Lawyers Be Warned: New Requirements Open Up Potential Vulnerability
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Lawyers need to be mindful of their potential vulnerability to unsatisfactory conduct complaints, warns the society's
Public Issues Committee in a paper entitled What are the costs to lawyers and clients of complying with the new
compulsory client regime? Auckland's 'Law News' reports on the paper.
There are two reasons why lawyers need to be aware of the requirements of the new regime that came into force with the
implementation of the Lawyers and Conveyancers Act 2006 and the Rules of Conduct and Client Care for Lawyers on August
1, the committee says.
"First because, the concept of unsatisfactory conduct is new and, in the early stages of the implementation of the new
regime, lawyers may not be able to ascertain whether they have complied with their client care responsibilities until
after their conduct has been scrutinised by a Standards Committee at an unsatisfactory conduct hearing."
The second reason is because the act gives the recently formed Standards Committee the power to impose a range of
potentially time consuming and costly sanctions on lawyers found guilty of unsatisfactory conduct.
Under s156 of the act the Standards Committee can:
(a) make an order giving effect to any or all of the terms of an agreed settlement;
(b) make an order censuring or reprimanding a lawyer;
(c) order a lawyer to apologise to a complainant;
(d) order a lawyer to pay compensation of up to $25,000 to anyone suffering loss resulting from the lawyer's acts or
omissions;
(e) order the reduction, cancellation or refund of a lawyer's fees;
(f) order a lawyer to rectify errors or omissions, or to provide relief from the consequences of errors or omissions;
(g) order a lawyer to pay a fine of up to $15,000;
(h) order an inspection of a lawyer's practice;
(i) order a lawyer to undergo training or education or to take advice on practice management;
(j) order a lawyer to pay the costs and expenses of any inquiry, investigation or hearing conducted by the Standards
Committee.
"No one knows how the public will respond to the new client care regime which is an unknown quantity," the Public Issues
Committee paper observes.
"Some clients may consider that the new act and Rules of Conduct give them a licence to bring trivial complaints before
the Standards Committee."
"The new client care regime is designed to ensure that lawyers take a consumer oriented approach towards their dealings
with clients.
"Under the new consumer focussed regime, a lawyer 'must, in advance [ie. before commencing work on a retainer], provide
a client with information in writing on the principal aspects of client service' listed in Rules 3.4 and 3.5 of the
Rules and s 94(j) of the act."
That information must advise clients of:
1. the basis on which fees will be charged;
2. the lawyer's indemnity insurance arrangements;
3. the coverage provided by the Lawyers' Fidelity Fund;
4. the lawyer's procedure for handling complaints by clients;
5. the client care and service obligations that lawyers are required to fulfil when providing legal services to their
clients;
6. the name/s and status of those who will have general carriage of or overall responsibility for the services provided
to the client;
7. any limitations on the extent of the lawyer's obligations to the client or any limitation or exclusion of the
lawyer's liability.
A lawyer's "terms of engagement" should spell out the nature and scope of the services that the lawyer will provide to
clients and the action that lawyers will take if clients do not fulfil their obligations under the terms of engagement.
"For this reason, the approach taken by lawyers to the formulation of their terms of engagement is a matter of public
importance," stresses the committee paper.
"At this point, the cost to clients, who will need to take the time and make the effort to read and understand this
information, is unknown," says the Public Issue Committee.
"However, what is known is that lawyers who breach the client care regime can be found guilty of misconduct or
unsatisfactory conduct.
It is not difficult to determine the circumstances in which lawyers are likely to be found guilty of misconduct. A
serious breach of the act and rules or any regulations made under the act will amount to misconduct."
Lawyers will be the subject of misconduct complaints if they:
(a) commit wilful or reckless breaches of the act or of any regulations or practice rules made under the act or any
other act relating to the provision of regulated services;
(b) behave in a disgraceful or dishonourable ,fashion;
(c) charge grossly excessive costs for legal work; or
(d) wilfully or recklessly fail to comply with
any practicing certificate conditions or restrictions (s7 of the act).
"On the other hand, the ambit of the new concept of unsatisfactory conduct is less clear," the committee states.
"What is clear, however, is that the definition of unsatisfactory conduct has been formulated with the objective of
giving lawyers little margin for error."
Unsatisfactory conduct is defined in s 12 of the act as conduct which:
(a) falls short of the standard of competence and diligence that members of the public are entitled to expect of
reasonably competent lawyers;
(b) would be regarded as unacceptable by lawyers of good standing;
(c) does not amount to misconduct but which contravenes the act, or any regulations or practice rules made under the
act, or of any other act relating to the provision of regulated services; or
(d) does not amount to misconduct but which fails to comply with a condition or restriction to which a practising
certificate held by the lawyer is subject.
In view of the above definition, the Public Issues Committee believes the number of complaints to the law society is
likely to increase and the majority of those complaints will relate to unsatisfactory conduct.
"Any breach of the act and rules which is not wilful or reckless appears to be capable of falling within this
definition. In Client Care under the New Regime - How your Practice can benefit, NZLS 2007, Mackintosh and Webb endorse
such a broad interpretation of the term.
ENDS