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Solicitors’ settlement advice immune from suit

I know for a fact that the profession does not understand the extent of the advocates’ immunity which is set out in the decision of the majority in D’Orta-Ekenaike v Victoria Legal Aid [2005] 223 CLR 1. Not uncommonly I see lawyers’ negligence claims arising out of litigation being defended without claiming the immunity, or wasting costs by failing to claim it at the outset. In Jezovita v AGL [2007] VCAT 1447, VCAT’s Senior Member Howell, undoubtedly the most experienced examiner of immunity defences in the world, has delivered a pithy judgment which reiterates two matters in a clear way, and states clearly something which is relatively newly brought out into the open, though it has been lurking around quietly if you looked hard enough. The two matters reiterated are:

  • in relation to out-of-court litigation work, solicitors are as entitled to the immunity as barristers, regardless of whether they are appearing as advocates or engaging in the solicitor’s traditional role; and
  • advice as to settlement of litigation, as well as failures to advise in relation to settlement issues, may not be sued on because of the immunity: Biggar v McLeod [1978] 2 NZLR 9; Kelley v Corston [1997] 4 All ER 466.

In this matter, both solicitors and barrister were entitled to summary disposition of Mr Jezovita’s claim against them that they pressured him into the settlement, should have realised he did not understand the terms of settlement, that they negotiated negligently and did not get a satisfactory result, and that they should have advised him to run his case. In other words, just another failed regretted settlement case.

The relatively new matter clearly expressed in this judgment is that adding an allegation of undue influence into the plaintiff’s case will not assist, because the equitable doctrine of undue influence either founds a defence to a claim based on a transaction said to have been induced by undue influence of the counterparty or founds a claim to set aside a disposition said to have been brought about by the exercise of undue influence on the part of the counterparty to the disposition, but does not lead to an entitlement to damages: D’Orta-Ekenaike v Victoria Legal Aid (per Buchanan JA in the reasons for decision of the Court of Appeal’s refusal to grant leave to appeal from Judge Wodak’s decision at first instance, approved by Justice Callinan on appeal at (2005) 223 CLR 1 at 121).

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Home Office v Harman: some law about its application to VCAT

This is a workmanlike little post, designed simply to trap into the world of this blog for when I need them next in court the legal principles discussed in Acting President Bowman’s decision in ZGW v Legal Services Board [2007] VCAT 1406, casenoted in the previous post. The parties’ arguments are also reproduced below in part. Continue reading “Home Office v Harman: some law about its application to VCAT”

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The obligation not to use documents obtained under compulsion except for the purpose compelled

Update, 21 August 2007: Latest case on the implied undertaking:  Street v Hearne [2007] NSWCA 113.

When a person comes into possession of documents through legal compulsion, they are under an implied obligation not to use them for any purpose but the purpose for which the compulsion operates. Most lawyers know the rule insofar as it applies to discovered documents. But it applies to all manner of compulsion and to information as well as documents, including subpoenaed documents, and documents obtained by the Legal Services Commissioner under s. 4.4.11 (in relation to disciplinary complaints) (or, now, in relation to civil disputes, s. 4.3.5(3)) of the Legal Profession Act, 2004. It is best known as the rule in Home Office v Harman after the House of Lords decision in that case reported at [1983] 1 AC 280.

The latest decision in the saga of Australia’s best-known female criminal lawyer, ZGW v Legal Services Board [2007] VCAT 1406 (see for background my earlier posts here and here and here) is a ruling on an application by the Legal Services Board to be released from the obligation. It is another of Acting President Bowman’s long, honest, and thorough judgments. His Honour is a hard-working judge, and I like the way he sets out with fidelity the parties’ arguments, and then deals with them one by one. It is a diligent, and intellectually honest approach, and goes beyond what could be, and often is, gotten away with in some administrative tribunals. More generally, VCAT is to be commended for having the courage to publish each and every new written decision on the internet.

The case was argued by some heavy-hitters: Joe Santamaria QC for the Board and Gerry Nash QC for the solicitor. Mr Nash prevailed. The tussle was over a police file on the solicitor, and: Continue reading “The obligation not to use documents obtained under compulsion except for the purpose compelled”

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Solicitors’ liability paper; conflicts of lawyers acting for insurer and insured

Here’s a link to a little article on the law relating to the possible conflicts of duties faced by a lawyer retained by a liability insurer to act for its insured in the defence of proceedings against the insured. It discusses 3 English cases:

  • Brown v Guardian Royal Exchange Assurance;
  • TSB Bank v Robert Irvin; and
  • Zurich Professional v Karim.

And here’s a link to an excellent solicitors’ liability publication from Barlow Lyde & Gilbert. It deals with the new professional conduct rules in England, solicitors’ liability for mortgage fraud, lawyers’ obligations to their opponents, and an unusual case in which liability insurers were ordered by the Court to pay £1 million in legal costs of a failed defence even though the limit of indemnity had been exhausted by the judgment. That was ordered on the basis of these apparently unremarkable circumstances:

‘(i) the insurers determined that the claim would be fought; (ii) the insurers funded the defence of the claim; (iii) the insurers had effective conduct of the claim; (iv) the insurers fought the claim exclusively to defend their own interests; and (v) the defence failed in its entirety.’

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Freshfields partner gets whacked $140,000 over conflict of duties to concurrent clients

Freshfields used to be Marks & Spencer’s go-to lawyers. Then they fell out of favour a bit. But they were still acting for Marks ‘n’ Sparks on one relatively small contract. A key partner then decided to accept instructions to act for a consortium trying to take over the supermarket chain. If the takeover went hostile, that one contract was likely to be contentious. There was a potential conflict of duties, the Court found in Marks and Spencer Group Plc v Freshfields Bruckhaus Deringer [2004] EWCA Civ 741, and restrained the firm from acting. Three years later, the wheels of justice have ground on, and the disciplinary sequelae of the injunction application have come to a head. Barry O’Brien copped a £5,000 fine from the Solicitors Disciplinary Tribunal, and a £4,000 fine for bringing the profession into disrepute. He pleaded, and ‘volunteered’ to pay prosecution costs of £50,000 which suggests that he had a good long think before pleading. Continue reading “Freshfields partner gets whacked $140,000 over conflict of duties to concurrent clients”

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The 60 day time limit for instituting VCAT proceedings under the Legal Profession Act

In Ralph Cosentino v MY [2007] VCAT 1319, Member Butcher continued a tradition of statutory interpretation of a little technical provision about when service of statutory notices is effective. That tradition, of the Legal Profession Tribunal and its predecessors, has always troubled me. Though it does not seem to have been cited by counsel,  a recent decision of a Deputy President of VCAT took the opposite approach: Vitesnik v Macedon Ranges SC [2007] VCAT 598. There is a Legal Profession Act, 2004 notice issued by the Legal Services Commissioner within 60 days of receiving which an applicant must start their VCAT case.  Mr Butcher concluded that he would have found that Mr Cosentino did not ‘receive’ it on the day when the Act directed that it was to be ‘taken to have been given to him’. But the question never quite arose, as Mr Butcher used a VCAT Act, 1998 power to excuse the applicant’s use of the wrong originating process and concluded that the proper characterisation of things was that the application, though defective, had been made within time anyway, so that it was appropriate to excuse the procedural defect and recognise the case as having been started within time. Warning: this is a particularly boring decision unless you are a user of VCAT’s Legal Practice List. Continue reading “The 60 day time limit for instituting VCAT proceedings under the Legal Profession Act”

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Victoria Marles to speak on progress towards national profession

The Legal Services Commissioner, Victoria Marles, is to speak at the Australian Legal Practice Management Association’s conference in Melbourne on 26 October 2007. I feel for her, with the 4 p.m. Friday shift. With her NSW counterpart Steve Mark, she will speak on what is left to do in creating a truly national profession. Imagine trying to fit all that in on a Friday afternoon, just before cocktails. The conference brochure provides the following profile of the Commissioner: Continue reading “Victoria Marles to speak on progress towards national profession”

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President Maxwell: legal reformer

President Maxwell spoke at Jason Pizer’s book launch the other night. There is no nonsense about him, and no hubris. I liked the way he sorted out Mr He’s case, one which was sufficiently memorable for him to make reference to it in passing in his speech. The President is at pains to cast the Court as a practical and fast court, correcting injustices but not interfering with first instance decision makers for a want of i dotting and t crossing. He does not aspire to a Court writing finely appeal-proofed legal treatises for the delectation of other courts of appeal. Indeed, he is advocating ex tempore judgment giving wherever possible. The President’s speech on the New Court may be found here, the latest practice note on civil appeals here.

The President sees written advocacy as very much on the rise in the Court of Appeal, a way of getting through more hearings more quickly and reducing what he properly regards as the inexcusable delays which have sometimes characterised the Court of Appeal in the past. President Maxwell actually said that justice delayed is justice denied, an admission rarely heard in the formal, public part of our grindingly slow superior court system, but one which practitioners and their clients feel keenly, all the time.

I kind of knew all this, but I was only vaguely aware of the passion with which the President is trying to clean up the archaic and uncertain bits of the law of procedure. Continue reading “President Maxwell: legal reformer”

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Pizer’s Annotated VCAT Act comes into third edition

        

My friend Jason Pizer had the launch of the third edition of his book this week, and I went along and enjoyed the company of VCAT’s Acting President John Bowman, Deputy President Marilyn Harbison, and Justice Chris Maxwell, President of the Court of Appeal.  It’s the VCAT equivalent of Williams, the looseleaf ‘Bible’ of civil procedure in the state courts.  Compared with Williams, it is a joy to use. It has the same in-court handling as the ‘Cook Book’. It has serious traction with the members over there. It’s full of intellectual grunt. And it’s about one-tenth of the price of Williams at $130. Continue reading “Pizer’s Annotated VCAT Act comes into third edition”

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Professional liability of in-house counsel: the US experience

The New York Law Journal has an interesting piece about liability exposures of in-house counsel. All sounds a bit foreign to Australian ears, but maybe it won’t in a few years’ time. Here are two examples:

SHAREHOLDER CLASS ACTIONS

Several shareholder class actions were commenced against a financial institution alleging breach of fiduciary duties, violations of Rule 10b-5 of the Securities Exchange Act of 1934 inclusive of fraud and insider trading, misrepresentation, negligence, and legal malpractice. These actions were ultimately consolidated. The consolidated plaintiff class named all of the board directors and certain senior level officers as defendants, including the general counsel and two associate general counsels.

The plaintiffs claimed that the general counsel and associate general counsels were negligent in their performance of legal research regarding financial reporting. In the factual allegations, the plaintiffs asserted that the general counsel delegated a research assignment to the associate general counsels who completed it incorrectly, but the general counsel did not review their work. Rather, she forwarded their work directly to the board of directors who in part acted on the inaccurate information.

Following the completion of discovery and on the eve of trial, the parties engaged in settlement negotiations and agreed to resolve this matter for $40 million. The insurer for directors and officers liability contributed $25 million to the settlement and the employed lawyers professional liability insurer contributed $2.25 million for the legal malpractice claims. The remainder of the loss was borne by the financial institution. Continue reading “Professional liability of in-house counsel: the US experience”

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Client wins professional negligence case against solicitors at VCAT

Such a result is a rare turn up for the books. It would be an interesting exercise to think when a client last won compensation after a hearing down there. What’s more, the American client didn’t bother with representation, didn’t come to Australia for the hearing, and still won based on a statutory declaration he presumably put in the post. The case is L. Scott Turner v DCL [2007] VCAT 1296. Essentially, Senior Member Howell found that the solicitors did nothing much that was useful, and seems to have ordered the refund of fees charged as damages according to the principle in Heywood v Wellers (a firm) [1976] QB 446. As Walmsley et. al put it in their excellent Professional Liability in Australia, ‘where the professional’s breach of contract in respect of that part of the work for which fees are to be paid renders the professional’s services valueless or useless, he or she is not entitled to payment.’ This small case is exactly the kind of case the Legal Practice List is set up to deal with efficiently (which is not to say that it is unable to deal with much more complicated matters). It is a matter of continual surprise to me how rarely its jurisdiction is successfully invoked. Continue reading “Client wins professional negligence case against solicitors at VCAT”

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Arbitrators slice $40 million off plaintiff lawyers’ breast implant proceedings fees

22 July Update: what may be the first ever legal blog, and without doubt one of the best, Overlawyered has  a link to the arbitrator’s ruling, and links to some old posts dealing with the interlocutory stages of the case. And here’s Law.com’s article.

Houston plaintiff lawyer John O’Quinn has been ordered to repay clients $40 million in legal fees after he was found to have charged his clients for bar association fees, overheads, and flowers as part of a ‘general expenses fee’ of 1.5% of the settlement. Ironically, his former clients ganged up on him. In a class action. They wanted all the fees he charged them back — estimated at $0.66 billion:

‘A Texas Supreme Court case from 1999 opened O’Quinn up to the possibility of having to pay back all the collected legal fees. That case, Burrow v. Arce, held that if a lawyer breaks his fiduciary duty to a client by putting his own interest above the client’s, he can lose part or all of his fee — even if the lawyer did a good job.’

I’ve noted that case before. Scary. Not that he got away without penalty, exactly:

‘The order says that O’Quinn, through three legal entities under which he has practiced law, must pay back [AU$12] million he improperly charged clients and a [AU$28.5] million penalty because he broke his contract with them.

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18 days after I buy mine, wigs’ future looking shaky

The barrister garb costs more than $1,500 to buy if you take up the mega-discount the merchants of these things provide to baby barros. Normally, the wig itself costs $1,350. I shelled out for some at around 4.45 p.m. on 30 June 2007. Now the English have abolished wigs for civil and family trials (some consultant managed to wring a fee of AU$250,000 out of her Majesty’s government for the report recommending same) and the New South Welsh are muttering in the same direction. NSW Supreme Court judges are actually going to vote on the question. What is more, Rob Hulls, Victoria’s Attorney-General, has reportedly said ‘there is plenty of horsehair running around Flemington … and that is where it should stay’. Apparently, it’s already happened in Westralia. Here’s a .pdf version of a whole book on the history of legal wigs from England. And here’s an Australian pamphlet on the subject.

I thought the wig was a bit dear, but now that I know the hair is from Mongolian ponies, I’m much happier. In fact Ludlows say:

‘Our wigs are made from the hair of Mongolian ponies and Australian Brumbies, the finest horsehair available in the world. The hair used for our wigs is taken naturally by cutting, the animals are not harmed. Once sourced, the hair is sterilised and bleached so that it is completely clean and conforms to the strictest standards.

Each wig takes six days to make and is built on a block by one artisan (not on a production line) in the same manner that the finest hats were once made, ensuring the wig keeps its shape for a lifetime.’

I think the barristers’ garb is a bit plain. It needs to be revamped, ramped up, given a bit of bling. I’m thinking gold, lace, medals. Like the Chief Justice of Malaysia: Continue reading “18 days after I buy mine, wigs’ future looking shaky”

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The crazy opponent

Let’s see if I can prompt any of you out of your commentless indolence with a question: what is the right thing to do when a self-represented man with self-evident psychosis characterised by florid delusions of a type which no sane person could possibly have sues your client? A friend of mine was appalled that I was considering applying for a guardianship order.  For him, to have persisted with the defence of a proceeding which probably did not exist because the man was not capable of bringing it, winning, getting costs, and executing on the judgment for costs against the man was far preferable than combining paternalism with adversarialism. The other option would be to apply for summary judgment on the basis that the plaintiff was not permitted in law to commence proceedings.  But that would involve the defendant undertaking the task of proving insanity, about the last thing in the world I would ever undertake to prove.

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The incapacitated client

client-capacity-guidelines-diagram.jpg

Here’s an interesting case about lawyers, incapacitated clients, paternalism, and the right to be represented. An Alzheimers affected woman hired a beak to oppose a guardianship application brought by her brother. The court appointed another lawyer to act for her, suspecting that the man she professed to want to marry had in fact been behind the first hiring. The Court-appointed lawyer successfully applied to remove her own lawyer for a conflict of duties owed to her and to the man. An appeal court in the US capital reversed the decision, saying that free will cannot be countermanded on the basis of a hunch as to competence. Sounds like an important principle to me, else some mandarin in the Federal Government might decide that a doctor was not only an illegal alien of thoroughly rotten character but incompetent to boot and appoint a nice government lawyer resident in Nauru to act for him. The NSW Law Society has published a set of Client Capacity Guidelines for Civil and Family Law matters. The diagram featured is from it.

I acted for a solicitor sued by a former client. She said her medication affected her so at the mediation that the lawyer should pay her the difference between the millions she should have got and the paltry amount she considered she did get. I know, it didn’t make sense to me either. Anyway, during the professional negligence case, the lady seemed to flicker in and out of competence depending on whether an adjournment was needed. Continue reading “The incapacitated client”

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No-show attorney in Texas jailed by judge

A lawyer failed to show up for court one day. Then he appeared to explain: injured his ankle that morning. The judge said ‘Take him away’ and he went to jail, just like that. Now, for some reason, the judge is under investigation. They do everything bigger and better over there. Her Worship Pat O’Shane’s conduct, scolded by the NSW Court of Appeal, in citing a party for contempt and continuing to hear the trial of his matter, is but a pale imitation of the strong leadership shown by the Texans.

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Chinese wall holds up at investment bank

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) [2007] 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 [454]ff: Continue reading “Chinese wall holds up at investment bank”

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The latest on fiduciary relationships

In the Citigroup Case referred to in the next post, Justice Jacobsen summarised the law relating to fiduciary duties. I have reproduced the whole of the relevant passage, which includes a restatement of the law (at [297]ff) relating to solicitors’ fiduciary duties to give prospective clients full disclosure about the disadvantages of time costing if such a course is proposed.  In my experience, those principles lie gathering dust in real life, and it is a harsh decision maker who trots them out to shaft some poor solicitor who really gets up his nose.  In summary, the principle is:

‘298 A solicitor who wishes to enter into a time charging costs agreement with the client must make full disclosure to the client of all the implications of such an agreement: see Foreman at435-437 per Mahoney JA; Re Morris Fletcher v Cross’ Bill of Costs [1997] 2 Qd R 228 at 243 per Fryberg J; McNamara Business & Property Law v Kasmeridis [2007] SASC 90 at [28] – [31] per Doyle CJ.

299 This principle applies whether or not the costs agreement is made before the solicitor is instructed: see Symonds v Raphael (1998) 148 FLR 171 at 186-187 per Baker and Burton JJ; see also McNamara at [38] per Doyle CJ.’

But here’s the entire exegisis of the law of fiduciary relationships, as applied specifically, to the general case of adviser and client: Continue reading “The latest on fiduciary relationships”

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Just another failed regretted settlement case: Part II

Mr Tewoldeberhan wasn’t happy with the way he settled his case. So he sued his lawyers, a leading labour law firm, and failed. Nothing very interesting about the case, except its addition to a very long list of failed regretted settlement suits. Tewolderberhan v MBC [2007] VCAT 1239. I have written extensively about regretted settlement suits: “Compromise of Litigation and Lawyers’ Liability” (2002) 10 Torts Law Journal 167. If you want a pdf copy, email me (click on my photo in the ‘About Me’ section).

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Unconscionability and legal fee estimates, again

The law of unconscionable conduct has been rolled out again as a vehicle to adjust lawyers’ fees in the same way as they might be in a civil costs dispute under the Legal Profession Act, 2004, but in a case to which that Act’s regime did not apply. It has happened once before to my knowledge (see my previous post). In P&R v. Goodwin [2007] VCAT 1199, solicitors sued for their fees, but succeeded in obtaining an order only for the difference between the amount they estimated total legal fees to be at the start of the retainer, and the amount they had already been paid by the client. I do not think VCAT has jurisdiction in relation to disputes between lawyers and clients, because the jurisdiction is predicated on the engaging in of trade or commerce (VCAT has reserved on a test case in that regard). That aside, it is a relatively attractive forum in which to sue for fees. This decision may suggest that it is better to sue in a court, however, unless there is an unusual squeaky cleanliness in following the costs disclosure regime. Continue reading “Unconscionability and legal fee estimates, again”