is a blog post about ‘bill padding’ from the US site, Legal Blog Watch. That is where lawyers say work took them longer than it really did, and so charge commensurately more, or even make up the fact that they did work, and charge for it. Sometimes I read articles like this and wonder whether lawyers don’t think they live in a different world where, if they commit crimes, what will happen to them is that they will be dealt with by professional discipline. They think that, or course, because it’s more or less true, unless you get caught stealing from your trust account. But the criminality of time sheet crime should not be allowed to be buried under anodyne euphemisms. ‘Bill padding’ sounds kind of cute, a necessary evil. It is a kind of newspeak. Time to do away with it. Let’s call it ‘rapacity fraud’. It is tolerated by the profession in this sense. There are generalised allegations of widespread bill padding. Talk privately to costs consultants and they will tell you all about it. But I have never heard of a firm which has even basic anti-fraud procedures to detect the practice.
My point kind of makes itself when the author says ‘allegations of bill padding … drew … strong criticism about the practice from legal ethics experts’. Experts say fraud is bad? Well shit Sherlock! The 9th commandment does kind of feature relatively prominently in most systems of law. We’re going to have the case one day when someone actually subpoenas a firm’s electronic billing system and its metadata, and diaries, analyses when the billing entries were made, and cross-examines lawyers on how they could have billed 180 units in a day and still made it to the client function at 6 p.m., or why, having billed relatively consistently every day, they would suddenly remember on the 30th of the month some comparatively vaguely described units they had forgotten to record mid-month, or why given that they had used a precedent for similar documents three times previously in the same month, they decided to draft the document from scratch, only to end up with — you guessed it — the same document as the precedent. Now, that article: Continue reading “Lawyers and the criminal law”
On 13 August 2008, Deputy President O’Dwyer found charges of misconduct at common law made out against Kylie Minogue’s one-time solicitor, the man towards the centre of the government’s Operation Wickenby investigation, Michael Brereton. See Legal Services Commissioner v Brereton  VCAT 1723. Mr O’Dwyer found he had transferred more than $2.3 million of clients’ money out of his trust account contrary to the trust accounting rules. Since he did not turn up to the hearing, the finding is not altogether surprising. His counsel explained the solicitor ‘was attending to important business matters overseas, having invested in an information technology business with links in America and Europe,’ which makes me wonder whether he could not have used some of his investments to appear by video link. The Age‘s report is here.
The Commissioner is to be commended for making some sense of the very complex business transactions in which the solicitor and his clients were involved, and achieving the making out of the allegations of misconduct which were made out. So too the Tribunal, which had a difficult task in the absence of participation by the solicitor, and produced a spare but careful set of reasons. But it was not all wins for the Commissioner. Continue reading “Kylie’s one-time lawyer goes down, with a ‘disgraceful and dishonourable’ finding”
I prepared an application to restrain a firm of solicitors from acting in a Corporations List matter in the Supreme Court recently, and so have been reading the latest cases about conflict injunctions. The very latest is TJ Board & Sons Pty Ltd v Castello  VSC 91, where the plaintiff applied unsuccessfully to restrain the defendants’ solicitors from acting, and the defendants applied to restrain the plaintiff’s solicitors from acting. Neither succeeded in convincing Justice Hollingworth. The first application is interesting in making some comment on:
- the materiality of the evidence which a solicitor must be likely to give; and
- the extent of a personal interest in the outcome of the litigation as a result of participation in the controversial events which a solicitor must have
before he or she will be enjoined from acting because of a conflict of duty and interest.
The second application is a relatively unremarkable application of the law relating to confidential information based conflicts which allegedly arose out of a pre-retainer 20 minute ‘meet and greet’ which did not lead on to a retainer. Continue reading “Both sides apply to restrain the other’s lawyers from acting”
In Chen v Chan  VSCA 2, President Maxwell and Justice of Appeal Redlich dismissed an application by the appellant for an order enjoining the respondent’s solicitor and counsel from acting in the appeal. The applicant alleged that there had been wrongdoing by the respondent’s lawyers at the trial. In fact that was one of the grounds of appeal. It is certainly the case that where a lawyer is to be a witness, he ought not continue to act, especially as an advocate. But their Honours held: Continue reading “Application by appellant to remove respondent’s trial counsel from appeal dismissed”
Update, 13 November: Clayton Utz’s take on the case here.
Here’s a long Sydney Morning Herald article about the latest big Chinese wall case, this time not in the context of a law firm, but of Citigroup, an investment bank. Here’s The Age‘s shorter version. The case is ASIC v Citigroup Global Markets Australia Pty Ltd (No. 4)  FCA 963. Here’s a summary by Corrs Chambers Westgarth. Here’s Minter Ellison’s effort. And here’s Allens Arthur Robinsons’ take. The bank’s Chinese wall was declared ok in a 40,000 word long judgment, and his Honour found that Citigroup had successfully contracted out of a fiduciary relationship from the outset, in its retainer letter. But the judge did have this to say about one of the Bank’s key witnesses at ff: Continue reading “Chinese wall holds up at investment bank”
The Ombudsman has been looking into the performance of a regulator, MARA, the Migration Agents Registration Authority. He was critical. His press release is here, the full report here. Reproduced below are the bits about impartiality and the avoidance of conflicts of duties ‘in the case where an industry representative body is also the regulatory body and complaint-handling organisation’. Though the Legal Services Commissioner does not fall into that category, the Uber-regulator’s review of a professional regulator may nevertheless be of interest to those who deal with her. The Ombudsman suggested that oral complaints be taken, reduced to writing by regulator staff, and confirmed by sending out the writing to the complainant. I think that would be an efficient way of dealing with complaints against lawyers by unsophisticated clients. It would be a case of a stitch in time saves nine, and would prevent lawyers from having to respond to allegations which are incomprehensible and legally embarrassing. The Legal Services Commissioner ‘may’ provide assistance to members of the public in making complaints: s. 4.2.12(c) Legal Profession Act, 2004. Under s. 123(5) of the Legal Practice Act, 1996, the Law Institute’s Professional Standards were obliged to assist if asked, but to my knowledge they rarely did so, and I am aware of instances where assistance was formally sought but refused. Now, that extract from the report I mentioned: Continue reading “The regulator’s regulator, the Ombudsman, criticises Migration Agents’ bureau de spank”
In my post “Judge uses big word”, I commented on President Mason’s use of “tergiversation”. Now David Starkoff at Inchoate has noted another’s analysis of the odds of each of the High Court judges other than Justice Kirby being responsible for the appearance of “epexegetical” (which seems to mean “explanatory in a way supplementary to the principal or original explanation”) in a decision on migration. (10/1 odds: Justice Gummow.) Love how the judiciary tends to save up these little diamonds of language for those least likely to have the resources to look them up.
And, by way of update to my post “Finally, some scholarship on Australian lawyers’ conflict of duties”, here is a long article on conflicts of duties in America, “I’m All Verklempt!” by Kendall M. Gray et. al., including a long analysis of the Yanks’ position on Chinese walls. The relationship between establishing a conflict of duties and the entitlement to compensation of one of the people to whom the conflicting duties is owed is a bit complicated in Australia. It certainly does not follow that every breach of fiduciary duty gives rise to a right to money in the victim from the lawyer. But in Texas, there is a principle of fee forfeiture which applies in cases of clear and serious breaches of fiduciary duty, a remedy born in Burrow v. Arce 997 S.W.2d 229 (Tex. 1999). Where an attorney was found to have grossly overcharged, fee forfeiture was imposed so that the attorney lost all his fees rather than just those which exceeded a reasonable fee: In re Allied Physicians Group, P.A., No. 397-31267-BJH-11, Civ. A.3:04-CV-0765-G, 2004 WL 2965001, at *5 (N.D. Tex. Dec. 15, 2004) (unpublished), aff’d, 166 F. App’x 745 (5th Cir. 2006).
Mr Gray’s style cannot be described as stuffy, and exemplifies what is good about Texas, namely plain talking: Continue reading “Updates: big words, Texan legal writing, conflicts of duties”
H v Medical Practitioners Board of Victoria  VCAT 526 was a rehearing of a case before the Medical Practitioners Board (the decision of which is here). VCAT, constituted by Vice President Harbison and Associate Professor Davis, reduced the severity of the outcome of an unprofessional conduct prosecution for an intimate relationship with a former patient, which continued after the psychiatrist had paid her $100,000 conditional on her not suing him or lodging a disciplinary complaint. VCAT suspended him for 18 months in lieu of the deregistration imposed on him by the Board, the majority of which had concluded that:
‘Dr [H] is unlikely to engage in unprofessional conduct of the nature of a sexual relationship with a patient or former patient again. … However we note that some of factors in Dr [H’s] personal background that formed the context within which this relationship developed remain unresolved. … on balance, … there is likely to be a benefit to the public in Dr [H] continuing to practise his profession. However, through our knowledge as members of this Board, we are aware that the predictive capacity of bodies such as ours in relation to repetition of sexual misconduct is poor. Therefore it is incumbent upon us to be cautious.’
That conclusion was recounted in VCAT’s judgment as a finding ‘that it was unlikely that Dr Honey would be likely to engage in unprofessional conduct of the nature of a sexual relationship with a patient again [sic.]’.
The Board’s decision is notable for containing a dissenting opinion. Disciplinary tribunals are often constituted by panels of lawyers and non-laywers, but I do not recall ever seeing a legal disciplinary tribunal publish majority and minority reasons. Continue reading “Affair over 6 years and a $100,000 payment earn psychiatrist an 18 month holiday”
Patterson v S  VLPT 11 is a decision of the Legal Profession Tribunal dealing with a sole practitioner who was the executor of a priest’s will. It held that executors’ work carried out by an executor who happens to be a solicitor is not legal work, and so fees for the work were not within a clause in the will entitling professional executors to charge their “usual or reasonable charges”. Continue reading “Solicitor-executor’s work not legal work”
In Sexter & Warmflash, P.C. v Margrabe, 2007 NY Slip Op 00065, a woman hired lawyers to represent her and her brother in a dispute with a cousin. The lawyers charged a reduced fee but could charge a 50% premium upon resolution of the dispute. The dispute was settled, but the woman thought the lawyers were progressing too fast towards final resolution (and their premium payment) at the expense of her interests. She fired them and copied her brother in on her none-too-complimentary letter of dismissal, which she also sent to two other lawyers she had retained for second opinions. Essentially, she alleged a concurrent conflict between duty and interest, as well as incompetence. The lawyers sued her in defamation for at least US$1 million, and then represented themselves, a step which raises real questions in my mind about their strategic competence, one of the things criticised in the controversial letter. The case was summarily dismissed. The New York Supreme Court Appellate Division‘s statement of the law of absolute privilege is reproduced: Continue reading “Lawyer’s defamation suit against former client founders on absolute privilege”
The Bar has produced a practice guide. It is a great achievement and stands as a beacon for the Law Institute’s future efforts at promulgating knowledge of the practice rules. The Bar actually has something called the Professional Standards Education Committee. Written by Roisin Annesley, it was launched by Victoria Marles, the Legal Services Commissioner on 18 October 2006, and distributed free to every member of the Bar. Annesley has done a lot of work as Counsel Assisting the Legal Profession Tribunal (and continues to do occasional work assisting the Legal Practice List at VCAT). A doyen of professional discipline, Paul Lacava SC, and a judge who has excoriated Professional Standards, Justice Gillard, are credited with substantial involvement. It has chapters on: Continue reading “Roisin Annesley’s Victorian Barristers’ practice guide”
Solicitors’ Practice (Conflict) Amendment Rule 2004
(a) This rule sets out provisions for dealing with conflicts of interest other than
those conflicts in relation to conveyancing, property selling or mortgage
related services which are dealt with in rule 6.
(b) This rule applies to a regulated individual and a regulated practice.
(c) Conflicts between the duty of confidence and duty of disclosure owed by an
individual or a practice to two or more clients are dealt with in rule 16E. Continue reading “Detailed new conflict rules commence in England”
Legal Services Commissioner v JAF  VCAT 581 (Cullity, Shattock, Hannebury) Acting for vendor and purchaser; conflict between duty and interest (of solicitor’s associate)
The Full Tribunal were not impressed with this solicitor who acted for the vendor and the purchaser which was a trust of which his wife was a beneficiary, but did the rule they relied on extend to prohibit acting in the face of a conflict between duty and the interest of an associate? Continue reading “Misconduct in acting in face of duty and associate’s interest conflict”
Law Institute of Victoria v PJR  VCAT 293 (see the associated pecuniary loss dispute decision here)
The Law Institute prosecuted a solicitor for misconduct constituted by simply missing a time limit. That failed, as did most of the other charges. But he was convicted of unsatisfactory conduct in not telling his client for two years that he had missed a crucial time limit, giving rise to a conflict between duty and self-interest. After 3 days of hearings, the solicitor was fined $1,000 and ordered to contribute only a fraction of the Law Insitute’s costs.
Continue reading “Non-disclosure of own negligence founds unsatisfactory conduct conviction”