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200020 Professional Responsibility & Legal Ethics - Final Examination Autumn 2018 Question 1 (25 marks) James is a barrister practising law in New South Wales. James’ primary area of practice is civil litigation, and over the previous 30 years he had developed a successful practice. ...

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200020 Professional Responsibility & Legal Ethics - Final Examination Autumn 2018 Question 1 (25 marks) James is a barrister practising law in New South Wales. James’ primary area of practice is civil litigation, and over the previous 30 years he had developed a successful practice. Students should pick up that James is a barrister and thus the BR apply. James’ primary area of practice is civil litigation, and therefore he may not be particularly familiar with criminal practice, but if he take on criminal matters he still has an obligation to do so at an acceptable professional standard. In the last ten years James has been dealing with significant personal matters - the serious illness of a young child, and the breakdown of his marriage. Students should pick up that James may have been under some stress and these may have potentially affected his practice. This led to James to reduce the time he spent in chambers and accordingly some of his longer-term clients had transferred their work to other barristers. Students should pick up that a reduction in work generally means a reduction in income. In order to maintain his income at the level it was when he was practising six days a week James, in 2014, took out a loan and invested a significant portion of his savings into a seemingly low-risk, high-gain business venture. Specifically, James bought a half share in an avocado farm in Vanuatu, which exported its produce directly to a distributor in New South Wales. James was hoping to take advantage of the ’smashed avocado’ craze then spreading through the Sydney caf0 scene. There is nothing to prevent a legal practitioner from running a business, or investing in a business, alongside practice. Save for the obvious: as long as it does not affect the professional standard of the work required and does not bring the profession into disrepute. Better students may note these points and refer to s 298 LPUL and BR 4 respectively. Unfortunately, in 2015, Cyclone Pam smashed James’ avocado farm and he suffered significant debts. In 2016 James voluntarily went bankrupt. In 2017 James failed to lodge a tax return, for which the Australian Tax Office fined him $1000. In late 2017 James had his driver’s licence suspended for six months as a result of having been detected driving with more than the prescribed concentration of alcohol in his bloodstream. James, who prided himself on his professional reputation, did not tell anyone about his misfortunes, and is very pleased that in April 2018 he had been able to pay all his debts and relieve himself from the burdens of his bankruptcy. Each of this series of events, individually, would normally be needed to be brought to the attention of the Bar Association by way of the disclosure regime – see Part 3.5, Division 4 LPUL. However, students should have tackled these issues from the perspective of potential misconduct. In Chapter 29 of the textbook there is some significant discussion about matters of a personal nature that could potentially be misconduct. Dal Pont discusses bankruptcy, tax issues and criminal matters. Better students will discuss each of the matters individually. An acceptable response is to deal with the matters collectively. Students should argue that the events do, or do not, constitute personal misconduct. Reference should typically be made to ss 296298, particularly here ss297 and 298. Section 297 should be discussed because personal misconduct “otherwise than in connection

with the practice of law” is specifically referred to in s297(1)(b). Section 298 should be referred to as s 298(e) specifically refers to ‘conduct in respect of which there is a conviction for (i) a serious offence or (ii) a tax offence; or (iii) an offence involving dishonesty’ and Better students will discuss several aspects of this. 1. Whether the PCA offence is a serious offence or an offence of dishonesty – no 2. Whether the failure to lodge a single tax return is a complete disregard of civic obligations (c/f Hamman, Cummins) – no 3. Whether the personal bankruptcy is personal misconduct (see Murphy c/f Wardell) – no. A question asked by some students may be whether, in combination, the conduct could be deemed to be ‘disgraceful and dishonourable’ (Allinson), or ‘justify a finding that the lawyer is not a fit and proper person to engage in legal practice’ (s297(1)(b). Marks should be given for this. Better students will identify that personal misconduct needs to be more closely scrutinised that professional misconduct proper (Ziems). Earlier this year James was approached by two men, Todd and Angelo, who had both been charged with possession of a prohibited drug. Todd was a long-term friend of James. James did not normally take on any criminal work but, being keen to make money where he could, and to help Todd, he decided to do so in this matter. Again, better students will note that James is not particularly familiar with criminal law and may need to take extra care in relation to ensuring professional proficiency. Students should note that James is taking a direct access brief. In such circumstances James should advise his client in accordance with BR 22. It appears that James has not done so. 22 A barrister who proposes to accept instructions directly from a person who is not a solicitor or officer of a government department or agency whose usual duties include engaging lawyers must: (a) Inform the prospective client in writing of (i) The effect of rules 11 and 13; (ii) The fact that circumstances may require the client to retain an instructing solicitor at short notice, and possibly during the performance of the work. (iii) Any other disadvantage which the barrister believes on reasonable grounds may, as a real possibility, be suffered by the client if the client does not retain an instructing solicitor. (iv) The relative capacity of the barrister in performing barristers’ work to supply the requested facilities or services to the client compared to the capacity experience of the barrister, and (v) A fair description of the advocacy experience of the barrister, and (b) Obtain a written acknowledgement, signed by the prospective client, that he or she has been informed of the matters in (a) above.

While the facts are silent on the matter it is also the case that James had an obligation to advise his clients in accordance with BR38. It appears that James has not done so. A barrister must (unless circumstances warrant otherwise in the barrister’s considered opinion) advise a client who is charged with a criminal offence about any law procedure or practice which in substance holds out prospect of some advantage (including diminution (намаляване, съкращаване) of penalty), if the client pleads guilty or authorises other steps towards reducing the issues, time, cost or distress involved in the proceedings. Todd told James that the cocaine found in his home was not his - he believed Angelo must have brought it for a party they were going to have - but that he, Todd, was intending to use some of it on the evening that the police searched his home and arrested him. Angelo told James that he brought the cocaine to Todd’s house for the party they were planning but he was not going to take the blame for it because Todd had asked him to obtain it. Both Todd and Angelo had refused to answer any questions when arrested or interviewed by police. James advised Todd and Angelo that they should defend the matter and that they had a very good chance of beating the charges against them. Students should identify that there are different defences available to the two accused. Accordingly, James needed to consider whether there was a conflict in representing both accused in the same trial. Specifically, James should have considered moving for separate trials or suggesting that different representation for the individual accused clients be obtained. Here, students should have made mention of law regarding concurrent conflicts. Better students will see the application of BR119. Students may make reference to the discussion in [16.100] particularly the minimisation of a client’s involvement (Cocks). Better students will make mention of the case of Hunter and Sara and the potential for miscarriage of justice. The matter went to trial and James was soon out of his depth. He told Todd and Angelo that he needed a solicitor to help him. Angrily, Todd and Angelo agreed to pay for one. While this could have been foreseen the response was appropriate. Now, while the facts are silent on the issue, it appears that James did not bring BR22 to the attention of his clients. This should be raised at this point. During the course of the trial James posed the following questions to a police officer who was in the witness box: James: “Neither Todd nor Angelo has admitted that they brought the cocaine onto the premises have they?” Police officer: “No.” James: “So, all you’ve got is two guys who blame each other for it?” Police officer: “Yes, I guess so?” Given that the two accused have admitted, at least partially, that they have some criminal responsibility for the cocaine James needed to be mindful of not breaching BR80. Students should consider this in analysing the above interchange. My view is that the questions do not breach BR 80. However, the second (unnecessary) question seems to provide the court with information that was

only ever divulged in private. Accordingly, a real question should be asked by students as to whether James has breached his duty of confidentiality: BR114. At this point the solicitor, experienced in criminal law, asked James to stop questioning the witness. James complied with his solicitor’s request. During an adjournment the solicitor advised James that Todd and Angelo should reconsider their pleas of not guilty. Todd and Angelo refused to plead guilty. They were both found guilty of the charges and fined and placed on good behaviour bonds. The actions of the solicitor suggest that James had handled the questioning (and perhaps more broadly, the case) incompetently. What is James’ responsibility to the clients in tort? Students may discuss whether James has reached an appropriate standard of care (Hawkins; Rogers), and, for better students, in fact breached it by engaging in work outside his normal jurisdiction without adequate preparation (Holdway). Better students will recognise that a barrister is protected by advocate’s immunity (D’Orta Ekenaike) and that because this conduct occurred bona fide, while acting as an advocate, James would be protected from suit. Angelo lodged a complaint about James to the Bar Association of New South Wales (Bar Association). In its investigation in the first quarter of 2018, the Bar Association discovers the matters referred to above. The Bar Association also lodges and investigates complaints against James and resolves to take the matter to the New South Wales Civil and Administrative Tribunal. A complaint may be lodged by any person or professional body (s266 LPUL) providing it is in writing (s267LPUL). James has suffered from anxiety and depression for over a decade, and has medical records supporting that fact. In addition, James has practised law for over 30 years and in that time has not been the subject of any formal complaint or disciplinary action. A key point is whether there is to be an adverse finding by way of professional misconduct (s297 LPUL) or unsatisfactory professional conduct (s296 LPUL). Students usually find that there has been some misconduct – more mark should be allocated for those who explain their view clearly. The mental health and clean disciplinary record are matters that will go towards mitigating any adverse finding. Medical condition is discussed at [28.145] respectively. Better students should make some reference to this before making a determination as to what an order before the NCAT could be (s 302 LPUL). Discuss the conduct of James. In your advice be sure to refer to specific common law and legislative sources as necessary. Question 2 (20 marks) Sophia is a newly admitted solicitor practising law in New South Wales. Sophia holds a position as an employed solicitor in a firm, ABC & Associates (ABC). Students should pick up that Sophia is a solicitor and therefore the SR apply. Students may also note that Sophia is an employed solicitor and better students will be aware that her work must be supervised. Sophia, who is quite articulate and persuasive, has

recently been given responsibility to run minor court matters on her own. Tania, a partner of ABC, supervises Sophia. Tania has trained Sophia in ABC’s software systems and client-related policies. As a supervisor Tania is able to permit Sophia to engage in “minor” court matters, providing the work is discussed and supervised. Better students will be starting to think about Keddie. Sophia, who desperately wishes to buy a new house in the rising Sydney property market, discovers that she is able to make her clients pay her twice the amount of money, for the minor matters she runs, if those clients do not have a costs agreement in advance of their matters going to court. This appears to be complete conflict between the practitioner’s personal interest (buying a new house) and the interests of the client, for whom she is a fiduciary. Better students will notice this and make reference to SR12 and Harvey. 12.1 A solicitor must not act for a client where there is a conflict between the duty to serve the best interests of a client and the interests of the solicitor or an associate of the solicitor, except as permitted by this Rule. This is because Sophia gives them the costs agreement at the end of the matter, typically after they have won the case, and the clients, in their relief at victory, do not read it. Sophia appears not to be providing clients with a cost disclosure: s174. 174(1) Main disclosure requirement A law practice… (a) Must when or a s soon as practicable after instructions are initially given in a matter provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs and (b) Must when or as soon as practicable after there is any significant change to anything previously disclosed under this subsection provide the client with information disclosing the change including information about any significant change to the legal costs that will be payable by the client.. Together with the information referred to in subsection (2) In addition, it might be argued that the terms of the costs agreement are unclear and that the contra proferentem rule is implemented, with the result that the agreement is unenforceable – see discussion generally at [21.80]. Better students may also note that while costs agreements must be evidenced in writing (s180(2) LUPL) it may also be accepted by conduct (s180(3) LPUL). Clearly the issue here is whether the clients have been given, or have clear, terms with which to accept. As what noted in Foreman (1994) “Lawyers should ensure that, by explanation, independent advice or otherwise, clients exercise an independent and informed judgement in entering into such an agreement”. Finally, students should note that costs should be fair and reasonable – here they are not: s172 LPUL. Sophia’s practice is to ask the clients at the initial interview for the correct fee for the matter - clients are asked to write the cheque to ’ABC & Associates’. Sophia advises that that amount is ’about half’ of what is required, as there will be ’disbursements’ in preparation for their cases, which Sophia explains she is unable to calculate accurately at that point -

most clients had little understanding of what ’disbursements’ meant and Sophia was happy not to clarify the point. As the relevant court dates became nearer, Sophia asked her clients to bring to court another cheque, payable to ’Cash’, which she claims covers all the disbursements for their matters. Sophia proceeds to deposit the ABC cheque into the ABC trust account, and deposits the Cash cheque into her personal bank account. Only better students will recognise that in relation to costs in litigation, if the matter is settled, Sophia had an obligation to provide clients with a clear guide as to the amount of legal costs: s177 LPUL. Without fuller and better details it is difficult to comment precisely, but some students may wish to argue that Sophia not depositing the individual client’s payments into the ABC trust account is arguably a breach of s137 LPUL. S137 A law practice must deposit trust money (other than cash) into the law practice’s general trust account as soon as practicable after receiving it unless(a) The law practice has a written direction by a person legally entitled to provide it to deal with the money otherwise than by depositing it in the account or (b) The money is controlled money or transit money or (c) The money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person. Where genuine disbursements exceeded the amount covered by the ABC cheque, Sophia would simply deposit cash into the ABC trust account to cover the difference and create a receipt for the client, which she would never send to that client. This is clear evidence of fraudulent (unethical) behaviour. Better students will note that Sophia is taking advantage of clients naivete and also using her firm as the basis for the fraud. While there is a clear issue associated with tarnishing the firms name, and taking advantage of clients students should note that this behaviour is, in and of itself, unethical. Most students should make reference to SR5. Better students will make reference to Allinson and like authorities. 1.1 A solicitor must not engage in conduct, in the course of practice or otherwise which demonstrates that the solicitor is not a fit and proper person to practise law or which is likely to a material degree to 1.1.1 be prejudicial to, or diminish the public confidence in, the administration of justice, or 1.1.2 bring the profession into disrepute Tania and ABC were pleased with Sophia’s performance running her own files, as Sophia never had any problems making her budget, as she always had the complete ABC costs deposited in the trust account by the end of the matter. Tania has an obligation to check Sophia’s practice more than simply being happy with the accounts being in order: Keddie. See also discussion of failure to supervise in Foreman (1991) at [29.90].

On one occasion Sophia was invited by Tania to assist in a larger civil litigation matter, representing a large corporation, XYZ Ltd (XYZ). Sophia wanted to be promoted to an associate’s position within the firm, so she worked hard on that matter. In addition to extra hours that she genuinely spent on the matter Sophia also entered into the costs database, for the XYZ matter, extra hours for which she had not worked. These took the form of double entries for minor components of the case, claiming hours over and above those she spent on the matter, claiming separate interview times for employees of XYZ, when she had met with several of the employees in one interview. At the end of the matter XYZ lost, and it scrutinised its costs bills closely. During that scrutiny XYZ detected the double entries and incorrect claims, which amounted to a 47% increase on its costs. XYZ advised Tania of its concerns. Tania, on reviewing the costs, explained that she was unaware of the ’mistakes’ when they were made, as all staff on the matter were well trained in the relevant software and policy, but that she would endeavour to have ABC refund the mistaken costs. XYZ accepted Tania’s statement, but also lodged a complaint with the Law Society of New South Wales. Tania had an obligation to monitor the costs for her clients. Is simply having staff trained adequate? Good students will discuss and distinguish Keddie. As a result of the likely loss of significant costs in the XYZ matter Tania chose not to immediately pay Gary, the barrister in the XYZ matter. Tania’s usual practice was to pay counsel immediately, as she liked to keep an excellent working relationship with the Bar. Despite repeated letters from Gary, Tania, who was working significantly extra hours on other matters to make up the budget...