Lawyer-client relationship: duty to advise and account

Question 1

What are some of the obligations of a lawyer in their duty to advise? 5

Answer 1

• help the lawyer understand their iissues in relation to the law
• inform them of their rights (such as that to a costs agreement)
• inform them of a settlement, even if they believe the offer isn’t good enough
• inform them of the ADR processes avaliable
• however they don’t have to provide non-legal advise

Question 2

Explain the case of ASIC v Somerville [2009] NSWSC 934

Answer 2

• The solicitor advised the directors of the companies to transfer company assets to newly formed companies to make better shares and prioritise dividend payments however the directors knew there was no way for the company to make dividend payments
• This act contravened the Corporations Act 2001 (Cth) s 79 and Mr Sommerville was found guilty of aiding, abetting, counselling or procuring the contravention, they found that the transactions wouldn’t have occurred if it wasn’t for his involvement
• He conduct was seen to be more serious given he was a solicitor and therefore was disqualified from managing corporations for six years

Question 3

Explain the need for the ‘reasonable prospects of success’ principle 2

Answer 3

• waste of time, court resources and tax-payers money to pursue a case that had no chance of succeeding
• part of a lawyers duty to justice and the court not to pursure matters they know have no chances of success, their paramount duty is to the court

Question 4

What consequences can arise if there is found to be no reasonable prospects of success? 3

Answer 4

• Court has the power to order costs penalties against a law practice where it finds a claim was issued without reasonable prospects of success
• Advising on a claim which has been found to have no reasonable prospects of success could amount to professional misconduct or unsatisfactory professional conduct which could result in disciplinary sanctions
• however if there was a recent change in the law that perhaps the lawyer was unaware of, this wouldn’t constiutte ‘reasonable’ prospects, there is leeway

Question 5

list some other points on reasonable prospects of success 2

Answer 5

• ‘not fairly arguable’ – what is a reasonable prospect of success, perhaps a 50% or majority chance –> its challenging to determine exactly what this means
• a practitioner isn’t just a mouthpiece for a client but rather a professional exercising independent judgement

Question 6

What is a lawyer’s duty to account? 2

Answer 6

• It is the duty to account for any money received by the lawyer from the client such as for costs/disbursements or the pending payment of a deposit in a real property purchase
• a lawyer serves as the trustee of funds, they are the clients funds however not the laywers

Question 7

What section of the law talks about the responsibilities of a lawyer as a trustee?

Answer 7

• Legal Profession Uniform Law 2014 part 4.2 and division 2 - this talks about keeping trust records, withdrawal and protection of trust money

Question 8

What are some key ethical responsibilities in relation to trust money? 3

Answer 8

• it can only be transferred with the authoirty of the client, the lawyer cannot trasnfer money without this
• the money must remain in the account until said authorisation is given
• s 137 Legal Profession Uniform Law 2014 prescribes a law practice must deposit trust money into the firm’s general trust account as soon as pracitcable and only disburse it as accordding to the client’s authorisation

Question 9

Explain the case of Council of the Law Society of New South Wales v Nguyen [2016] NSWCATOD 141

Answer 9

• Would transfer money out of the account claiming it as ‘remaining legal fees’ and the client was having to pay more because they thought they owed more but that wasn’t the case, they didn’t get all the money refunded back
• The Civil and Administrative Tribunal Act 2013 gives the tribunal the power to remove a solicitor’s name from the roll, make the solicitor pay costs of the law society or any further order they deem fit
• found guilty of professional misconduct, name removed from the roll of solicitors and solicitor requried to pay the costs of the law society
• across many instances Nguyen withdrew too much money and then used this money for other trust accounts and different cases, transferring lots of money without the authorisation of the client

Question 10

What are some consequences of mishandling trust money? 2

Answer 10

• wrongful things could include failing to report trust iregularities, mixing trust money wiht non-trust money, using false names in the trust accounts or overdrawing from it
• this could amount to professional misconduct or unsatisfactory professional conduct as well as offences under state criminal laws