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Ethics Committee rulings

Every Issue

Cite as: (2003) 77(9) LIJ, p.85

Ethical dilemmas are part of everyday practice for solicitors. The Ethics Committee of Victorian Lawyers RPA Ltd is available to help.

Introducer fees to consultants

The Ethics Committee was asked to consider the issue of a legal firm paying a fee to individuals or companies who introduced clients to the firm.

The firm proposed that a consultancy fee would be paid on completion of its instructions and after the client had paid the firm’s fees. The fee would not be a proportion of the income received by the firm, but would vary according to the type of work to be rendered. The fee would be paid from the office account of the firm, not from trust funds.

The firm queried whether the proposed arrangement would be in breach of s317 of the Legal Practice Act 1996. Section 317 prohibits the sharing of the income of a firm with unqualified persons except as allowed by that section.

Resolution
On the information available, the proposal does not offend s317(1) of the Legal Practice Act 1996, but as the matter involves a question of law and a careful review of the facts, it would be wise for the firm to seek their own legal advice. The firm is referred to the following cases that may assist them, namely:

(i)  Beneficial Finance Corp Ltd v Conway (No 2) (1971) VR 594;

(ii)  Hamilton v Haw (1962) VR 215.

Transfer of file to new legal practitioner

The Ethics Committee’s guidance was sought in a matter regarding the transfer of a file.

A beneficiary under a will inherited a joint interest in a brothel. His solicitor settled this entitlement for payment to the beneficiary of $48,000 which was the current value of his life interest.

The beneficiary owed a debt to another individual who had initiated proceedings in the Supreme Court. The beneficiary subsequently instructed a second firm to act for him to ascertain any further entitlement in the estate and to transfer his entitlement to the debtor in those proceedings.

The second firm sought the beneficiary’s file from the previous solicitor and provided an authority that allowed it to act in the Supreme Court proceedings. However, the authority failed to specifically mention transfer of the beneficiary’s file. Thus the previous solicitor argued that the authority, while allowing the firm to act in the Supreme Court proceedings, did not necessarily extend to authorising a transfer of the file. The matter was referred to the Ethics Committee.

Resolution
It is not clear from the facts whether the letter [of authority to act in the Supreme Court proceedings] constitutes an authority to transfer the file. In the circumstances it would be wise to obtain express written authority from the client.

Conflict of interest
The Ethics Committee’s guidance was sought regarding a potential conflict of interest situation when presenting a former client as a witness in a client’s criminal trial.

A practitioner acted for a client charged with a count of armed robbery who was committed to stand trial in the County Court. There were also two co-accused who were separately represented.

The accused’s wife gave evidence at the committal, providing the accused with an alibi and implicating the two co-accused. The accused’s wife was a former client of the practitioner and had an extensive criminal history. Although it did not appear that the practitioner would be required to use any confidential information from the accused’s wife for the benefit of the accused, he queried whether he was in a position of potential conflict in representing the accused at the trial.

Resolution
On the material provided, there does not appear to be a conflict of interest which would preclude the practitioner from representing the accused in the County Court trial.


The Ethics Committee is drawn from experienced present and past members of the COUNCIL OF VICTORIAN LAWYERS RPA LTD. Committee members serve in an honorary capacity, meeting monthly to consider requests for rulings. Those seeking a ruling should write to the Secretary, Ethics Committee, Victorian Lawyers RPA Ltd, 470 Bourke Street, Melbourne 3000.

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