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Ethics Committee rulings

Every Issue

Cite as: (2006) 80(12) LIJ, p. 80


Ethical dilemmas are part of everyday practice for solicitors.
The Ethics Committee of the Law Institute of Victoria Ltd is available to help.

Litigation – conflict of interest/professional mobility

(R4365 June 2006)

An employee practitioner who subsequently acts as principal in another firm may not have a conflict of interest in acting for a client associated with a previous client.

An employee practitioner acted in a family law matter for a client of Firm A.

The practitioner became the principal of Firm B and was acting for a couple seeking to be joined as parties in Supreme Court proceedings. Firm A acted for the plaintiff in that matter. The plaintiff was the current domestic partner of the practitioner’s former family law client.

Firm A raised the issue of conflict of interest.

Ruling

In the opinion of the Ethics Committee and on the information presented:

1. Firm B does not have a conflict of interest in this matter.

2. There is insufficient evidence that Firm B (or the practitioner) has “directly acquired confidential information personally” as required by r4 of the Professional Conduct and Practice Rules 2005.

Property law – trust account/acting without instructions

(R4366 July 2006)

Issues subsequently raised by a client outside the scope of an undertaking will not result in deferring compliance with the undertaking.

Firm A acted for the vendor and Firm B acted for the purchaser of a property. Several defects in renovations and additions were identified by a consulting engineer before sale of the property and a special condition relating to the satisfactory completion of works before settlement was incorporated in the contract of sale.

Most of the work was completed before settlement with the exception of the render coating. To facilitate settlement, the vendor’s solicitor provided an undertaking that $10,000 would be held in trust pending the satisfactory completion of the works within three months.

The works were undertaken and the consulting engineer provided an additional report to confirm that the works had been completed to a satisfactory level.

Firm A made a number of requests to Firm B for the release of the balance of funds remaining in trust after payment of the costs of rendering works and the consulting engineer’s report.

The purchaser then disputed the standard of finish of the works and the matter remained unresolved for seven months. Firm B advised Firm A that it was unable to obtain further instructions from its client.

Ruling

In the opinion of the Ethics Committee and on the information presented:

1. The undertaking provided by Firm A has been complied with and the balance of funds retained in trust should be released to the vendor.

2. Firm A should advise Firm B that the balance of trust funds will be released within seven days.

Family law – undertaking

(R4373 July 2006)

A firm cannot be released from an undertaking following settlement when the negotiations for settlement have failed.

Firm A acted for the husband and Firm B acted for the wife. Firm A gave an undertaking to retain settlement money from the sale of a property in trust, pending finalisation of family law matters by the making of consent orders. The consent orders were not finalised. The wife has instructed Firm B to proceed with an application to the Family Court rather than settle on the basis of a “without prejudice” offer previously discussed.

Firm A wished to be released from the undertaking provided.

Ruling

In the opinion of the Ethics Committee and on the information presented:

Firm A will be required to comply with the undertaking until there is binding financial agreement or court orders.

Wills and estates – legal practice management/release documents

(R4363 July 2006)

A firm is not entitled to charge the executor of an estate an administration fee to obtain an original will in its possession.

Firm A held the original will of a former client. Firm B acted on behalf of the executor and requested that the original will be released to it. A signed authority from the executor was annexed to the letter of request.

Firm A agreed to release the will on payment of an administration fee.

Ruling

In the opinion of the Ethics Committee and on the information presented:

1. In the particular circumstances raised, where Firm B has made a request supported by an authority provided by the executor to Firm A that Firm A deliver up the will, Firm A should do so without charge.


The Ethics Committee is drawn from experienced past and present members of the Council of the Law Institute of Victoria Limited with involvement in a wide range of practice areas. Members serve in an honorary capacity and meet monthly to consider requests by solicitors for rulings on ethical issues in legal practice.

Ethics Committee rulings are non-binding and do not have the force of law. However, as the considered view of a respected group of experienced practitioners, the rulings carry substantial weight. It is considered prudent to follow them. For further information, contact the Legal Ethics manager on ph 9607 9383 or visit http://www.liv.asn.au/regulation/ethics/rulings/

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