ETHICS & PROFESSIONAL RESPONSIBILITY GOULBURN VALLEY LAWYERS ASSOCIATION 25 SEPTEMBER 2012

ETHICS & PROFESSIONAL RESPONSIBILITY GOULBURN VALLEY LAWYERS ASSOCIATION 25 SEPTEMBER 2012 The Importance of Being Ethical as a Lawyer What can go wrong if you aren t Ethical? The Importance of Being Ethical as a Lawyer All lawyers need to complete a certain number of CPD 1 points. These can cover a range of issues related to our practise. But ethics is mandatory. Given the attention given to this aspect of our practise it should be at the front of mind in all our actions. But for some practitioners this does not seem to be the case. In particular experienced practitioners often forget or ignore ethical issues in their practise and then fall foul of complaints to and/or prosecution by the Legal Services Commissioner ( LSC ). What is ethics? Ethics is not definable, is not implementable, because it is not conscious, it involves not only our thinking, but also our feeling. Valdemar W. Setzer Or the definition that seems to be followed by some practitioners Ethics are so annoying. I avoid them on principle. Darby Conley, Get Fuzzy Comic, 08-15-07 I agree with Setzer, if it feels wrong it probably is, and the feeling should be heeded and steps taken before it becomes a problem for your practise. The terms legal ethics and professional responsibility are used more or less synonymously. Legal ethics is concerned with having a critical understanding of the legal profession, its structures, its roles and responsibilities, the roles and responsibilities of lawyers in their provision of professional services and requires participants to examine what the legal profession does and compare it with what it, and they, ought to do. How these legal ethics are applied by individual legal practitioners is often influenced by their personal values or moralities and the situations they find themselves in which may conflict both with the rules or their own personal values of morality and philosophy. 1 Continuing Professional Development 1

Professional Responsibility The Rules As a regulated profession we have rules we are required to abide by. Legal ethics requires us to know the disciplinary rules regulating our legal profession. Some rules are statute based with punitive sanctions like the Legal Profession Act 2004 ( the Act ) (Amended 2/5/2012) Some rules have been drawn up or endorsed by professional bodies like the Law Institute of Victoria ( LIV ) (Professional Conduct and Practice Rules 2005) ( the Rules ) and the Victorian Bar ( the Bar ) (Victorian Bar Practice Rules) (the Bar Rules ). In addition we now also have to keep the Civil Procedure Act 2010 in mind. Some sections of the Rules relevant to all lawyers are: 2.4.27 Holder of local practising certificate show cause event 3.4.11 How and when must disclosure be made to a client? 4.4.2 Unsatisfactory professional conduct These 3 are reproduced as a Schedule to this paper but there are, of course, many more. We all need to become familiar with the Act. If unsure when acting for a client, check the Act and the relevant Rules, or seek advice from your regulatory body (LIV or the Bar) before committing yourself to a step which could see you fall foul of the Legal Services Commissioner, and join the ranks of those appearing before VCAT. The Act currently consists of some 620 pages dealing with issues of how lawyers are admitted to practise, remain in practise, and what issues or behaviour can cause them to have their practising certificates cancelled, suspended, (in other words lose their ticket ) facing fines and paying the costs of the Legal Services Commissioner to bring them to the Tribunal. The Act empowers the Legal Services Commissioner, ( the Commissioner ) currently Mr Michael McGarvie, and his staff to handle complaints from the public, the profession 2 and even the judiciary. 3 To put the following statistics into perspective according to the Legal Services Board s ( LSB ) website states that there are currently 16,727 practitioners registered in Victoria. In 2010-11 1,263 new practitioners were admitted, an increase of 6%. 56% of the legal profession were male 2 Legal Services Commissioner v D'Alessandro (Legal Practice) [2009] VCAT 1129 (2 July 2009) 3 Legal Services Commissioner v Griffin (Legal Practice) [2010] VCAT 484 (21 April 2010) Oldham v Law Institute of Victoria (Legal Practice) VCAT 571 (30 May 2012). 2

and 44% female. Of these 16,7272, 15,000 are located in the city or suburbs and 1,200 in the country. The remaining 441 are located either overseas or interstate. In 2010 the Commissioner received 2200 some complaints. Most of these were resolved with 10 practitioners being referred to VCAT for findings of professional misconduct. In 2011 there were 15, in 2012 to date I have counted 19 reported on the Legal Services Board s ( LSB ) website, most heard in VCAT but 4 were heard by the Supreme Court. In reviewing the reported cases the breadth of the complaints made to the LSB is surprising, but by far the greatest number related to a failure by lawyers to communicate. Initially with their clients and once a complaint had been lodged, a failure to respond to the Commissioner s request for information in relation to a complaint. In most cases these were later resolved. Where they couldn t be resolved, the lawyer often faces a reprimand as well as a fine as well as meeting the Commissioner s costs of bringing the action. How do you prevent a Complaint? Communication Communicate with all parties but especially your client. The dilemma all legal practitioners face is cost. Every time we communicate with our client it costs them. Most non-lawyers are not aware of lawyers responsibilities, even when it is spelt out to them in disclosure letters. For some the only communication that seems to make an impact is the dollar figure on the bill they receive, whether it is large or small. Despite this, we cannot be cowed into failing to advise clients of costs consequences of various actions, incurring further costs in seeking their instructions in the face of changed circumstances and advising of the likely outcomes of continuing the current action. We need to do this even when we think they will confirm our current instructions. When dealing with a new client you need to set the pattern of behaviour from the outset and refer back to this initial advice, if need be, as the relationship continues. The client needs to be aware that you are not allowed to act without their instructions, in fact are prohibited from doing so either by legislation or professional regulations. Regrettably this need for communication adds to the client s costs. Conversely, a client who is continually contacting you for advice needs to be aware that all those phone calls, emails, are going to generate costs they are liable for. Situations where there is no time to draft and provide a Costs Disclosure Letter or Agreement are rare. Verbal advice of costs with verbal acceptance can cover an emergency or rush situation, but should always be immediately followed up by confirming written documentation. This needs to be done not only to meet your obligations under the law, but you may well be relying on it in a costs fight, even if you win the case. 3

Even where all these steps have been undertaken, lawyers still need to be aware of how their costs are viewed. If the matter is litigious and proceeds to a hearing, although the client may be successful in winning their case, if their judgment is wiped out by your costs it will be a hollow victory. Rarely does it s the principle that s important last to judgment. In some areas, like Family Provision claims against Estates, costs of the applicant have generally been borne by the Estate of the deceased. However, recently courts have been reluctant to award what they consider to be excessive costs and in some cases have either refused costs 4 or capped them. 5 Currently the Law Reform Commission is reviewing the legislation and cases in relation to costs. Practitioners in this area will be aware of the courts already limiting costs in small estates by disallowing affidavits prior to Mediation. In addition you need to ensure you keep good, legible, dated file notes. Some complaints don t come in for some time and trying to remember what you told someone five years back is almost impossible. 6 Not keeping file notes is considered unprofessional by the courts. Emails can be stored electronically and.pdf copies of relevant documents are worth storing especially with the reducing cost computer disk space. Ensure your instructions are current Barristers are familiar with being told on the day of trial that the matter has settled. In the euphoria of settling a difficult case the lawyer may have forgotten to communicate this fact to Counsel. The client will not be happy to be paying Counsel s fees when they consider the matter done and dusted. However a worse scenario is for a solicitor to continue to act in a proceeding and advising his opponent that the client had refused their offer to settle. Quite by accident his opponent discovered the Plaintiff had died some days before so would have been unable to give those instructions. I can only imagine the judge s reaction and attitude to the lawyers for the plaintiff. A case on point is listed in this paper. 4 Re Carn-Moerth-v-Moerth and another;moerth-v-mac Bean (No 2) [2011] VSC 275, Gardiner AsJ Related [2011] VSC 176. 5 Cangia v Cangia (No 2) 5 [2008] VSC 556 6 Bale v Mills [2011] NSWCA 226, Allsop P, Giles JA and Tobia AJA para 15 and 17. 4

What can go wrong if you are not ethical Listed below is a summary of some recent cases giving examples of the type of complaints the Commissioner deals with. These are grouped according to type of behaviour rather than in strict chronological order. Breaches of Practising Regulations Purporting to witness a signature in the absence of the relevant person Legal Services Commissioner v Comito (Legal Practice) [2011] VCAT 497 (24 March 2011) Reprimanded, fined $10,000, pay LSC s costs $5,519. Legal Services Commission v Lamplugh (Legal Practice) [2012] VCAT 279 (5 March 2012). Practitioner witnessing signature on guarantee in absence relevant person Legal Services Commissioner v Turner (Legal Practice) [2007] VCAT 1986 (24 October 2007) Reprimanded, fined $5,000 and pay LSC s costs. Legal Services Commissioner v Jackson (Legal Practice) [2012] VCAT 272 (2 April 2012) Forged his wife s signature on an application to ASIC and on 6 tax refund cheques deposited in the parties joint bank account. Pleaded guilty, was ordered to pay $3,552.90 in LSC s costs. Charging for retrieval of stored documents where client not advised in advance Legal Services Commissioner v Rose (No. 2) (Legal Practice) [2007] VCAT 2465 (17 December 2007) Paid LSC s costs $6,714.00 5

Failing to deliver up file to client when demanded Legal Services Commissioner v Nixon (Legal Practice) [2007] VCAT 1695 (31 July 2007) Reprimanded, fined $1,000 on 2 charges, and LSC s costs $1,750. Failure to hold current practising certificate Legal Services Commissioner v Owens (Legal Practice) [2010] VCAT 1686 (14 October 2010) Lawyer suffering from depression, 8 charges were proved, lawyer was ordered not to apply for practising certificate for 5 years. Taking a commission without authority Legal Services Commissioner v Hession (Legal Practice) [2010] VCAT 1687 (5 October 2010) Lawyer transferred $109,000 in unauthorised commission as Executor of an Estate. Fined $30,000, LSC s costs $38,161.50, and ordered to attend a course on Wills and Estates management. Competency as a lawyer Failure to reach or maintain reasonable standard of competence and acting in conflict of interest Legal Services Commissioner v McNamara (Legal Practice) [2011] VCAT 1228 (1 July 2011) Lawyer gave advice to Executor and beneficiary widow, suspected of suffering from dementia. Conflict of interest and acting beyond his expertise and knowledge. Charges proved. Adjourned to further hearing 11 August 2011. Failing to complete work promptly and communicate with client Legal Services Commissioner v Morgan (Legal Practice) [2010] VCAT 1814 (22 October 2010) Found guilty of 6 charges of unsatisfactory professional conduct and to use his best endeavours to complete legal work. Not to apply for Practising Certificate October 2011 (12 months), pay LSC s costs. 6

Conflict of Interest Failure to avoid conflict of interest and disclose interest in a transaction Legal Services Commissioner v Francis (Legal Practice) [2006] VCAT 690 (13 April 2006) 2 Charges found, 2 fines $30,000 and $17,500, LSC s costs to be taxed. Acting in conflict of interest in a property matter Legal Services Commissioner v Harle (Legal Practice) [2008] VCAT 2301 (21 October 2008) Practising Certificate cancelled for 3 years, pay LSC s costs. Failure to get client to sign Form 2 acknowledgement of solicitor s interest in the company loaning money to the client. Legal Services Commissioner v Johnston (Legal Practice) [2011] VCAT 1366 (11 July 2011) Reprimanded, fined and ordered to pay LSC s costs. Failing to keep business interests and legal practice separate involving misappropriation of client s funds. Legal Services Commissioner v Brereton (Legal Practice) [2008] VCAT 2073 (7 October 2008) Practising certificate cancelled, not able to apply till 2013, or for practising certificate to deal with Trust Money till 2018, ordered to pay LSC s costs of $145,000. Failure to disclose costs Failure to provide a Costs Agreement Legal Services Commissioner v Nowicki (Legal Practice) [2011] VCAT 1003 (24 May 2011) Reprimand, fined $15,000 and LSC s costs. 7

Failure to communicate with client and confirm instructions Legal Services Commissioner v Brott (Legal Practice) [2011] VCAT 110 (7 February 2011) The Tribunal found 4 charges proved of instituting proceedings without seeking client instructions. The lawyer was referred to be struck off the roll of practitioners and ordered not to re-apply for a practising certificate till 2019, 8 years. Failing to communicate properly with clients regarding proceeding Legal Services Commissioner & Ors v Jayakody (Legal Practice) [2008] VCAT 2075 (7 October 2008) Reprimand, $3,000 fine and pay LSC s costs. Misleading a client regarding a VOCAT application Legal Services Commissioner v Horsley (Legal Practice) [2011] VCAT 875 (27 April 2011) Reprimand, fine and pay LSC s costs. Failing to advise clients Honesty Legal Services Commissioner v Cassidy (Legal Practice) [2009] VCAT 2647 (8 December 2009) Reprimand, fine and pay LSC s costs of $15,891.63. Forging a medical certificate (previous complaints) Theft Legal Services Commissioner v Johal (Legal Practice) [2011] VCAT 1390 (14 April 2011) Reprimand, fined $3,500 and to pay LSC s costs on County Court D Scale. Mr Ali Abou-Eid pleaded guilty to 2 counts of obtaining property by deception, was sentenced to 24 months imprisonment. Application made pursuant to 2.4.42 of the LPA to remove his name from the Roll. AsJ Zammitt made the Orders on 16 February 2012. 8

R v Andre di Cioccio [2012] VSC 28 24 February 2012, Macauley J Mr di Cioccio found guilty of misappropriating $2.6M, $691,000 money entrusted to him by his clients. Sentenced to 7 ½ years imprisonment. Compensation orders made in favour of the LSB for claims made on the Fidelity Fund in the sum of $172,492.35. R v Tansey [2012] VSC 221 (31 May 2012), Almond J Found guilty of 25 charges of theft totalling $1.9M stolen from clients between 1999 and 2004. Court ordered compensation to be paid to the Fidelity Fund of $318,047 in respect of claims made by Tansey s clients. Tansey sentenced to 4 years imprisonment. Defrauding the State Revenue Office Legal Services Commissioner v Szental (Legal Practice) [2007] VCAT 1835 (2 October 2007) Solicitor attempted to defraud SRO, repaid monies, pleaded guilty to criminal charges, inherited money, made donations to charity, Practising Certificate cancelled till 2013. Plagiarism in an application for Masters Legal Services Commissioner v Keough (Legal Practice) [2010] VCAT 108 (3 February 2010) Solicitor pleaded guilty to plagiarism in obtaining a Master of Health and Medical Law. Practising Certificate cancelled and solicitor not to reapply before October 2010. Pay LSC s costs. Falsifying resume Legal Services Commissioner v Spicehandler (Legal Practice) [2012] VCAT 630 (14 May 2012) Three charges of professional misconduct for denying he had been charged with an offence, omitting details of his employment history, falsifying details of employment and engaging in legal practice without a valid practising certificate. His dishonest conduct was found inconsistent with a lawyer s duty to act honestly and his blatant, breathtaking lies. Reprimand and unable to obtain a practising certificate until 2017, ordered to pay LSC s costs of $5,935.90. 9

False Statutory Declarations Solicitor Jonathan Wong was reprimanded on 2 charges of misconduct at common law from submitting two false Statutory Declarations to the Migration Agents Registration Authority (the MARA). Wong was fined $15,000 and ordered to pay LSC s costs of $12,000. Litigation complaints/breaches of Duties to the Court Failing to discover relevant documents Legal Services Commissioner v Piva (Legal Practice) [2009] VCAT 1981 (25 September 2009) Solicitor knowingly withheld document when giving discovery to the Supreme Court, document held information against solicitor s case. Practising Certificate cancelled, solicitor not to reapply before September 2011, pay LSC s costs. Failure to comply with duties to Court Legal Services Commissioner v Shulsinger (Legal Practice) [2010] VCAT 1497 (9 September 2010) Solicitor reprimanded for neglecting to comply with duties owed to the Family Court. Three charges of professional misconduct fined $5,000, $1,000 and $1,000 respectively and $36,000 LSC s costs. Legal Services Commission v Cantwell (Legal Practice) [2012] VCAT 890 (23 April 2012). Solicitor found guilty of 4 charges of professional misconduct in misrepresenting to the County Court that his client in a serious criminal matter was ready to proceed to trial, that a barrister had been briefed to appear for the client and that funding was in place for the trial. Cantwell s practising certificate was cancelled and he was banned for re-applying before 29 March 2013 and ordered to pay the LSC s costs of $10,000. 10

Tax Issues Failure to file tax returns for 13 years, practitioner bankrupted Legal Services Commissioner v Long (Legal Practice) [2011] VCAT 1164 (10 June 2011) Lawyer pleaded guilty to charge of professional misconduct, returns filed following action by ATO, now meeting revenue obligations. Good character otherwise, Practising Certificate suspended for 4 months. Fined and paid LSC s costs $12,000. Failure to Lodge Tax Returns and GST Returns Legal Services Commissioner v Moore (Legal Practice) [2010] VCAT 742 (1 June 2010) Reprimanded, fined $50,000 and paid LSC s costs. NB: There were a number of other cases in 2012 so it appears that tax responsibility appears to be an ongoing issue for some practitioners. Trust monies Failing to deposit trust monies within required period Legal Services Commissioner v McCristal (Legal Practice) [2011] VCAT 231 (10 February 2011) Fined $25,000 and ordered to attend course on Trust account management and pay LSC s costs. Failure to manage office and trust monies Legal Services Commissioner v Peacock (Legal Practice) [2008] VCAT 983 (2 June 2008) Practitioner failed to supervise his legal practice another party utilised his office account to misappropriate monies from third parties. Practising Certificate downgraded to employee certificate, required to attend practise management course, reprimanded with costs. Legal Services Commissioner v Coldham & Ors (Legal Practice) [2012] VCAT 74 (19 January 2012). 11

Three lawyers failed to present 216 cheques totalling $300K between 2004 to 2007 for moneys owed to barristers and expert witnesses. The cheques were deliberately withheld in order to reduce the level of debt in the law practice s overdraft account. All 3 pleaded guilty but the Tribunal ruled that dispositions falling short of cancellation or suspension of practising certificates have proven inadequate as to general deterrence. Citing McCristal and Quinn. 7 Practising certificates suspended for 9 months and ordered to pay the LSC s costs of $16K. Unqualified practice and receipt of trust monies Legal Services Commissioner v Rallis (Legal Practice) [2009] VCAT 1445 (23 July 2009) Practitioner pleaded guilty to two counts of misconduct, unqualified practice and unqualified receipt of trust money. Practising Certificate cancelled, may not apply till 2014, monies to be repaid and LSC s costs of $25,000. Legal Services Commission v M McAuley [2012] VCAT 159 (23 January 2012) Practitioner received trust monies without holding the appropriate authorisation to do so, failed to act on her client s instructions and failed to respond to request for information from the LSC. Obtained $5,500 to obtain a second opinion from senior counsel in relation to quantum of damages likely regarding a personal injuries claim. She failed to seek this opinion and without authorisation applied the money to an outstanding account incurred by the client s family for an unrelated matter. Ms McAuley was reprimanded, fined $8,000 and ordered to pay the LSC s costs of $14,532.20. Legal Services Commissioner v S Dhanapala VCAT 23 May 2012. In partnership Dhanapala received $101K in trust monies while neither party held a practising certificate authorising them to receive trust monies. Dhanapala co-signed cheques but was considered naïve rather than wilful. Reprimanded and ordered to pay LSC s costs $4,000. 7 Quinn v Law Institute of Victoria [2007] VSCA 122; Legal Services Commission v McCristal (Legal Practice) [2011] VCAT 23 (10 February 2011). 12

Undertakings Failing to take steps to be released from an undertaking he was unable to complete and acceding to his client s request to disburse trust funds contrary to his undertaking Legal Services Commissioner v D'Alessandro (Legal Practice) [2009] VCAT 1129 (2 July 2009) Reprimanded, fined $4,000 and LSC s costs $3,357.60. Failure to honour undertaking within reasonable time Legal Services Commissioner v Sapountzis (Legal Practice) [2010] VCAT 1124 (24 June 2010) Reprimanded and LSC s costs $5,000. NON-LEGAL PRACTICE Carrying on business of an estate agent without the required license. Noone v Mericka & Ors [2012] VSC 101 (27 March 2012) Sifris J Action by Director of Consumer Affairs Victoria. Lawyer contravened Estate Agents Act 1980 (Vic) and Fair Trading Act 1999 (Vic) by carrying on the business of a real estate agent without the required license. Activities went beyond the exemption in Section 5(2)(e) of the Estate Agents Act 1980 (Vic). Dishonesty of Non-legal employee Law firm employee found guilty in the Magistrates Court of two charges of commencing employment in a law practice without having first informed his prospective employee of his previous relevant prior convictions. Law firm was not aware of his prior convictions. A law firm can employ an individual with prior convictions but must get the Board s prior permission. Rules of integrity extend beyond licensed lawyers to lay associates. (August 2012 unreported). Convicted and fined $2,000. Ordered to pay the LSC s costs $5,000. 13

THE COST OF FAILING TO ACT ETHICALLY OR PROFESSIONALLY RECENT CASES IN THE COURTS: ENSURE YOU HAVE INSTRUCTIONS In the aftermath of Black Saturday 2009, a number of class actions were spawned, including one against a power company with a claim that the proximity of power lines to vegetation had caused a fire. In Matthews v SPI Pty Ltd 8 the group proceedings were prepared by an articled clerk who was obviously under pressure and lacking in supervision. Mr Keane had merely registered his interest on the firm s website. No proper instructions were taken or advice given regarding likely costs consequences against Mr Keane as a representative plaintiff if he was unsuccessful The fact that writ incorrectly named defendants and included an allegation of damage from a fire some 200 kms north of Mr Keane s property also demonstrated the lack of preparation. After the matter had been issued and underway for some months, the firm discovered their representative plaintiff had not given instructions to make a claim or be a representative plaintiff. Even after realising this, it was some months before the firm took corrective action and informed the court and the defendant. The castigation of the law firm by the judge, not to mention the costs consequences both for the firm s loss of revenue and having to pay the defendant s costs was considerable. No quarter was given. The judge commented that group proceedings are now called lawyer driven litigation 9. The defendant argued that allowing the proceeding to remain on foot, notwithstanding a replacement representative plaintiff had been found and her substitution ratified, that the court should exercise its authority to strike out the claim as an abuse of process. The court determined that practitioners must be made aware that issuing proceedings without the authority of a client is misconduct. The court decided not to exercise its authority to deal with the behaviour as contempt of court, but decided to refer the lawyer s conduct in issuing and maintaining the proceeding to the Legal Services Commissioner. One of the reasons the court took this action was it considered striking out the application would be more punitive against the replacement representative plaintiff, and the group she represented rather than the 8 Matthews v SPI Electricity Pty Ltd; SPI Electricity P/L v Utility Services Corporation Limited & Ors (Ruling No 1) [2011] VSC 1676 10 May 2011, Forrest J at 120. 9 Kirby v Centro Properties Ltd [2008] FCA 1505, Finkelstein J. 14

lawyers responsible. As the interest on any damages granted to the plaintiff flow from the date the proceeding was commenced. Striking out the pleading would have penalised the plaintiffs and the group she represented with a loss of some 27 months interest. However, the court restricted the plaintiff s right to interest to commence from the date the representative plaintiff was substituted in July 2010, thus giving the plaintiff a benefit of some 9 months interest. Matthews v SPI Pty Ltd stands out because it relates to Black Saturday and the number of plaintiffs affected, but, as we have seen above, similar breaches by lawyers have occurred in less public arenas. Oldham v Law Institute of Victoria (Legal Practice) [2012] VCAT 571 (30 May 2012). Solicitor reported by Justice Forrest, LSC took action in VCAT for professional misconduct for issuing and maintaining legal proceedings in relation to two separate bushfire class actions without obtaining the appropriate authority or instructions from the nominated clients. This case again highlights the dangers of lawyers undertaking legal work in areas of law where their knowledge or experience is limited. Practising Certificate restricted for 2 years to the areas of building law, construction law, property law and owners corporation law. Ordered to pay $30,000 towards the costs of the proceeding. CONFLICT OF INTEREST SOLICITOR/EXECUTOR In Walker v D Alessandro (2010) VSC 15, Forrest J found that the claim by the solicitor, appointed Executor under the Will of Ivy Rosalind Mary Pump, to the beneficiaries for a 3% commission, in addition to his costs for applying for Probate was made without full disclosure and advising the beneficiaries to seek legal advice so that they could give informed consent. Court ordered that the agreement by the beneficiaries to the payment of 3% commission was unenforceable. In Re Estate of Zsuzanna Gray 2010 VSC 173, Daly AsJ followed Walker v D Alessandro. Estate of $885,000, fees charged for work on Probate some $22,000, which were assessed by the Law Institute as reasonable but did not take into account his pains and trouble as provided for in the deceased s Will. Solicitor working in an atmosphere of suspicion and distrust, sought $35,000 commission, or 3.5% of corpus, such payment to include $22,000 costs of the Probate and some $4,500 for assessment of those costs. Court only allowed $22,000 and $4,500 as sufficient for his pains and trouble. 15

COMPETENCY IN PLEADINGS In some cases the courts themselves have punished a lack of competency and expertise of legal practitioners by way of refusal to accept what it considers sub-standard pleadings. Gunns Limited v Marr [2005] VSC 251, Bongiorno J. At a Directions Hearing of the Matter, the Plaintiffs applied to file an amended Statement of Claim some 360 pages long with 528 paragraphs against some 20 defendants. The Claim was filed in lieu of late Particulars of Claim, however the court, in dismissing the Statement of Claim, stated that the function of a statement of claim is to set out with sufficient clarity the case which the defendant must meet, limit generality of the allegations and to limit and define the issues to be tried. Bongiorno J found that the crossreferencing of paragraphs failed to assist and in fact often renders the original paragraph at best ambiguous and at worst misleading. The pleadings were described as prolix and that the Court will not tolerate laxity of pleadings or deficiency of particulars to the disadvantage of those against whom the proceeding is brought. His Honour went on to say that a new statement of claim should be accompanied by a detailed table of contents or index, a glossary of every term or phrase used in it which requires definition, and it should employ a uniform method of referring to the parties. Murphy v Council of the Municipality of Strathfield [2012] NSWSC 85 (17 February 2012), Schmidt J Recent case relying on Gunns. Pleading struck out, amended pleadings to be filed in proper form. COMPETENCY IN ADVICE GIVEN As in Gunns v Marr above, competency of legal practitioners is not restricted to pleadings. Where advice is sought clients will not be backward in seeking recompense where they consider the advice has been bad, or at best insufficient. In Austrust Ltd v Astley & Ors (1999) 197 CLR 1, the High Court considered an appeal by Austrust against a Full Court ruling of the South Australian Supreme Court. The case involved a company seeking advice regarding changing its business practice from managing Trusts in relation to deceased estates, settlements, conventional trusts managed pursuant to non-trading trusts with some property management trusts, to the field of commercial trading trusts. 16

The company sought advice from Astley who was a highly experienced legal practitioner in the area of commercial and corporate law. Astley was asked to advise on a Trust Deed in relation to setting up an intensive piggery, which involved conducting a business and trading in livestock. Astley s advice was given in relation to compliance with the relevant Companies Code and regulations. He did not provide advice on the potential legal implications of Austrust acting as trustee of a trading trust, notwithstanding he knew it was a new type of business for Austrust. Although the Deed allowed the Trustees to borrow money and provided that the Trustees would not be personally liable, Astley did not advise that this clause would protect Austrust from any claims by potential lenders. Austrust proceeded with the transactions and borrowed, as trustee, an amount, the repayment of which was secured by mortgages over the property. When it became apparent that the trust might have to be wound up and its assets insufficient to meet liabilities, Austrust found that it had become liable for losses that exceeded the amount available from the trust property. Astley s advice had failed to deal with the trustee company s liability to creditors of the trust nor recommend a provision in the documents to confine its liability to creditors to the amount it was entitled to be indemnified from the trust assets. After making its way through the South Australian courts, the High Court ruled that Astley was liable for damages against him both in tort, notwithstanding contributory negligence of Austrust, as well as in breach of contract. Keddie & Ors v Stacks/Goudkamp P/L [2012] NSWCA 254 (17 August 2012) Appeal by solicitor firm appealing against Court order of costs against firm. Appeal dismissed, cross-appeal upheld with indemnity costs confirm. Unnecessary costs Costs incurred without reasonable cause in circumstances where legal practitioner responsible for costs unnecessarily incurred. Civil Procedure Act 2005 s99. 17

MEDIATION ETHICS AND PROFESSIONAL RESPONSIBILITY Mediation is now an accepted part of the dispute resolution process and ordered by all the Courts. Thus many matters litigators are involved in never run all the way to trial. However, this does not mean that the same rules don t apply. A different type of justice It should be stressed that mediation is not an inferior type of justice. It is a different type of justice. All studies of dispute resolution show that people greatly value quick resolution of disputes and the opportunity to put their case in the presence of a neutral person. Mediation satisfies both these requirements Former Chief Justice Supreme Court John Harber Phillips (16 Aug 1995) What should you expect in the conduct of a Mediation Mediation agreement Mediator Confidentiality Courtesy Pleasant surroundings Informal atmosphere Opportunity to find out what is really in dispute Opening statements/issues determined/parties time apart Outcome: o Settlement all parties can live with o Settlement Agreement (written and signed) o Settlement Agreement that ensures compliance by all parties; o OR o issues in dispute limited. o NOT o An opportunity to find the weaknesses in your opponent s case. 18

Does the standard of ethics change from that of court? No the same ethical rules apply. The informality of mediation can assist in resolving the real issues in dispute, but is not intended to be a reason to relax your usual professional standards. The fact that mediations are cloaked in confidentiality should not allow lawyers to engage in allegations or assertions which cannot be sustained, in particular denigration of the justice system to urge clients to settle. The Rules referred to above still bind lawyers, except when acting as mediator. The same requirements apply, to act honestly, fairly, with competence and diligence in the service of the client and not to engage in conduct which is either discreditable to the lawyer, prejudicial to the administration of justice or likely to diminish public confidence in the legal profession or bring it into disrepute. Relevant LIV Rules 18.1 A practitioner must not knowingly make a false statement to the opponent in relation to the case (including its compromise) 18.2 A practitioner must take all necessary steps to correct any false statement unknowingly made by the practitioner to the opponent as soon as possible after the practitioner becomes aware that the statement was false. 18.3 A practitioner does not make a false statement to the opponent simply by failing to correct an error on any matter stated to the practitioner by the opponent. 18.4 A practitioner must not deal directly with the opponent s client in relation to the case for which the opponent is instructed unless: 18.4.1 the opponent has previously consented; 21 A practitioner, in all of the practitioner s dealings with other practitioners, must take all reasonable care to maintain the integrity and reputation of the legal profession by ensuring that the practitioner s communications are courteous and that the practitioner avoids offensive or provocative language or conduct. 19

Issues which can arise in Mediation Extremely aggressive advocacy and bargaining Hiding strengths of other case and weaknesses of own case Not alerting other side to existence of documents which would assist them Claiming final offer when it is not & other posturing As in dealing with the courts, at a court appointed mediation you may not keep secret an error that you know the other side may be relying on to their detriment and to your client s advantage. Authority to settle courts commonly make orders that persons with authority to settle should attend the mediation. Ignoring such an order, or concealing the fact that the responsible person either does not attend the mediation or does not have the requisite authority offends the rules and probably amounts to contempt of court. For many clients attending a mediation is as emotional as appearing in court, often they are not prepared for what is happening or likely to happen. Apart from the opening statement and discussion, the rest of the mediation is between the key parties and their willingness to concede points or position. Whilst settlement is to be encouraged and clients made aware of costs consequences in proceeding to the next step in litigation, neither should they be harassed either by their own legal representatives or the other side s. A settlement at mediation has to be settling, not unsettling. Conclusion In conclusion I think our position as lawyers to deal ethically and professionally can be summed up with the following cases: In Clyne v NSW Bar Association (1960) 104 CLR 186 at 200, the court ruled that An advocate owes a duty to his client. He must advance and protect the client s interest to the best of his skill and diligence. Acting for clients is a privilege and carries with it responsibilities to always act ethically in all areas of the work and in ensuring that we are competent to perform the task we have been called upon to do. Lydia Kinda Douglas Menzies Chambers 25 September 2012 20

S. 2.4.27(2)(a) amended by No. 12/2007 s. 16(3). Schedule A Legal Profession Act 2004 2.4.27 Holder of local practising certificate show cause event (1) This section applies to a show cause event that happens in relation to the holder of a local practising certificate. (2) The holder must provide to the Board both of the following (a) within 7 days after the happening of the event notice, in the form approved by the Board, that the event happened; (b) within 28 days after the happening of the event a written statement explaining why, despite the show cause event, the person considers himself or herself to be a fit and proper person to hold a local practising certificate. 3.4.11 How and when must disclosure be made to a client? (1) Disclosure under section 3.4.9 must be made in writing before, or as soon as practicable after, the law practice is retained in the matter. If the legal practitioner fails to disclose costs as required by the legislation, then : (4) The reaching of a decision referred to in subsection (3)(the decision not to disclose costs) otherwise than on reasonable grounds is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of the principal. Unsatisfactory conduct what is it? 4.4.2 Unsatisfactory professional conduct For the purposes of this Act unsatisfactory professional conduct includes conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. Legal Services Board 6.2.3 Objectives The objectives of the Board are (a) to ensure the effective regulation of the legal profession and the maintenance of professional standards; 21

(b) to address the concerns of clients of law practices and legal practitioners through the regulatory system and provide for the protection of consumers of legal services; (c) to ensure the adequate management of trust accounts; (d) to ensure that the Victorian system is at the forefront of regulation of legal practitioners. 22