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New Zealand Legal Complaints Review Officer |
Last Updated: 16 January 2025
LEGAL COMPLAINTS REVIEW OFFICER
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Ref: LCRO 76/2024
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CONCERNING
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an application for review pursuant to section 193 of the Lawyers and
Conveyancers Act 2006
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AND
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CONCERNING
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a decision/determination of the [Area] Standards Committee [X]
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BETWEEN
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QM
Applicant
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AND
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BY
Respondent
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The names and identifying details of the parties in this decision have
been changed.
[1] QM has applied to review a determination of the [Area] Standards Committee [X] (the Committee) dated 17 May 2024, in which the Committee took no further action on her complaint about the professional conduct of her former lawyer, BY.
[2] In simple terms QM’s complaint raised two issues: BY’s competence when acting for her, and the level of legal fees he charged her.1
[3] The Committee based its decision upon s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act). This allows a Standards Committee to dismiss a complaint if, based on the information it has, the Committee considers that further action on the complaint is neither necessary nor appropriate.
1 I use the word “competence” to include a lawyer’s obligations to act competently and in a timely manner, to give independent and objective advice and to protect and promote their client’s interests (see rr 3, 5.3 and 6 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.
[4] For reasons which follow later in this decision, I agree with the Committee’s decision to take no further action on the complaint about BY’s competence.
[5] However, I will be directing the Committee to reconsider QM’s complaint about BY’s legal fees.
Background
[6] QM and her partner, HW, separated and turned to lawyers to assist with settling their relationship property.
[7] The significant assets were a family home and shares in a log harvesting business run by the couple.
[8] QM initially instructed a law firm in City A to act for her, but in May 2019 she terminated that retainer and instructed BY to act for her.
[9] Proceedings were issued however the parties subsequently agreed to attend a private mediation. This took place on 12 February 2021, before AV. Each was represented by their lawyer.
[10] The result was the parties reaching agreement about the division of property and executing a handwritten agreement, certified by the lawyers (the mediated agreement).
[11] The mediated agreement included the following:
- (a) HW agreed to pay QM the sum of $1,260,000 in two tranches. The expectation was that the full amount would be paid within about five years. This was subject to HW obtaining finance approval within 10 working days of the agreement, for the first payment.
- (b) Provision for interest on outstanding amounts payable by HW.
- (c) Provision relating to separate property.
- (d) QM to remove a Notice of Claim from the family home after HW paid the first instalment.
[12] One of the issues discussed at mediation was HW’ assertion that he could not provide QM with any security for the sums he agreed to pay her. Despite this, and after being advised by BY about her options, QM decided to execute the mediated agreement.
[13] One month later, on 12 March 2021, QM and HW agreed to vary the mediated agreement in relation to the amount of the first payment (the variation agreement). This was because HW had been unable to raise finance to make that payment within the originally agreed time of 10 working days.
[14] The variation agreement provided for HW to make the first payment on 12 March 2021. It was also agreed that interest would begin to run on outstanding sums within three rather than five years.
[15] The variation agreement was signed by the parties and certified by their lawyers.
[16] HW defaulted on repayments under the variation agreement.
[17] By mid-2023 it was apparent that HW was facing serious financial difficulties. Through his lawyer he endeavoured to negotiate some variations to the mediation and variation agreements.
[18] QM terminated her retainer with BY in about May 2023. She instructed another lawyer to represent her.
[19] By then, QM was facing her own financial difficulties as she had been reliant upon the repayments that HW had agreed to.
Complaint
[20] QM lodged her complaint about BY’s conduct with the New Zealand Law Society Lawyers Complaints Service (Complaints Service), in early December 2023. In summary, she said:
- (a) The mediation and variation agreements had “fallen over.”
- (b) The mediation and variation agreements were poorly written and offered her no protection, yet BY advised her to sign them.
- (c) Legal fees incurred were $43,000.
- (d) BY advised her to remove a Notice of Claim from the title to the former couple’s family home.
[21] QM attached a number of documents to her complaint, which I discuss later in this decision.
Response
[22] BY responded to the complaint in his letter to the Complaints Service dated 2 February 2024. In summary he said:
- (a) The couple’s relationship property, and the issues concerning that property, were relatively straightforward. However, acrimony between them delayed resolution by two years.
- (b) The options were to either sell relationship property and divide the proceeds, or for one party to buy out the other.
- (c) The advice given to QM about those options included advantages, disadvantages and risks.
- (d) HW was paraplegic and it was likely that he would be awarded the family home in a Court-ordered outcome. The business relied on HW’s personal goodwill and was not a business that QM could have run. QM’s best option was to sell her share in it to HW.
- (e) At mediation HW agreed to pay QM $460,000 (as his first payment towards the agreed amount of $1,260,000.00), but needed to raise that sum. He had no security to offer for any loan or for the agreed repayments to QM. She was advised that her options included proceeding to a hearing which involved uncertainty and risk, or accepting HW’s offer knowing that he might default on repayments or that the business might fail.
- (f) QM’s instructions were to agree to HW’s offer and the mediated agreement was signed by the parties.
- (g) The mediated agreement was subsequently varied. QM was again advised that her options were going to court, or renegotiating the mediated agreement. Her instructions were to agree to the variation.
- (h) The Notice of Claim she had lodged had to be removed because of the agreement reached between the parties, and also because HW needed to obtain finance against the family home.
- (i) One invoice was issued at the conclusion of the relationship property settlement. “Time on the clock” was 124 hours which generated fees of
$37,510 plus GST and disbursements. The invoice was sent to QM on
12 March 2021. She agreed to pay this from the proceeds of a lump sum payment under the mediated agreement.
(j) In May 2022 issues arose with HW defaulting on payments. At this time, QM sought an explanation for the March 2021 invoice. This was provided to her, and included a copy of timesheets.
[23] BY noted that QM’s complaint about the legal fees was made more than two years after the invoice had been sent to her and that any assessment would be time- barred. He said:
I have not gone into detail justifying the fee, but I can confirm that at the time I was comfortable it was a fair fee in accordance with the usual Rule 9.1 fee factors.
[24] BY attached a number of documents to his response, including a chronology, copies of correspondence dated after May 2022 (which included QM querying the March 2021 invoice), his timesheets, and the March 2021 invoice itself.
[25] BY’s response was not given to QM at the time it was received by the Committee. Rather, the Committee attached the response to its decision.
Standards Committee decision
[26] The Committee identified the following conduct issues as arising from QM’s complaint:2
- (a) Rule 3: whether BY acted competently and in a timely manner consistent with the terms of his retainer with QM.
- (b) Rule 5.3: whether BY provided independent and objective advice to QM.
- (c) Rule 6: whether BY protected and promoted QM’s interests to the exclusion of the interests of others.
- (d) Rule 9: whether BY charged a fee that was more than fair and reasonable.
[27] In dealing with those issues, the Committee held:3
- (a) There was no evidence of any lack of competence by BY. His response to the complaint established that he had explained “the advantages, the
2 Standards Committee decision (17 May 2024) at [9]. References to the Rules are to the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.
disadvantages and the risks involved” and that ultimately QM had chosen to sign the mediated agreement.
(b) Attending mediation was an appropriate strategy.
(c) BY appropriately advised QM to seek independent legal advice when she indicated that she had lost trust in him.
(d) BY’s response to the complaint “contained a helpful summary of the invoices”. “The invoice” had been sent to QM on 21 March 2021, which was over two years earlier.
(e) Regulation 29 of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 prevented the Committee from considering the invoice because of its age. QM had not identified any special circumstances which would otherwise justify reviewing the invoice.
[28] The Committee noted that although it was not required to address each and every element of QM’s complaint, this did not mean that those elements had not been considered by it.4
Application for review
[29] QM initially wrote to the New Zealand Law Society on 12 June 2024, advising that she wished to appeal the Committee’s decision.
[30] QM set out a background and chronology in her letter, and attached a number of documents which she said were relevant to her complaint. Some of that material does not appear to have been before the Committee.
[31] Although the exact details are not before me, I anticipate that the recipient of QM’s letter informed her that she needed to lodge an application for review with the Legal Complaints Review Officer.
[32] Whatever the process, QM lodged her application for review on 1 July 2024. She has submitted the following:
- (a) BY failed to represent her competently and acted unprofessionally.
(b) This has had a detrimental effect on the outcome of her relationship property settlement.
[33] By way of outcome, QM seeks compensation of $1,215,315.00. This includes the sum of $43,489.00 being legal fees, GST and disbursements.
[34] In relation to the amount of compensation QM seeks, I point out at this stage that the maximum sum that can be awarded by a Standards Committee or a Review Officer is $25,000.00.5
[35] QM attached to her review application her 12 June 2024 letter to the New Zealand Law Society and the material that she had submitted with that letter.
[36] QM raises a further matter in her review application, and it was not one which she had included in her complaint to the Complaints Service. She said the following:
I would also like you to consider the matter regarding [BY’s] advice to me to move out of our former family home – the occupancy order, as to the direction this case took.
[37] I can deal with that issue now.
[38] The process of review in this jurisdiction involves a reconsideration of all of the material that was before a Standards Committee. It is not an opportunity for a fresh complaint to be made. All complaints must first be dealt with by a Standards Committee.
[39] Accordingly, I do not have the jurisdiction to deal with the issue that QM has raised concerning the occupancy order and BY’s advice about that.
BY’s response
[40] In an email to the Case Manager dated 29 July 2024, BY provided a brief response to the review application, as follows:
- (a) He noted the fresh issue in connection with the occupancy order;
- (b) He noted the reference in QM’s 12 June 2024 letter to a judicial settlement conference during August 2020 at which he had made submissions. He said that QM made an error in her letter about the provenance of a
5 See s 156(1) and s 211(1)(b) of the Act and reg 32 of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008.
settlement proposal that had been made during that settlement conference.
[41] BY said that he otherwise relied on the submissions that he had made to the Committee.
Further comment by QM
[42] QM commented on BY’s response to her complaint, in an email to the Case Manager dated 5 August 2024. Much of what she said repeated her earlier complaint, however the following points are noted:
- (a) BY’s advice led her to transfer her half share in the family home to HW, without security or any guarantee that she would be paid. This is “blatant misconduct.”
- (b) Independent advice she has received from other lawyers corroborates this.
- (c) BY did not use figures that he had prepared for an earlier judicial settlement conference, when representing her during the mediation.
- (d) BY’s figure for the value of the family home ($935,000) should have been updated for the mediation.
Review on the papers
[43] This review has been undertaken on the papers pursuant to s 206(2) of the Act.
[44] This provision allows a Legal Complaints Review Officer to conduct a review on the basis of all information available, if the Review Officer considers that it can be adequately determined in the absence of the parties.
[45] In anticipation of that process being followed, on 2 August 2024 the parties were given an opportunity to make submissions as to whether they wished the review application to proceed by way of a hearing in person, or a hearing on the papers. They were informed that any submissions were to be filed by no later than 4pm on 16 August 2024.
[46] In an email to the Case Manager also dated 2 August 2024, BY said that he agreed to the review application being dealt with on the papers.
[47] QM advised the Case Manager on 6 August 2024 that she agreed to her review application being dealt with on the papers.
[48] I confirm that I have carefully read the complaint and response, 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.
[49] On the basis of the information available, I have concluded that the review may be adequately determined on the papers and in the absence of the parties.
Nature and scope of review
[50] The nature and scope of a review was discussed by the High Court in 2012, which said of the process of review under the Act:6
... 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.
[51] In a later decision, the High Court described a review by a Review Officer in the following way:7
[2] ... A review by [a Review Officer] is neither a judicial review nor an appeal. Those seeking a review of a Committee determination are entitled to a review based on the [Review Officer’s] own opinion rather than on deference to the view of the Committee.
...
[19] ... A “review” of a determination by a Committee dominated by law practitioners, by the [Review Officer] who must not be a practising lawyer, is potentially broader and more robust than either an appeal or a judicial review. The statutory powers and duties of the [Review Officer] to conduct a review suggest it would be relatively informal and inquisitorial while complying with the
6 Deliu v Hong [2012] NZHC 158, [2012] NZAR 209 at [39]–[41] (citations omitted).
7 Deliu v Connell [2016] NZHC 361, [2016] NZAR 475.
principles of natural justice. The [Review Officer] decides on the extent of the investigations necessary to conduct a review in the context of the circumstances of that review. The [Review Officer] must form his or her own view of the evidence. Naturally [a Review Officer] will be cautious but, consistent with the scheme and purpose of the Act ... those seeking a review of a Committee determination are entitled to a review based on the [Review Officer’s] own opinion rather than on deference to the view of the Committee. That applies equally to review of a [decision] under s 138(1)(c) and (2) [of the Act].
[20] ... While the office of the [Review Officer] does not have the formal powers and functions of an Ombudsman, it can be expected to be similarly concerned with the underlying fairness of the substance and process of the Committee determinations in conducting a review.
[21] A review by the [Review Officer] is informal, inquisitorial and robust. It involves the [Review Officer] coming to his or her own view of the fairness of the substance and process of a Committee’s determination.
[52] Given those directions, my approach on this review has been to:
- (a) independently and objectively consider all the available evidence afresh;
- (b) consider the fairness of the substance and process of the Committee’s determination;
- (c) form my own opinion about all of those matters.
Discussion
Competence
[53] As foreshadowed at the beginning of this decision, I agree with the Committee’s decision to take no further action on QM’s complaint about BY’s competence.
[54] At the core of QM’s argument is that events which occurred after she and her former partner signed the mediation agreement effectively rendered that agreement worthless to her, and BY’s ought to have anticipated that possibility, advised about the potential consequences and discouraged her from settling on the terms recorded in the mediated agreement (and its later variation).
[55] Although not quite expressed in this way, I interpret what QM has said to be that BY should have advised her to press on with the litigation and leave it to a Family Court judge to decide the outcome.
[56] However framed by her, it is clear that QM asserts that BY did not represent her competently, that he did not advise her professionally and objectively and he failed to protect and promote her interests to the exclusion of others.
[57] QM singles out BY’s advice that she should transfer her half share in the family home to HW with a cash adjustment in her favour. On settlement of all issues (i.e. when the mediated agreement was signed by the parties) this also necessitated QM withdrawing the Notice of Claim that she had lodged against the title.
[58] QM argues that it was not sensible to agree to selling her half share in the family home (which included five acres of land) because HW was paraplegic and would have been unable to live in the house and manage the surrounding property.
[59] BY’s view was that in a contested hearing before a Family Court judge it was likely that occupation of the family home would have been awarded to HW precisely because of his paraplegia. The home had been modified to accommodate his needs and so the balance of convenience lay in favour of him remaining there.
[60] There is no way of knowing whether BY’s view about that was reasonable in the circumstances. It certainly presents as a reasonable view for a lawyer to have in these particular circumstances; or, put more precisely: this view does not appear to indicate a lack of competence by BY in assessing possible outcomes.
[61] Moreover, it seems to me that even a fully litigated outcome would not have altered the fundamental reality of HW' limited capacity to secure potential payments to QM.
[62] As one would expect, BY gave QM advice about the advantages and disadvantages of settlement vs continuing the litigation. It would have represented a failure in his duty to QM if BY had not given her that advice.
[63] Indeed, this is precisely reflected in the Rules which provide as follows:
Alternative to litigation
13.4 A lawyer assisting a client with the resolution of a dispute must keep the client advised of alternatives to litigation that are reasonably available (unless the lawyer believes on reasonable grounds that the client already has an understanding of those alternatives) to enable the client to make informed decisions regarding the resolution of the dispute.
[64] Legal disputes are inherently complex, with uncertain outcomes that often defy simple resolution. The nuanced nature of litigation means that predicting an outcome is often challenging.
[65] An experienced lawyer's guidance typically centres on identifying the most pragmatic and economically sensible approach for their client, balancing potential legal outcomes with strategic considerations.
[66] Of course, one lawyer’s strategic view about their client's case can be another lawyer's point of disagreement. The fact that they disagree about strategy does not make one of them right and the other wrong. This reflects, as described by me above, the nuanced nature of litigation.
[67] Therefore, I place little weight on QM’s evidence that a number of lawyers were apparently critical of BY’s advice to her during the mediation and at the point when she signed the mediated agreement. That evidence is no more than others’ opinions.
[68] Absent compelling and objective evidence demonstrating that a lawyer's strategic approach to their client’s case revealed a lack of competence, the disciplinary system should refrain from substituting its own strategic judgement and retrospectively criticising the lawyer's professional conduct.
[69] In a case like QM's, the most persuasive evidence would be a decision by a Family Court judge to set aside the mediated agreement (and its subsequent variation) on account of BY’s inadequate or even incorrect advice to her at the time it was executed.
[70] For those reasons I agree with the Committee’s decision to take no further action on QM’s complaint about BY’s competence.
Fees
[71] My concern about the way in which the Committee approached QM’s complaint about BY’s fees, is in two parts:
- (a) Whether the evidence establishes that BY’s invoice had been rendered more than two years before QM made her complaint (stale invoice issue), and
- (b) whether BY charged a fee that was fair and reasonable having regard to both his and QM’s interests.
[72] I will deal with each in turn.
[73] Relevant to this issue is regulation 29 of the Lawyers and Conveyancers Act Lawyers Complaints Service and Standards Committees Regulations 2008, referred to by the Committee in its decision (but not set out in full).
[74] Reg 29 provides as follows (emphasis added):
29 Complaints relating to bills of costs
If a complaint relates to a bill of costs rendered by a lawyer or an incorporated law firm, unless the Standards Committee to which the complaint is referred determines that there are special circumstances that would justify otherwise, the Committee must not deal with the complaint if the bill of costs—
(a) was rendered more than 2 years prior to the date of the complaint; or
(b) relates to a fee that does not exceed $2,000, exclusive of goods and services tax.
[75] The word “rendered” should be given its ordinary and natural meaning: given to
– whether that is handed to, posted in the ordinary mail or sent as an attachment to an email. The latter two methods also have deemed receipt provisions.
[76] Sometimes the date on which an invoice is rendered to a client may differ from the date on an invoice.
[77] BY issued one invoice. It is dated 12 March 2021. The fees component is
$37,510 which represents – to the dollar – the time recorded on the firm’s accounting software.
[78] QM’s complaint was made on 6 December 2023.
[79] In his response to QM’s complaint, BY said that the invoice was “sent” to her on 12 March 2021. I infer from this that he did not personally hand it to her.
[80] BY did not say how he had rendered the invoice to QM. A copy of any covering correspondence confirming that the invoice was rendered to QM on 12 March 2021, was not attached to that response.
[81] Self-evidently QM’s complaint was made more than two years after the date of BY’s invoice.
[82] The Committee found as a fact that the invoice had been rendered to QM on 12 March 2021.
[83] The evidence about that particular point is less than clear to me.
[84] In an email to BY dated 23 May 2022, QM asked for “an itemised account for what you charged me for my legal fees.”
[85] BY responded by email on 26 May 2022, attaching a copy of the firm’s time records and a copy of the 12 March 2021 invoice.
[86] This raises a question as to whether that was the first occasion on which the invoice had been rendered to QM. If so, then her complaint was clearly within the two- year sudden-death provisions of reg 29.
[87] It may well be the case that BY was simply rendering the invoice again, having already done so on 12 March 2021. But his 26 May 2022 email to QM represents the only independent evidence of the invoice being rendered.
[88] As indicated, if that is the case then it excludes QM’s fees complaint from the limitations of reg 29.
[89] I do not discount BY’s evidence that he sent the invoice to QM on 12 March 2021. But, on the evidence before me, that point is contestable.
[90] As well, I am not oblivious to the fact that in the complaint form completed by QM, the following is included (where relevant to her complaint):
If your complaint is about an invoice [that] is older than two years please contact the Lawyers Complaints Service (see page 6 for contact details).
... Please attach copies of all invoices, correspondence about the fees you were charged and an explanation of why you are complaining about the fees.
[91] QM ticked that the invoice had been paid in full, and then recorded the following:
I paid $43,000 for a matrimonial property agreement that is poorly written with no protection for myself advised by [BY] to sign this.
[92] On receipt of the complaint form, the Complaints Service asked QM to complete it by confirming that she authorised disclosure of her complaint and attachments to BY.
[93] QM responded by email almost immediately, giving the necessary authorisation to the Complaints Service.
[94] QM appears to have attached the following documents to her complaint form:
- (a) 2023 correspondence between QM’s former partner’s lawyer and BY.
- (b) 2023 correspondence between QM and BY’s business partner.
- (c) An email dated 6 December 2023 seemingly authored by a RD but sent from QM’s email account to “[redacted]”, headed “To Whom It May Concern”. The email apparently attached seven categories of documents together with a brief description of each.
- (d) The mediated agreement.
[95] Despite QM clearly noting on the complaint form that her complaint included legal fees charged, and despite the fact that she did not include any invoice/s with her complaint, the Complaints Service wrote to QM on 24 January 2024 and said that the Committee did not require any further information from her.
[96] I acknowledge that the complaint form puts a complainant on notice about the reg 29 issue (without referring to it in those terms), by inviting them to contact the Complaints Service to discuss any invoice that is older than two years or less than
$2,000.
[97] However, I consider that the form should go further and explain why a complainant should contact the Complaints Service in those circumstances. If the fees complained about are prima facie excluded from consideration by the operation of reg 29 (by dint of age or amount), then this fact should be made quite clear in the complaint form itself.
[98] Most complaints about legal fees come from clients who are not lawyers. Speaking generally, lay clients cannot reasonably be expected to understand that complaints about certain categories of legal fees are subject to strict time limits, which can only be waived if the Committee finds that special circumstances exist.
[99] After all, a complainant challenging a fee presumptively covered by reg 29 carries the burden of putting evidence before the Committee as to whether special circumstances exist for those fees to be considered.
[100] Adding the following words (or similar) after the suggestion to a complainant to contact the Complaints Service, could suffice: “A Standards Committee may require further information from you before it can consider invoices in this category.”
[101] In the present case, it is clear that QM was complaining about BY’s fees, yet she did not attach any invoice despite the form recommending complainants to do so.
[102] I appreciate that there is a point at which complainants must take responsibility for any deficiencies in their complaint material and I acknowledge that it is not the function of the Complaints Service to shore up what might be seen as a tenuous complaint.
[103] However, given that there was a specific complaint about fees, referencing an amount ($43,000) yet no accompanying invoice, this should have prompted the Complaints Service to contact QM and ask for a copy of any invoice.
[104] That might have led to a further discussion about whether reg 29 applied and if so, how that might affect QM’s complaint.
[105] I am also mindful that QM’s review application does not raise the issue of when BY’s invoice was rendered to her, which was of course central to the Committee’s decision not to inquire into it.
[106] However, I anticipate that this point may have been lost on her, as I am sure it would be to most laypeople. The reg 29 issue is technical and involves a Committee deciding whether to exercise a discretion to depart from the strictures of the regulation.
[107] QM’s review application does however note that she is seeking a refund of the fees paid to BY.
[108] Even if the evidence establishes that BY rendered his invoice on 12 March 2021, I am not satisfied that the Committee properly considered whether special circumstances existed justifying a consideration of whether the fees were fair and reasonable.
[109] The Committee said the following:
- [20] The Standards Committee did not consider any special circumstances were involved. ...
- [21] You did not submit any special circumstances and the Standards Committee declined to take this aspect of the complaint any further. The evidence indicated to the Standards Committee that BY had validly performed work for you and provided you with legal advice. The Committee considered the evidence provided with the complaint did not establish the work had done for you had been either incompetent or negligent.
[110] The Committee’s reasoning suggests that its consideration of whether there were special circumstances was predominantly based on the fact that QM had failed to squarely address that issue. This conclusion was informed by the Committee’s assessment of the totality of the evidence that QM had provided to support her complaint.
[111] With every respect to the Committee, this is insufficient.
[112] First, it is difficult to see which, if any, of the evidence QM supplied with her complaint had relevance to the fairness and reasonableness of legal fees. By far the majority of that material post-dated, by two or more years, the date of BY’s invoice.
[113] Secondly, regardless of whether a complainant identifies special circumstances for a stale invoice, the Committee must independently evaluate all available evidence to reach its own objective conclusion about that and if necessary invite a complainant to address the issue if there is an obvious gap in their evidence, as was the case here.
[114] The available evidence here included BY’s time records, which he had supplied to the Committee (but which it had not in turn given to QM). Those records indicate time spent as amounting to the equivalent of $37,510. The invoice was for exactly that amount.
[115] In my view that squarely raises the question of whether the fees were fair and reasonable.
[116] It is appropriate to reproduce the relevant rules concerning fees.
- 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.
Reasonable fee factors
9.1 The factors to be taken into account in determining the reasonableness of a fee in respect of any service provided by a lawyer to a client include the following:
- (a) the time and labour expended:
- (b) the skill, specialised knowledge, and responsibility required to perform the services properly:
- (c) the importance of the matter to the client and the results achieved:
- (d) the urgency and circumstances in which the matter is undertaken and any time limitations imposed, including those imposed by the client:
[117] The evidence that BY considered any of the other 13 reasonable fee factors when settling on the amount to charge QM, is scant. In responding to the complaint, BY simply said that he “was comfortable it was a fair fee in accordance with the usual Rule
9.1 fee factors.”
[118] Yet, the fee was for precisely time spent.
[119] Time spent, which is clearly the basis upon which BY settled on the invoice amount, is but one of the reasonable fee factors referred to in r 9.1 of the Rules. As a factor, it has no priority over any of those other factors.
[120] As an approach to settling a fee it is wrong for a lawyer to only consider time spent.
[121] It is at least arguable, though I leave it to the Committee, that this approach to setting a not insignificant fee (and I am not suggesting that the fee was excessive) could amount to special circumstances justifying an assessment of that fee.
[122] For all of those reasons, I reverse the Committee’s decision to take no further action on QM’s complaint about BY’s fees, and direct it to reconsider that issue. That reconsideration would appear to fall into three parts:
- (a) When was the invoice rendered?
[123] Before ending this part of my decision, I record that I have of course considered whether to deal with the fees issue myself, and to ask the parties the questions posed by me above. After all, a Review Officer has broad powers to request information, as well as having all of the powers of a Standards Committee.8
[124] However, I do not consider it appropriate for me to carry out what would in effect be a first-instance review of a matter of this nature. To do so would be to deprive the parties of the relatively benign review rights to this jurisdiction, as any challenge to a Review Officer’s decision can only be by way of judicial review to the High Court, under the more proscriptive provisions of the Judicial Review Procedure Act 2016.
[125] By “matter of this nature” I am referring to the fact that a fee of nearly $40,000 is not insignificant, and merits careful examination in the interests of both parties. Again, I am not to be taken as expressing a view as to whether the fee here was fair and reasonable. It may well prove to be so.
Committee – procedural concern
[126] Before concluding, I express my concern about an issue relating to the Committee’s pre-hearing process.
[127] BY provided a response to QM’s complaint, in a comprehensive letter to the Complaints Service, together with relevant attachments, dated 2 February 2024.
[128] BY’s response to the complaint provided context to the mediation, the mediated agreement (and its variation) and HW’ eventual defaults in payments to QM. It was important evidence answering QM’s complaint about his competence.
[129] This response was not sent to QM at the time it was received. It should have been. Instead, the Committee simply attached it to its decision.
[130] This is procedurally irregular and infringes the rules of natural justice.
[131] Standards Committees are explicitly required to comply with the rules of natural justice. Section 142(1) of the Act provides:
A Standards Committee must exercise and perform its duties, powers, and functions in a way that is consistent with the rules of natural justice.
[132] Natural justice demands that all parties have the right to be heard (audi alteram partem). When a decision-maker receives evidence from one party, they must share it with the other party before making any substantive decision.
[133] A practical illustration of that requirement is given to Standards Committees in the New Zealand Law Society Practice Note Concerning the Functions and Operations of Lawyers Standards Committees as follows:9
9.4(a) ... The complainant should be provided with a copy of the lawyer’s response and given an opportunity to reply.
[134] While the Practice Note [9.4(a)] requires that complainants receive and have an opportunity to reply to a lawyer's response, I accept that there will be cases when a Committee determines that a lawyer's response raises no contentious issues, that a complainant's reply would not materially advance the matter, or that only specific aspects of the response warrant further comment.
[135] While the Committee in the present matter may have had reasonable grounds for concluding that QM had nothing material to add regarding BY’s response, this did not absolve it of its duty to provide her with that response before issuing its decision.
[136] The Committee could have satisfied this requirement by simply forwarding BY’s response to QM while indicating that no further submissions were necessary.
[137] This procedural irregularity does not otherwise affect the substance of the Committee’s decision to take no further action on QM’s complaint.
[138] I have concluded that its processes were deficient in a different respect, in relation to the overall question of whether BY’s fees were fair and reasonable.
Decision
[139] Pursuant to s 211(1)(a) of the Act, the decision of the Committee is:
- (a) Confirmed as to the decision to take no further action on QM’s complaint about BY’s competence.
9 2nd Edition, October 2021 – made under Regulation 28 of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008.
(b) Reversed as to the decision to take no further action on QM’s complaint about BY’s fees.
[137] Pursuant to s 209(1)(a) of the Act, I direct the Committee to reconsider QM’s complaint about BY’s fees as follows:
(a) For the reasons set out at [71]–[122].
(b) The Committee should consider approaching its reconsideration of QM’s complaint about BY’s fees as follows:
- (i) When was the invoice rendered?
- (ii) If the invoice was rendered on 12 March 2021, given that QM made her complaint about BY’s conduct in December 2023, are there any special circumstances justifying an assessment of whether the fees were fair and reasonable?
- (iii) If reg 29 does not apply (i.e. the invoice was rendered less than two years before QM made her complaint about BY’s conduct), were the fees charges by BY fair and reasonable?
Anonymised publication
[140] Pursuant to s 206(4) of the Lawyers and Conveyancers Act 2006, I direct that this decision may be published but without any details that may directly or indirectly identify the parties, or any other person named in this decision.
DATED this 13TH day of December 2024
R Hesketh
Legal Complaints Review Officer
In accordance with s 213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:
Ms QM as the Applicant Mr BY as the Respondent
[Area] Standards Committee [X]
New Zealand Law Society
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URL: http://www.nzlii.org/nz/cases/NZLCRO/2024/153.html