GC v KM [2018] NZLCRO 43 (31 May 2018)

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	LCRO 116/2017
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING	a determination of the [City] Standards Committee [X]
BETWEEN	GC Applicant
AND	KM _Respondent

The names and identifying details of the parties in this decision have been changed.

[1] Mr GC, a lawyer who at the relevant time was a sole practitioner practising as [Law Firm], Lawyers (the firm), has applied for a review of a decision by the [City] Standards Committee [X] (the Committee) which made a finding of unsatisfactory conduct against him concerning his conduct when he acted for Ms KM.

[2] Ms KM’s intention was to move to a retirement village. To that end, the legal services provided by the firm to Ms KM included the proposed sale of her apartment, enduring powers of attorney (EPA’s), and a proposed will. Ms KM’s complaint largely concerned the scope of the legal work, timeliness, communication issues, and as a consequence, the level of Mr GC’s fees.

[3] In August 2016, Ms KM, then aged 66 and retired, lived in an apartment at [Property Address] (the apartment). On 22 August 2016, she approached Mr GC to act for her on a “power of attorney change” and “then probably a few more things, including a will update in approximately six months”. She also mentioned she “will possibly be

looking at retirement village living at some stage soon” and would “need advice about that”.

[4] Mr GC sent Ms KM a letter of engagement on 24 August 2016 in which he described the legal services to be provided to her by the firm as “matters from time to time”. That day, he also opened Ms KM’s first of two files, “Your affairs”.

[5] Ms KM met with Mr GC at Mr GC’s office on 7 September 2016 for just over an hour to discuss her requirements for Mr GC’s assistance. She had in mind the [Retirement Village] ([Village]) as a possibility for her future residence. Mr GC’s file note of matters covered at that meeting included “detailed discussion about retirement village”; new EPA’s; and a will in respect of which she wished to “leave all to children” and wanted the will drafted “in plain English”.

[6] During the next fortnight, a number of emails were exchanged between the parties including Ms KM’s query about a cash-out clause in the [Village] application form; Ms KM provided details about Ms NL, her proposed attorney, and her daughter, Ms [DI], as alternate; and the proposed sale of Ms KM’s apartment. On 19 September 2016, Mr GC opened Ms KM’s second file, “Sale [apartment] [Property Address]”.

[7] On 20 September 2016, Mr GC and Ms KM had what can be described as a reasonably lengthy catch up on the telephone, following which Ms [PD], a lawyer employed by the firm, drafted the EPA’s, revocation of Ms KM’s existing EPA’s, a will and illness directives.

[8] On 21 September 2016, Ms KM asked Mr GC if the prospective purchasers of her apartment could submit their offer by email. She raised the question again on

22 September 2016 in another email to Mr GC. Outside office hours that day, Mr GC delegated the task of responding to that question to Ms [ET], a legal executive employed by the firm, who was acting on the sale. Ms KM met with Ms [ET] the following morning,

[9] There appear to have been no further communications between the parties concerning the EPA’s, will, and illness directives until 21 October 2016 when Ms KM informed Mr GC she was changing lawyers.

[11] She stated that contrary to her instructions provided to Mr GC at the meeting with him on 7 September 2016, seven weeks later, when she attended Mr GC’s office on

28 October 2016 to sign the EPA’s, Mr GC had also prepared a will for her to sign which she claimed was not required by her “at [that] stage”.1 She said that the firm had also prepared “a do not resuscitate directive” which she “had specifically refused at the 7

[12] Ms KM said Mr GC “did not suggest or describe his complaints process”. She said she felt pressured “to sign things [she did] not wish to sign ... and to carry on [instructing Mr GC], and pay for further work that has not happened”.

[13] She claimed she made two attempts “to resolve [her] issues of concern” with the firm without success and “found [herself] dealing with different people [she] had not been introduced to before”.

[14] Ms KM alleged that if a “family friend (a retired lawyer)” had not alerted her to the presence of “a cash-out clause in the [Village] application document”, she may have overlooked it because Mr GC “had neglected to point [that clause] out” to her at the

13 September 2016, he acknowledged his oversight to her and sent her an email which contained “some counter strategies”. However, she claimed that because she “did not see” Mr GC’s email before she met with [Village] that day, she followed her friend’s advice and asked [Village] to remove the cash-out clause.

[16] Ms KM claimed it was not until she terminated the retainer on 21 October 2016, that Mr GC informed her that her signature was required on the EPA’s before he “proceeded to contact” her attorneys. She stated that whilst Mr GC “failed to advise [her]

of that fact”, “under pressure” she nonetheless “agreed to go in” to Mr GC’s office and

[17] Ms KM stated that Mr GC’s 30 September 2016 invoice (first) for $2,085 plus GST and disbursements concerned “one offer” received by her for the sale of her apartment. Although she acknowledged Mr GC carried out the legal work to which this invoice relates, she claimed the firm “did [not] on a number of occasions act in a timely way” and did not provide her information on how Mr GC’s legal services would be both provided, and billed. She said this led to the “cost and inconvenience of having to change” lawyers.

[18] Although Ms KM did not spell out her specific concerns with Mr GC’s 28 October

2016 invoice (second) for $1,635 plus GST and disbursements, which related to preparation of the EPA’s and will, in her view, the firm’s charges were “those of a larger firm” and “far from what one normally would expect with that level of charging”.

[19] The Committee delivered its decision on 9 June 2017, and determined pursuant to s 152(2)(b) of the Lawyers and Conveyancers Act 2006 (the Act), that Mr GC had contravened a number of professional rules which constituted unsatisfactory conduct pursuant to s 12(c) of the Act. Orders were made fining Mr GC, requiring him to pay costs, and cancelling his second invoice issued to Ms KM.

[20] In reaching that decision, the Committee identified five issues for consideration.

[21] The Committee noted that Mr GC did not bring the cash-out clause to Ms KM’s attention when they met on 7 September 2016.2 Although describing this as “unfortunate”, the Committee observed that no “prejudice” was suffered by Ms KM.3 The Committee “did not consider that any shortcomings in ... legal advice ... were of such

[22] The Committee concluded that Ms KM “had not instructed Mr GC to prepare a will or advance medical directives”.5 In the Committee’s view, “the only matters requiring [Mr GC’s] immediate attention were the replacement [EPA’s] and the [Village] application form”.6

[23] Although acknowledging Mr GC may have “misunderstood” the legal services required by Ms KM, the Committee concluded that because, “without [Ms KM’s] instructions”, Mr GC proceeded to “draft [the] will and medical directives” which he produced to Ms KM on 28 October 2016, he had contravened r 3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules) which constituted unsatisfactory conduct under s 12(c) of the Act.

[24] Mr GC’s description in his letter of engagement of the legal services his firm would provide to Ms KM was “matters from time to time”. While the Committee considered that “greater detail ... might [have] prevent[ed] ... a dispute ... as to exactly what work was requested to be undertaken”, it “was nevertheless satisfied that Mr GC had discharged his obligations under Rules 3.4 and 3.5” of the Rules.7

prepare new EPA’s in respect of which she provided further details a week later, on

14 September 2016. However, Mr GC did not inform Ms KM that the EPA’s were ready for her signature until she terminated the retainer on 21 October 2016.

[26] In the Committee’s view, “Mr GC ought to have advised Ms KM” that the documents were ready notwithstanding his intention to have her sign them when she was next in his office concerning the apartment sale.8 By not doing so, Mr GC had contravened rr 7 and 7.1 of the Rules, which constituted unsatisfactory conduct under s

(4) Response to Inquiries — cash-out clause, offer to purchase by email (rr 3.2, 7.2)

[27] The Committee noted that Mr GC did not respond to Ms KM’s emails, first, of

14 September 2016, when she provided further details about the EPA’s; secondly, of

21 September 2016, when she asked whether an offer for the purchase of the apartment communicated by email “would be acceptable”; and thirdly, the following day, on

22 September, when she asked about “charg[ing]”, about “the next steps” in the sale

[28] In the Committee’s view, this was a “failure [by Mr GC] to respond ... in a timely manner (or at all)” which contravened rr 3.2 and 7.2 of the Rules and was unsatisfactory conduct under s 12(c) of the Act.

[29] The Committee considered that although Mr GC had issued two invoices, the first concerning the apartment sale, and the second concerning the EPA’s, will and medical directives, “the work undertaken constituted a single legal service” which qualified as “special circumstances” for the purposes of reg 29 of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 (the CSSC).9 Consequently, the Committee decided it could consider Mr GC’s second 28 October 2016 invoice for $1,635 (fee component) plus GST and disbursements, despite it being less than the $2,000 threshold specified in reg 29.10

[30] The Committee considered that the first 30 September 2016 invoice for $2,085 (fee component) plus GST, which concerned the proposed apartment sale, was “fair and reasonable”.11

[31] Mr GC’s second 28 October 2016 invoice included Mr GC’s attendances in respect of the EPA’s and the will. In the Committee’s view, because there were “a number of shortcomings [with] client service provided by Mr GC”, this invoice was not “fair and reasonable”, thereby contravening r 9 of the Rules which constituted unsatisfactory conduct under s 12(c) of the Act.12 The Committee ordered cancellation

[32] Mr GC filed an application for review on 20 June 2017. He points to what he considers are a number of errors in the Committee’s decision.

[33] In an email to this Office on 5 July 2017, Mr GC says Ms KM “did not show [him] a [Village] application form at [the 7 September] meeting”. He “den[ies] that [Ms KM] wanted [him] to review the [Village] application form” at that meeting.

[34] Mr GC says that “the EPA’s, the will, and the illness directions had been prepared in a timely way and in accordance with Ms KM’s instructions received and arrangements made”.

[35] Mr GC points out that his letter of engagement named the persons in his firm who would be carrying out Ms KM’s legal work. He says he informed Ms KM at their

7 September meeting that Ms [ET] would be acting on the apartment sale. Although Ms [HB], a senior solicitor also employed by the firm, attended with Ms KM to sign the EPA’s while Mr GC was “overseas for a few days”, he says Ms KM could have arranged to see him either “before or after” his absence from his office.

14 September 2016 and 21 October 2016, “[t]here was no apparent need ... for [the] firm

[37] Mr GC “dispute[s] that [he] failed to respond to enquiries in a timely manner”. He addresses each of the three situations in respect of which the Committee found he had not done so, which I refer to in my later discussion.

22 September email, where she stated she “hop[ed] [she was] not being charged $450 an hr for these little admin things”, he contends “any or any serious response” was not required.

[40] In addressing each of Mr GC’s points made in his application for review, Ms KM

[41] She says a week after the 7 September 2016 meeting, on 14 September 2016, she provided Mr GC with details of her attorneys and informed him her existing will “would do for the [Village] transactions”.

[42] Ms KM says Mr GC has not denied she wanted him to “review [her] [Village]’ application”. She says “the substance of her complaint” was that Mr GC “should have spotted and advised” her about the cash-out clause at the 7 September 2016 meeting. She says the fact that her “friend’s husband, a retired lawyer” had drawn her attention to the clause “was not relevant” to her complaint that Mr GC did not advise her about this clause at their 7 September 2016 meeting.

[43] Ms KM claims that her emails to Mr GC on 13 and 16 September and her inquiry of her proposed attorneys a month later on 21 October, evidenced the “urgency” to her of having the EPA’s completed. She states if Mr GC had responded, she would have “correct[ed]” his “assumption about no urgency”.

[44] In further support of her claim that preparation of the EPA’s was urgent, she refers to statements produced to the Committee by her proposed attorneys, and to her emails to Mr GC on 13, 14, 16 and 19 September 2016, “none” of which she says “were replied to”. She also refers to her 19 September email to Mr GC, sent in response to his

email earlier that day, about the sale of the apartment, “to check whether things were progressing”.

[45] Ms KM says she was concerned about the cost of asking Mr GC about progress with the EPA’s, about the cash-out clause issue and about Mr GC’s 30 September 2016 invoice in respect of the apartment sale. She says this put her off approaching Mr GC on these issues.

[46] Ms KM says “[n]one of [her] email queries about the [EPA’s] were ever replied to or acknowledged”. She says she “heard nothing whatsoever about ... progress” until she terminated the retainer on 21 October 2016.

[47] Whilst Ms KM acknowledges Ms [ET] was negotiating the sale agreement, she regards this as “a separate issue” to her question to Mr GC in her 21 September 2016 email, as to whether the receipt by “email” of the “contract” containing the prospective purchasers’ offer to purchase “would work”.

[48] Ms KM says most of the firm’s attendances relating to the second invoice concerned preparation of a will. She notes Mr GC now acknowledges the will was not required by her at that stage. She says the second invoice “contained an amount for Mr GC’s advice re the cash-out clause” which he did not provide before her meeting with [Village] on 12 September 2016.

[49] The parties have agreed to the review being dealt with on the papers. This review has been undertaken on the papers pursuant to s 206(2) of the Act, which allows a Legal Complaints Review Officer (LCRO) to conduct the review on the basis of all information available if the LCRO considers that the “review can be adequately determined in the absence of the parties”.

[50] I record that having carefully read the complaint, the response to the complaint, the Committee’s decision and the submissions filed in support of and in opposition to the application for review, there are no additional issues or questions in my mind that necessitate any further submission from either party. On the basis of the information

available, I have concluded that the review can be adequately determined in the absence of the parties.

[51] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:13

the power of review conferred upon Review Officers is not appropriately equated with a general appeal. The obligations and powers of the Review Officer as described in the Act create a very particular statutory process.

The Review Officer has broad powers to conduct his or her own investigations including the power to exercise for that purpose all the powers of a Standards Committee or an investigator and seek and receive evidence. These powers extend to “any review” ...

the power of review is much broader than an appeal. It gives the Review Officer discretion as to the approach to be taken on any particular review as to the extent of the investigations necessary to conduct that review, and therefore clearly contemplates the Review Officer reaching his or her own view on the evidence before her. Nevertheless, as the Guidelines properly recognise, where the review is of the exercise of a discretion, it is appropriate for the Review Officer to exercise some particular caution before substituting his or her own judgment without good reason.

[52] More recently, the High Court has described a review by this Office in the following way:14

A review by the LCRO is neither a judicial review nor an appeal. Those seeking a review of a Committee determination are entitled to a review based on the LCRO’s own opinion rather than on deference to the view of the Committee. A review by the LCRO is informal, inquisitorial and robust. It involves the LCRO coming to his or her own view of the fairness of the substance and process of a Committee’s determination.

[53] Given those directives, the approach on this review, based on my own view of the fairness of the substance and process of the Committee’s determination, has been to consider all of the available material afresh including the Committee’s decision, and provide an independent opinion based on those materials.

(a) What legal work did Ms KM instruct Mr GC to carry out. That is, what was the scope of the retainer?

(b) Did Mr GC act competently when he carried out Ms KM’s legal work, with particular reference to the [Village]’ cash-out clause issue? (r 3)

(f) Were Mr GC’s fees invoiced to Ms KM fair and reasonable? (rr 9, 9.1) [55] There is some overlap in my discussion of each of these issues.

[56] The “retainer” between lawyer and client is the term used in the Rules to describe an agreement between a lawyer and the lawyer’s client whereby the lawyer is to provide legal services to the client. It appears in a number of rules and is defined in r

1.2 as an agreement which first, may be express or implied, secondly, may or may not be recorded in writing, and thirdly, may or may not provide for payment to be made by the client.

central to various aspects of the lawyer-client relationship. Fundamentally, it identifies the client and prescribes the services expected of the lawyer. In doing so it determines upon whose instructions the lawyer acts, the scope of the lawyer’s authority in carrying out those instructions and the scope of the lawyers’ duties.

[58] Whether a lawyer has been retained is to be “determined objectively”.16

[59] One of the regulatory requirements for a lawyer who accepts or wishes to accept instructions to act for a client is to be found in r 3.4 of the Rules, which requires that the

15 GE Dal Pont ‘Lawyers’ Professional Responsibility (6th ed, Thomson Reuters, Pyrmont (NSW),

16 Hartlepool v Basildon LCRO 79/2009 (3 September 2009) at [23]; T v G LCRO 29/2009 (21

lawyer concerned “must, in advance, provide in writing to a client information on the principal aspects of client service” as specified in paras. (a) to (d). That includes “the basis on which fees will be charged”, the lawyer’s “professional indemnity arrangements”, and the lawyer’s “practice for the handling of complaints by clients”.17

[60] A further requirement in r 3.5 of the Rules is that a lawyer “must, prior to undertaking significant work under a retainer, provide in writing to the client” the information specified in paras. (a) to (c). That information includes “a copy of the client care and service information set out in the preface to [the] rules”, and “the name and status of the person or persons who will have the general carriage of, or overall responsibility for, the work”.18

[61] In practice, to ensure compliance, the information required by these Rules is provided to clients ahead of work commencing on a retainer.19 The mode of provision of this information is usually by a letter of engagement accompanied by information for clients, and standard terms of engagement documents referred to collectively as “the letter of engagement” sent to clients electronically.20

[62] Ms KM says that on 7 September 2016, when she met with Mr GC, she instructed him to prepare new EPA’s only. She says she informed Mr GC she did not require a new will at that stage. She would “leave the will until after all the new expenses of the house selling and moving were over”. She says she did not require him to prepare illness directives because this was being attended to “elsewhere”. She says Mr GC “was wrong” to claim that “she did not know about such directives”.

[63] Concerning her proposed move to a retirement village, Ms KM says Mr GC recommended she “pause for 3-4 days before deciding about the proposed move”, and advised her about the “cool[ing] off period”.21 Referring to [Village], Ms KM claims she handed the [Village] application form to Mr GC at that meeting expecting him to review it for her.

_{2016 to sign the EPA’s, contrary to her instructions, Mr GC had
also prepared a will and}

17 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 3.4.

18 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 3.5.

20 New Zealand Law Society “’Client Care’ For Lawyers: Regulatory Requirements” New Zealand Law Society <https://www.lawsociety.org.nz/for-lawyers>; Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, rr 1.6 and 1.7.

21 Retirement Villages Act 2003, s 28 — allows time for a person wishing to acquire an occupation right to cancel the agreement within specified periods as provided in this section.

illness directives for her to sign. She claims she “had specifically refused” the illness directive at the 7 September meeting.

[65] In his letter to the Law Society on 12 December 2016, Mr GC refers to Mrs [KM’s] email to him of 22 August 2016, when she asked for an EPA “change” to be “done now”, and “probably a will update in approximately six months”. Also, “advice” about moving to a retirement village. He refers to his notes of the 7 September meeting which records “detailed discussion about retirement villages” including his advice as requested by Ms KM; discussion about the new EPA’s which Ms KM required ahead of her planned move to a retirement village; the intended sale of her apartment; a new will; and illness directives which he says he raised for her consideration at the 7 September meeting.

[66] Concerning [Village], Mr GC says in his email to this Office on 5 July 2017 that Ms KM “did not show [him] a [Village] application form” at their 7 September meeting. He “den[ies] that [Ms KM] wanted [him] to review” that document at that meeting.

7 September, Ms KM had instructed Mr GC to prepare new EPA’s, including revocation of the existing EPA’s. To enable Mr GC to advance preparation of the EPA’s, five days later, on 12 September, Ms KM informed Mr GC that her friend, Ms NL, had agreed to act as her attorney and [Ms KM] would “take [Mr GC’s] advice” and appoint her daughter, Ms [DI], as alternate attorney. Two days later, on 14 September, Ms KM confirmed that Ms [DI] would act as alternate attorney.

14 September, Mr GC had sufficient detail to prepare, at a minimum, the EPA’s. Whilst at that point Ms KM maintains she required the EPA’s only, on 20 September, after speaking to Mr GC on the telephone for 12 minutes, Mr GC had Ms [PD], a lawyer employed by the firm, prepare the EPA’s, will, and illness directives which Mr GC says he “altered and approved” two days later.

[69] In such circumstances, it would have been sensible for Mr GC, either following the 7 September meeting, or following his receipt of Ms KM’s 12 and 14 September emails which contained further EPA details, or at the latest, following their 20 September telephone conversation, to have written to Ms KM to clarify with her exactly what legal work he understood she required from him. Unfortunately, the letter of engagement which Mr GC prepared almost a month earlier on 24 August 2016, and described the legal services as “matters from time to time”, provides no clarification of this issue.

[70] Decision making bodies are frequently presented with conflicting versions of events and little other evidence to assist them as to what version is to be preferred.

Unlike the process in a Court where evidence can be tested by cross-examination, the nature of a review of a Standards Committee’s decision by this Office is, as noted earlier, “informal, inquisitorial and robust”.

[71] Ms KM’s evidence is that she did not instruct Mr GC to prepare the will and medical directives. Mr GC’s evidence is that Ms KM did. Where, in such circumstances, there is both conflicting and insufficient information, without the benefit of examining the witnesses it is not possible for me to decide which party’s version of events is to be preferred.

[72] I refer to this conflict of evidence again in my later consideration of Mr GC’s

[73] The observation has been made that in the practice of law, competence “entails an ability to complete the work required by finding the relevant law and applying the relevant skills”.22 Whether the lawyer concerned meets this standard is to be determined objectively.23

[74] The purposes of the Act include maintaining public confidence in the provision of legal services and protecting the consumers of legal services.24 To this end, r 3 of the Rules, which imposes several duties and applies when a lawyer is providing “regulated services” to a client,25 requires that “a lawyer must always act competently and in a timely manner consistent with the terms of the retainer and the duty to take reasonable care”.

[75] One commentator has described the duty to be competent as “the most fundamental of a lawyer’s duties” in the absence of which “a lawyer’s work might be more hindrance than help”.26 Relatedly, the definition of “unsatisfactory conduct” includes:27

conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.

22 Duncan Webb, Kathryn Dalziel and Kerry Cook Ethics, Professional Responsibility and the

25 Lawyers and Conveyancers Act, s 6 — “regulated services” is defined as including “legal services” and “conveyancing services”, which are themselves defined in the Act.

[76] The same commentator suggests that this does not impose the duty “to provide a high level of service to clients” and “is, in reality, a duty not to be incompetent ... aimed at ensuring minimum standards of service”.28 The duty is concerned with “the outcome of lawyer’s work rather than the way in which they deal with clients”.29

[77] Ms KM claims that Mr GC, to whom she says she handed the [Village] application form at their 7 September meeting, ought to have noticed the cash-out clause and advised her about it. She says Mr GC “only seemed to [glance] at it briefly and put it down again”. She says if a “family friend, a retired lawyer”, had not alerted her to the presence of “a cash-out clause in the application document”, she may have overlooked it because Mr GC “had neglected to point [that clause] out” to her at the 7 September meeting.

[78] Ms KM says, six days later, when she raised this issue with Mr GC, he acknowledged his oversight in his 13 September email to her which contained “some counter strategies”. However, she claims because she “did not see” that email before she met with [Village] later that day, she followed her friend’s advice and asked [Village] to remove the cash-out clause.

[79] As noted above, whilst Mr GC acknowledges he provided advice to Ms KM “about retirement villages” at the 7 September meeting, he denies that Ms KM handed to him and asked him to advise her about the [Village] application form.

[80] Mr GC says Ms KM acknowledged in her 12 September email that she understood “the effect” of a cash-out clause which had been explained to her by “someone”. In his view, the “deletion” of the cash-out clause “by negotiation would have been the obvious solution at that stage”. He poses the question why Ms KM could not have telephoned him on “Monday afternoon” or “on Tuesday morning” to discuss this issue.

12 September 2016 ... after normal business hours, when he was not in the office ... he did not know Ms KM was meeting with [Village] to sign an application form”, or that she had “chosen to go to [Village] until the following morning when he returned to his office”.

[82] The Committee did not consider that “any shortcomings in legal advice” by Mr

_{GC were sufficiently serious “to support a finding that Mr GC had
been incompetent”}

concerning this and another unrelated matter discussed at the 7 September meeting.30

However, the Committee found that “Ms KM was entitled to expect that Mr GC would advise her on all aspects of the [Village] application form”. For that reason, the Committee stated that Ms KM “ought not to have been invoiced for Mr GC’s mistake”.31

[83] I also refer to the parties’ differing versions of events on this issue in my later consideration of Mr GC’s second 20 October 2016 invoice.

[84] Rule 3 of the Rules also requires that lawyers must provide regulated services

[85] Illustrations of circumstances in respect of which the Rule has been held to apply include a lawyer who acted for a client employer in an employment matter and delayed responding to a client’s request for advice for four months;33 and a lawyer, instructed by a parent in New Zealand who sought access to and custody of a child living in the UK, delayed in obtaining legal assistance in the UK.34

[86] Ms KM claims she informed Mr GC that preparation of new EPA’s was urgent. She says this is supported by first, her emails to Mr GC between 13 and 16 September, and secondly, her inquiry five and a half weeks later, on 21 October 2016, of her proposed attorneys, Ms NL and her daughter, Ms [DI], as to whether they had heard from Mr GC.

[87] Ms KM states that having “found it difficult to get a reply” to her queries about Mr GC’s first invoice and “then to get a consistent response”, on 21 October 2016, she informed Mr GC that she had “decided to leave” the firm.

[88] She says it was not until then that Mr GC informed her that the EPA’s, will and illness directives had been ready for her signature “at the time of the change over to

_{[Village]”. She claims Mr GC “failed to advise her”
that her signature was required on}

32 KD v WW LCRO 83/2011 (30 March 2012) at [84]; Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, rr 3.2, 7 and 7.2.

the EPA’s before he “proceeded to contact” her attorneys. As noted earlier, she says

[89] Referring to her telephone discussion with Mr GC on 20 September, Ms KM says she does not understand Mr GC’s statement that “[t]he arrangement made changed in that way in discussion”. She says Mr GC’s file note of that conversation was “all about the sale of the house” and his note “the EPA’s are not needed now” was “a note to himself”.

[90] Mr GC says the EPA’s, will, and illness directive were prepared by him, as

[91] Whilst Mr GC acknowledges that Ms KM wanted the EPA’s “to be done before the will”, in his letter to the Law Society on 12 December 2016, he says by “14 September

2016” she had provided her “detailed instructions necessary to prepare the [EPA’s], the revocation of the existing [EPA’s], the will”. He says Ms KM did not instruct him that the EPA’s were “wanted ... urgently”. He asks why Ms KM did not include this requirement in her instructions.

[92] Similarly, referring to their 20 September telephone conversation, Mr GC says Ms KM “understood [he] would proceed to prepare these [EPA’s] and other documents”. He says he was “expecting to see Ms KM ... in the near future to sign [the EPA’s], and the will”. He says she could also sign the illness directive he had prepared “for [her] consideration” if she “wished to”, as well as “documents relating to a sale [of the apartment] and possibly the [Village] residential occupation agreement”. He says Ms KM had expressed interest in the “illness directives” at their 7 September meeting.

[93] I observe that there is no mention in any of Ms KM’s written communications to Mr GC that she required the EPA’s to be completed urgently. In my view, Ms KM’s statement in her 22 August email to Mr GC that she wanted the EPA’s “done now” is to be seen in the context of her request to Mr GC that she wanted the EPA’s prepared ahead of any new will “update in approximately six months”. That is, Ms KM wanted the EPA’s completed before a new will. Mr GC’s file note of the 7 September meeting does not refer to the EPA’s being required by Ms KM urgently.

[94] Ms KM does not refer to requiring the urgent preparation of the EPA’s in any of her emails to Mr GC on 12 September, concerning the appointment of Ms NL as her attorney, and her daughter, Ms [DI], as alternate; on 13 September, when she stated “await hearing further about the [EPA’s]”; or on 14 September, when she informed Mr GC that Ms [DI] had agreed to act as alternate attorney.

[95] The next reference by either party to the EPA’s is in Mr GC’s file note of their

20 September telephone conversation, where he noted “re POA’s not needed yet. Under preparation”. In his submission to the Committee, Mr GC explained that although the EPA’s “were not needed just yet”, they “were under preparation as they would be required”. That position appears to be supported by the entries on the firm’s timesheet that day by Mr GC and Ms [PD] relating to “[EPA] and will instructions”, “EPA”, “revocation of EPA”.

[96] From the information provided to this Office, there was no further communication between the parties about the EPA’s until 21 October 2016, when Ms KM informed Mr GC that she was changing lawyers. In response, Mr GC stated that the EPA’s and related documents were “ready and [he was] awaiting a time when [Ms KM] came into the office to sign sale documents “.

[97] The result of this discussion is that in my view, Ms KM has not established to the degree of proof necessary, namely, on the balance of probabilities, that her instructions to Mr GC to prepare the new EPA’s were urgent.

[98] As I have already noted, it would have been preferable for Mr GC, following his

20 September telephone conversation with Ms KM at the latest, to have clarified with her in writing, what legal work she required from him at that stage and the timing for that work. And later, when the EPA’s had been completed, to have informed her that they were ready for her signature.

[99] However, in these particular circumstances, although Mr GC’s conduct in not providing these communications to Ms KM presents as less than could have been expected from him on this matter, in my view, by a fine margin, his failure or omission to do so is not sufficiently serious to deserve an adverse disciplinary finding.

[100] A lawyer must disclose to his or her client information that is relevant to the retainer, take reasonable steps to ensure that the client understands the nature of the retainer, keep the client informed about progress and consult the client about steps to be

_{taken to implement the client’s
instructions.}35 _{With limited exceptions, a
lawyer risks a}

35 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules, rr 7 and 7.1.

complaint from a client with a prospect of a disciplinary response if the lawyer does not

[101] A lawyer is required to follow a client’s instructions on the client’s matter. It has been observed that a lawyer:37

must not act in contravention of a client’s instructions. It may be appropriate for the lawyer to counsel against a particular course of action when it is considered not to be in the client’s best interests. But when clients are firm in their instructions, the lawyer may not substitute the lawyer’s own judgment for that of the client.

it is incumbent on the lawyer to obtain clarification of those instructions. The lawyer may not proceed on an assumption the client agrees to a certain course of action.

[103] Concerning advice provided to a client in compliance with these requirements, r 1.6 of the Rules requires that information a lawyer is required to provide to the lawyer’s client under the Rules must first, be provided in a clear manner; and secondly, not be misleading. In doing so, the lawyer is required to take into consideration the identity and capabilities of the client and the nature of the information being provided.39

[104] Ms KM claims that Mr GC did not respond to her email enquiries about progress

with the EPA’s. She says it was not until she terminated the retainers with Mr GC on 21

October 2016 that Mr GC informed her that the EPA’s, will, and illness directives were ready for her signature.

[105] Mr GC says, in effect, that no communication with Ms KM was required in addition to that which was taking place at the time. In his letter to the Law Society on 12

December 2016, Mr GC says “information was provided to [Ms KM] about the work done and she knew it would be done by [him] and other members of the firm”. He says Ms KM “knew that the documents were under preparation, and the EPA’s were not and were never required urgently”. He says Ms KM could “’have contacted [the] firm if truly she

_{was very anxious to have [the EPA’s] drafted and signed just as
quickly as possible’”.}

[106] He refers to Ms KM’s statement to him in her 19 September email that she “[a]ssume[d] the POA documents have been sent out for signing”. In response, he says during their 20 September telephone conversation, he informed her that the firm “would proceed to prepare the EPA’s (and other documents) [which] had not been prepared at that time”.

[107] An opportunity for both the firm and Ms KM to confer again on this matter arose three days later, on 23 September, when Ms [ET] attended on Ms KM to sign the apartment sale agreement. Further opportunities arose after that date. Ms KM was in regular communication with the firm — both Ms [ET] and Mr GC — concerning the apartment sale and the invoice (first) issued by the firm on that matter on 30 September.

[108] Mr GC had both a professional duty and responsibility to let Ms KM know when the EPA’s were ready for her signature. Although, as I have observed, it would have been preferable and sensible for Mr GC to have informed Ms KM as soon as the EPA’s were ready for signature and to explain to her the process to obtain the attorneys’ signatures, by his own admission, Mr GC did not do so between 20 September and 21

[109] The High Court has stated that whilst the Rules are to be “applied as specifically as possible”,40 they “are also to be applied as sensibly and fairly as possible”.41 Applying this approach, in my assessment of the information produced on this issue, although Mr GC ought to have taken the initiative and informed Ms KM that the EPA’s were ready for her signature, again by a fine margin, I do not consider that his failure to do so warrants an adverse finding against him.

[110] In reaching this conclusion, I have taken into account the likelihood Ms KM would have known from her 20 September telephone conversation with Mr GC that preparation of the EPA’s was under way. Also, the fact that the EPA’s were ready for signature when Ms KM informed Mr GC on 21 October that she was changing lawyers.

[111] Rule 3.2 of the Rules imposes a positive duty on lawyers to “respond” to clients’ “inquiries ... in a timely manner”.

40 Q v Legal Complaints Review Officer [2012] NZHC 3082, [2013] NZAR 68 at [59].

[112] Illustrations of the application of the rule include circumstances where a lawyer who was acting on a litigation matter had made little substantive progress over a lengthy period and was found not to have promptly answered requests for information or other enquiries from the client.42

[113] Similarly, r 7.2 requires that lawyers “must promptly answer requests for information or other inquiries from the client”. Circumstances in which this rule has been held to apply include where a client was encountering difficulties in making contact with the lawyer concerned, where “it was evident that no preparation had been done to complete [the] affidavit and instead [the client] was required to wait late at night while the document was completed”.43

[114] In another illustration where a client’s repeated requests to the client’s lawyer for a response went unanswered, the observation was made that “it was not enough for [the lawyer] to just hand the letters to” another lawyer employed by the firm “to respond to without ensuring that the letters were indeed answered”.44 Also, “in addition to rule

7.2, the general rules of conduct as to appropriate standards of professionalism demand

[115] It is also helpful to note circumstances where the lawyer concerned has not been held to have contravened the Rule. These include where the lawyer’s “conduct ... was perhaps not exemplary... in all of the circumstances” but the delays were not “of a nature to fall foul of the professional duty of [the lawyer] to act competently and diligently.46

[116] Ms KM claims that Mr GC did not advise her, as requested, whether an offer to purchase her apartment communicated to the firm by email could be accepted by email. She says this issue is separate from the negotiation of the apartment sale by the firm on her behalf.

[117] Ms KM says she wanted to know that “things were legal” and “the process between lawyers at the next stage”. However, by 22 September, she “had given up on [receiving] a reply” but “registered [her] concern” by stating if she “didn’t hear [she] would

21 September (1.03 pm), Ms [ET] was negotiating the apartment sale agreement with the prospective purchaser’s lawyers. He says because Ms [ET] was acting for Ms KM on the apartment sale, Ms KM’s statement in her email to him the following day (7.09 pm), “how legal it is to email such signed offers ... but I’ll leave all that up to you”, had to be viewed in the context of the sale negotiation. As such he says the question “had become redundant”.

[119] As is often the case concerning allegations about communications between parties, a chronology of events can assist by providing background against which the allegation can be viewed. In Mr GC’s case, the claim that he failed to provide Ms KM with the advice she requested from him.

[120] Having made enquiries of the firm about legal costs concerning the apartment sale, on 21 September (1.03 pm), Ms KM asked Mr GC whether receipt of an offer from the prospective purchasers by email would “work”. Ms KM did not send a copy of that email to Ms [ET], who was acting on the sale.

[121] An email exchange followed that day between Ms KM and Ms [ET] about the apartment sale agreement, in particular, “pre-contract disclosure” and the previously resolved “weathertightness claim”.

[122] The following day, on 22 September, Ms KM sent several emails to Mr GC. First, at 12.21 pm when she referred to “a bit of a hold up” by the prospective purchasers; “anticipate[d] coming in to sign probably this afternoon”; expressed concern that the firm did not have a receptionist; and “hop[ed] [she wasn’t] being charged $450 an hr for these little admin things”.

[123] In her second email that day at 5.34 pm, she stated she had “finally heard from”

the prospective purchasers and asked to speak to Mr GC about “the next step”.

[124] Ms KM’s third email at 7.09 pm, included her statements that she still had “no word” from the prospective purchasers. In that email, she repeated her question about “how legal” communication of an email offer was, but concluded “I’ll leave that up to you”. Mr GC forwarded that email to Ms [ET] at 8.24 pm and asked her to “ring” him. At

8.25 pm, Ms KM left a message on the firm’s voicemail that she “need[ed] to talk to someone ... first thing Friday morning” and would “email”.

[125] The following day, on 23 September, Ms KM met with Ms [ET] at 9.45 am and signed the apartment sale agreement.

[126] It is evident from these communications that while Mr GC delegated to Ms [ET] the task of responding to Ms KM, that request was overtaken by events, namely, Ms KM attending at the firm’s office the following morning to sign the sale agreement.

[127] However, although it is evident Ms KM did not receive the advice she requested, I observe that no adverse consequences followed for either Ms KM or Mr GC. In these particular circumstances, I do not consider that Mr GC’s omission deserves an adverse finding on this aspect of Ms KM’s complaint.

[128] Rule 9 of the Rules prohibits a lawyer from charging a client a fee that is more than fair and reasonable for the legal services provided by the lawyer:

A lawyer must not charge a client more than a fee that is fair and reasonable for the services provided, having regard to the interests of both client and lawyer and having regard also to the factors set out in rule 9.1.

[129] The fee factors, which are contained in r 9.1 “formalise[s] what was considered to be best practice prior to the Client Care Rules” when “costing guidelines were included in a New Zealand Law Society publication referred to as New Zealand Law Society Property Transactions: Practice Guidelines 2003”.47

[130] Considerations to be taken into account when determining whether a fee is fair and reasonable include:48

(a) ... a global approach; (b) what is a reasonable fee may differ between lawyers, but the difference should be “narrow” in most cases; (c) ... time spent ... is not the only factor; (d) It is not appropriate to (as an invariable rule) multiply the figure representing the expense of recorded time spent on the transaction by another figure to reflect other factors.

[131] It is only when a fair and reasonable fee has been determined “can it be assessed whether the fee charged is sufficiently close to that amount to properly remain unchanged”.49

48 Hunstanton v Cambourne and Chester LCRO 167/2009 (10 February 2010) at [22].

[132] Mr GC opened two files. He opened the first file, “Your affairs”, on 24 August

2016. Attendances recorded against this file included the 7 September meeting, drafting the EPA’s and related documents, will, and illness directives. He opened the second file, “Sale [Property Address]”, on 19 September 2016.

[133] Ms KM complained about both of Mr GC’s invoices dated 30 September 2016 and 28 October 2016 respectively.

[134] The Committee found that Mr GC’s 30 September 2016 invoice for $2,085 (fee component) plus GST and disbursements in respect of the sale of the apartment, was fair and reasonable.

[135] Mr GC’s second 28 October 2016 invoice was for $1,635 (fee component) plus GST and disbursements. The attendances included Mr GC’s hour-long meeting with Ms KM on 7 September 2016, email communications with Ms KM, and drafting of the EPA’s and related documents, will, and illness directives. Ms KM did not spell out her specific concerns with this invoice other than to say she considered the firm’s charges were “those of a larger firm” and “far from what one normally would expect with that level of charging”.

[136] Although under $2,000, the Committee considered for the purposes of reg 29 of the CSSC, there were “special circumstances” to enable it to consider the second invoice. Its reasons included both matters being “clearly closely interrelated and the provision of the legal services in question was contemporaneous” and “the work undertaken constituted a single legal service”.

[137] Similarly, it is my view that because of the interrelationship of the two matters, namely, Ms KM needed to sell her apartment to enable her to move to [Village] and wanted new EPA’s, and ultimately a revised will, for that purpose, it would be unfair or unjust to exclude the second invoice from review because the invoice was under

[138] Having made the findings of unsatisfactory conduct against Mr GC, referred to earlier, the Committee ordered that the second invoice be cancelled to take account of “a number of shortcomings [with] client services”. However, because I have not found

50 Cortez Investments v Olphert and Collins [1984] 2 NZLR 434 (CA) cited in VG v AB LCRO

Mr GC’s conduct to have been unsatisfactory in respect of those matters, the remaining question therefore is whether Mr GC’s second invoice is fair and reasonable.

[139] The total amount of time recorded on this matter by the firm’s authors, Mr GC

and Ms [PD] was valued at $1,635 plus GST. Mr GC’s recorded time of 2.3 hours at

$450 per hour was valued at $1,035 plus GST; Ms [PD]’s recorded time of 2 hours at

[140] The Committee stated that it was satisfied that Mr GC’s and Ms [PD’s] respective hourly rates “were fair and reasonable having regard to their skills and experience”. I observe that on current matters of practice such as this, it is important to note that Standards Committees are made up of practising lawyers familiar with the practice of law as well as lawyers’ duties and obligations, and the time pressures and constraints under which lawyers often find themselves. Standards Committees must also include a lay member. This format allows for a range of views — legal and non- legal — to be considered. I also observe that Ms [PD’s] hourly rate approximates to the average hourly rate of a lawyer employed in New Zealand having five years’ post qualification experience.51

[141] Turning to the fee factors in r 9.1 referred to above, in my view, a weighting for the following fee factors could be expected for this type of work: “the time and labour expended” (r 9.1(a)); “the skill, specialised knowledge and responsibility required to perform the services properly” (r 9.1(b)); “the importance of the matter to the client and the results achieved” (r 9.1(c)); “the experience, reputation and ability of the lawyer” (r

9.1(g)); “the reasonable costs of running a practice” (r 9.1(l)); and “the fee customarily charged in the market and locality for similar legal services” (r 9.1(m)).

[142] I consider that Mr GC’s and Ms [PD’s] respective hourly rates can be regarded as incorporating a weighting for these factors without further compensation.

[143] Applying the “global approach” referred to above, in my assessment, Mr GC’s fee in his second invoice is fair and reasonable to both Ms KM and Mr GC for the legal work carried out by the firm.

[144] Under the Act, a Standards Committee or this Office on review, may not order reduction or cancellation of a lawyer’s invoice unless the lawyer’s fee has been found not to be fair and reasonable, and a finding of unsatisfactory conduct made against the lawyer concerned.52

51 New Zealand Law Society “Charge-out rates for employed solicitors June 2016” (27 July 2016)

[145] For that reason, because I have not made any finding of unsatisfactory conduct against Mr GC, it is not open to me to order that his second invoice be either reduced or cancelled. Finally, because, as noted earlier, I am unable to reconcile the parties’ differing views concerning the scope of Mr GC’s legal services, I have taken no account of that in reaching my conclusion on this issue.

[147] Under s 210(1) of the Act, “after conducting a review” a Review Officer “may ...

include such order as to payment of costs as the [Review Officer] thinks fit”. Section

210(3) provides, in effect, that although there has not been a finding of unsatisfactory conduct made against the lawyer concerned, the Review Officer:

... may, if the [Review Officer] considers that the proceedings were justified and that it is just to do so, order [the lawyer] to pay to the [Law Society] such sums as the [Review Officer] thinks fit in respect of the expenses of and incidental to the proceedings and any investigation of [the lawyer’s] conduct ... carried out by... a Standards Committee or the [Review Officer].

[148] Although I have reversed the Committee’s findings of unsatisfactory conduct against Mr GC, I consider that Ms KM’s complaint was justified. For this reason, I order that Mr GC pay costs in the sum of $500 to the Law Society by 28 June 2018. This was the amount ordered by the Committee in its decision.

[149] Pursuant to s206(4) this decision is to be made available to the public with the names and identifying details of the parties removed.

In accordance with s 213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:

Ms KM as the Respondent [City]Standards Committee [X] The New Zealand Law Society

New Zealand Legal Complaints Review Officer

GC v KM [2018] NZLCRO 43 (31 May 2018)