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Ethics Committee rulings

Every Issue

Cite as: (2004) 78(10) LIJ, p. 75

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

Undertaking – avoidance by legal technicality
(R3999 May 2004)

A settlement agreement should not misrepresent the true nature of a payment to be made
A practitioner acted for the wife/mother in children’s and property matters. The practitioner had obtained the file from the client’s former solicitor on the basis that the practitioner would ensure payment of the former solicitor’s outstanding fees from any “property/ maintenance settlement”. Other debts of the client were secured by way of caveat over the husband’s property.

A settlement offer was made, which proposed a lump sum payment characterised as “lump sum child support”.

The practitioner sought the Ethics Committee’s views on whether it would be ethical to characterise a payment in a particular way, knowing that it might bypass obligations to others. If so, would proposing or accepting such settlement terms amount to a breach of the undertaking given to a former solicitor as to costs?

Ruling
It will be a breach of the undertaking to fail to pay the former solicitor if the proposed characterisation misrepresents the true nature of the payment.

The Ethics Committee cannot give advice on the legal interpretation of the undertaking.

Conflict of interest: Dispute between beneficiaries: Solicitor related to client
(R4088 May 2004)

Complex personal relationships may combine with complex facts to make it inadvisable for a solicitor to act
A practitioner had been acting for her own husband (the client) in a Part IV application and a challenge to the validity of his late mother’s will. A second firm acted for the client’s sister who was executrix.

The practitioner sought the Ethics Committee’s guidance on whether she could accept instructions from another brother (the practitioner’s brother-in-law).

Supreme Court proceedings were on foot. An agreement had been reached at mediation between the client and his sister, but not their brother. There had been no distribution of the estate.

The brother instructed the practitioner to seek provision for him out of the estate. The brother and the client agreed to share any benefit each of them obtained.

Ruling
Noting the current Supreme Court proceedings, being a Part IV Application under the Administration and Probate Act, and noting that the practitioner has acted on behalf of the original client in the negotiations of a settlement between the client and the sister-executrix at mediation, it would be unwise for the practitioner to accept instructions from the brother, in particular having in mind the relationship between the parties.

Unqualified practice
(R4103 June 2004)

Care must be taken to avoid engage in (or assisting others to engage in) unqualified legal practice
A practitioner sought Ethics Committee guidance on a proposed arrangement with an independent contractor. The contractor would take instructions and execute documents, such as wills and powers of attorney, but would not offer legal advice. Matters requiring advice would be referred to the practitioner. The practitioner proposed careful supervision of the contractor and was aware of his potential liability for insurance purposes.

Ruling

1.

The Ethics Committee does give guidance on ethical dilemmas but cannot give legal advice.

2.

The Ethics Committee cannot give formal approval to the arrangement as the request seeks guidance on “any” relevant legislation and rules and would involve the giving of legal advice.

3.

To assist the legal practitioner the Ethics Committee notes:


3.1 The proposed association would not breach ss314 and 324 of the Legal Practice Act 1996 if the contractor merely performs clerical or administrative duties and does not do legal work or give legal advice


3.2 Some examples of clerical or administrative duties are:

  • Performing searches
  • Typing documents as specifically directed
  • Filing papers in court for the legal practitioner
  • Delivering or serving documents
  • The mere witnessing of a signature on a document prepared by the legal practitioner
  • Taking statements


3.3 It would not be wise to allow the contractor to “take instructions”.


3.4 The legal practitioner should ensure that the arrangement is not income sharing which is prohibited by s317 of the Legal Practice Act 1996 as no details have been given as to the financial remuneration. (See Income Sharing Prohibition Guidelines – available from http://www.liv.asn.au/ethics).


3.5 The legal practitioner should ensure (s)he is covered by his Professional Indemnity Insurance Policy for all authorised actions by the contractor.


3.6 The legal practitioner should have particular regard to obligations to avoid assisting the contractor to engage in unqualified legal practice contrary to s324.


3.7 Prior to commencement it should be disclosed to the client that the contractor is not a legal practitioner and that the contractor will be paid a fee.

4.

The Ethics Committee suggests that further guidance on the proposed arrangement could be given by Professional Standards.


The Ethics Committee has since published guidelines on unqualified legal practice – see (2004) 78(8) LIJ 58 or go to http://www.liv.asn.au/ethics.

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 tel 9607 9383.

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