Law Society of New South Wales v Sachs

[1999] NSWADT 17

CITATION:	Law Society of New South Wales -v- Sachs [1999] NSWADT 17
DIVISION:	Legal Services
APPLICANT:	The Council of the Law Society of New South Wales
RESPONDENT:	David Lewis Sachs
FILE NUMBER:	9835
HEARING DATES:	22/03/99
SUBMISSIONS CLOSED:	22/03/99
DATE OF DECISION:	22 March 1999
BEFORE:	G B Molloy Presiding Judicial Member H A Reed - Judicial Member A Mara - Member
PRIMARY LEGISLATION:	Legal Profession Act 1987
APPLICATION:	Misleading/deceptive/unfair dealing with client; Professional misconduct - solicitor -
MATTER FOR DECISION:	Principal matter
REPRESENTATION:	Applicant: L W Pirotti instructed by R J Collins Respondent: I Wales SC instructed by Malleson Stephen Jaques
ORDERS:	1. The Respondent be and is hereby reprimanded. 2. The Respondent pay the costs of the Applicant as agreed or in default of agreement as assessed. 3. Leave is granted to the Applicant to apply to this Tribunal for the imposition of any restrictions that it would wish to submit ought to be imposed upon the Respondent's practising certificate if and when the Respondent applies for a practising certificate in the future.

1. The material before this Tribunal is not challenged, neither are the allegations as to fact and in relation to the first five grounds of complaint the solicitor concedes that his conduct constituted professional misconduct but he does not admit in relation to the sixth and final ground that his conduct constituted professional misconduct but submits that it did amount to unsatisfactory professional conduct.

2. The short facts are as follows:

(a) At the time of the offences in question the solicitor was a salaried partner in one of Sydney's reputable larger firms. This firm acted for a major public liability insurer who was a direct client of one of the equity partners of the firm. The solicitor received instructions from this public liability insurer in two matters that clearly came off the rails.

(b) In the first matter the solicitor in late 1994 acted for the insurer in relation to a possible claim for negligence against another solicitor who had previously acted for the insurer. On or about 18 July 1996 the equity partner made an inquiry from the solicitor about the matter and the solicitor said to the equity partner words in or to the effect:

"I looked at the file. I don't know what the problem is. The advice was sent 13 November 1995. It is a good advice."

There is no doubt that the words the solicitor used were intended by him to give the equity partner the impression that the solicitor had prepared an advice and had sent that advice to the client. There is further no doubt that the solicitor was aware that at the time the statement was made it was untrue.

(c) The background was that some time towards the end of 1994 the insurer asked for an advice on whether there were reasonable prospects of success in a claim against their previous solicitors. As we understand it the solicitor looked through the file provided to him by the insurer and expressed an oral advice that there were no reasonable prospects of success. Some six months later (about mid 1995) he was asked to provide that advice in writing, probably because re-insurers in the United Kingdom needed reassurance. The solicitor handed the file to an employed solicitor to prepare a draft advice in proper form. That draft advice was provided on 30 October 1995 but it sat on the solicitor's desk until 18 July 1996 when the solicitor had the stated conversation with the equity supervising partner.

(d) That conversation apparently encouraged the solicitor into activity. He finalised the advice and then backdated it to make it appear as if it had been prepared on 13 November 1995, being a date (we infer) shortly after he had received the draft advice from the employed solicitor.

(e) No actual advice was forwarded to the client insurer from the date of the original draft advice on 30 October 1995 to at least 25 July 1996, on which date the equity supervising partner located in the file the formal advice backdated to 13 November 1995.
(f) There is no doubt in our mind that the solicitor backdated the formal advice in order to satisfy the inquiry from the equity supervising partner, that he did so on or about 15 July 1996 and there is further no doubt in our mind that the solicitor did not send to the client insurer the formal prepared advice.

(g) The second matter that has caused this solicitor to come before us was a matter involving an Arbitrator's Award. In this matter the arbitration had been conducted on 22 March 1996, the arbitrator had made an Award in favour of the plaintiff, the solicitor had appeared at the arbitration, instructing counsel on behalf of the defendant through its insurer but for reasons that are not entirely clear the solicitor failed to formally advise the insurer. There is some evidence that he may have advised the insurer orally within the time limited for a re-hearing, but clearly no formal written advice had been tendered.

(h) On 20 August 1996, when the solicitor was absent on sick leave, an equity partner in the Insurance Division of the firm of solicitors became aware that the file could not be located. She formed the view that the client insurer was not aware of the Arbitrator's Award nor its right to a re-hearing. She also formed the view that the Award had not been paid, that the Health Insurance Commission had not been informed of the Award, that the plaintiff's solicitors' costs as awarded and counsel's fees as awarded were also unpaid.

(i) She contacted the solicitor at home, he returned to work the following day and an effort was made to locate the missing file.

(j) On that day the solicitor sent an E-mail to the partner which stated:

"The post-arbitration report from my library."
and attached to this E-mail was a copy of a document which purported to be a two-page facsimile transmission from the solicitor to the client in the matter and dated 22 March,1996. In fact, on 22 March 1996 there was only sent a one-page facsimile transmission to the client, not the two-page facsimile the solicitor told the insurance partner and the fact is that the solicitor created the two-page facsimile transmission on 16 January 1996 but it was a transmission from the solicitor to the client in respect of another matter, and that document was changed on 22 August 1996 and became the purported facsimile on 22 March 1996 to the client in respect of the matter about which the inquiry had been made.

(k) We have no difficulty in concluding that the purpose of the solicitor's actions in creating the August 1996 facsimile transmission was to cover up the situation where advice had not been proffered to the client in a particular matter and to mislead his fellow partners that the advice had in fact been proffered in circumstances where it had not.

3. The solicitor has conceded that those factual circumstances constitute professional misconduct and that as a consequence a finding should be made against him in those respects. The concession in our view is properly made and we have no difficulty in making a finding accordingly. There is no doubt that a partner owes to his/her partner a duty of trust and candour and nothing less. If it were otherwise then legal partnerships could not reasonably operate for the same reason that courts would have difficulty operating without, not only the co-operation of the legal profession, but also without the undoubted duties owed by the practising profession to the courts, including duties of candour and duties of not creating or putting before a Court a document known to be incorrect. After all the other partner would be likely to rely on any statement made and consequential effects may flow therefrom, including consequences to clients, other parties and, in some circumstances, courts. By way of completeness we think that an employed solicitor owes similar duties to his/her employer.

4. In regard to the final complaint the solicitor has admitted that he has failed to discharge, in the said factual circumstances, his obligations and duties to his client, being the insurer, but he does not admit that his conduct constituted professional misconduct, rather that it constituted unsatisfactory professional conduct. In his affidavit the solicitor accepts that in relation to the first matter, in failing to provide the client with the written advice it had sought, he failed to live up to the standards of work expected of a competent solicitor. He submits, however, and it is still his opinion, that because there were no reasonable prospects of success in proceedings against the former solicitors he does not believe that the client was ultimately compromised. Similarly, in the second matter, he accepts that in failing to report back to the client promptly in writing he may have acted contrary to the client's requirements but he does not consider that the position of the client was not ultimately affected detrimentally.

5. For our part we have difficulty in accepting that those reasons operate to reduce the quality of professional conduct from one category to a lower category. It is the conduct that is in question, not the effect on the client, although the effect on the client may well determine the quality of the conduct depending on the particular circumstances and, in particular, the knowledge of the legal practitioner. The plain fact is that on any view the solicitor failed, and failed abysmally, to discharge his obligations and duties to his insurer client. The fact that the client may or may not have been prejudiced thereby seems to us to be an irrelevancy - the only question is whether or not the conduct complained of amounts to professional misconduct or otherwise.

6. Now it may well be that in relation to the re-insurance matter the solicitor having formed the opinion that there were no reasonable prospects of success and in communicating that opinion orally and not having confirmed it in writing as requested may in itself not amount to professional misconduct. However, the solicitor was aware that the written advice was required for re-insurers overseas so there were third parties involved. Similarly, the plaintiff in the arbitration proceeding was involved and was deprived of the benefit of the Award for at least five months and the solicitor, in our view, owed perhaps a higher duty to perform in his conduct than may have applied had the only person affected by his conduct have been the client.
7. The solicitor in his affidavit has conceded that the insurer was a very important client for the firm. He concedes that the relationship between the firm and the insurer client had become strained and the relationship between himself and the insurer client had become particularly strained. He was concerned that if he revealed his conduct to the client "it would be the straw that broke the camel's back" and he was concerned that that may lead to a complete termination of the retainer. He thought that the worsening relationship between the client and the firm was to a large extent his fault and instead of facing up to the matter and "looking the devil in the eye" he felt trapped, he could see no way out, and this caused him to act in the way that he did.

8. There can be no doubt that his conduct certainly fell below the standard reasonably expected and clearly amounts to unsatisfactory professional conduct. At the commencement of the hearing the Law Society conceded that the conduct did not amount to professional misconduct as pleaded. In our view, that concession was properly made. For our part we are not satisfied that the conduct amounts to professional misconduct in it being conduct that could be fairly regarded as disgraceful and dishonourable by the solicitor's brethren (Allison v General Council of Medical Education and Registration (1894) 1 QB 750 per Lopes LJ at 763). Neither in our view can it amount to the sort of "grave impropriety affecting (the solicitor's) professional character" nor can it constitute "a failure either to understand or to practise the precepts of honesty or fair dealing in relation to the courts, his clients or the public" (Kennedy v Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 per Rich J.) such that would justify a finding of professional misconduct. A finding against a legal practitioner that his/her conduct amounts to professional misconduct is a serious finding (see Ian Gordon Dun (1994) 3 LPDR 5 at 7) and just because other such findings have been made in these proceedings does not require, nor should it affect, the findings that should be made on this count. We state, however, that our finding of unsatisfactory professional conduct may well be on the higher side of the range of conduct that falls within this category, it demonstrating in this case deliberate intent.

9. The solicitor was admitted on 30 December 1989. He worked for the Commonwealth Government until June 1992 in a legal capacity and on 29 June 1992 he commenced as an employed solicitor in the firm. He became a senior associate in July 1993 and a salaried partner in July 1995. Most of his work involved public liability and professional negligence insurance work. In May 1994 he suffered serious domestic dislocation. He separated from his wife and two very young children and although access arrangements were in place he was "profoundly unhappy" about the separation. He says he lost all motivation to attend to his legal work in the manner in which he had previously and this is supported by the equity partner who in fact made the complaint to the Law Society. In his affidavit, the equity partner says that the solicitor's "behaviour in mid 1996 (was) inconsistent with the inability and standard of conduct that he had displayed since joining the firm".

10. It is plain on the evidence that the solicitor came to regard going to work as a chore, felt less and less happy working at the firm, arrived late, left work early, would take numerous breaks from work during the day and "all of this meant I had less time to devote to my files". The solicitor concedes that his conduct was irrational (his counsel described it as “stupid”) but he believes that "it was a consequence of the depressive state into which I had fallen which in turn had caused problems which made me feel I had lost all control of my matters." He says that he does not believe that similar circumstances would occur again. He has remarried. He feels better adjusted in relation to his children.

11. He no longer works as a solicitor although he comes from an impeccable pedigree of legal practitioners. He resigned as a partner effective 2 September 1996. There is no need to review his subsequent employment other than to observe that he now works as the manager of a fruit shop, being a very large and successful business employing 25 people full-time, six on a casual basis and servicing about 11,000 customers per week. He says he works approximately 100 hours per week over six days.

12. He says that he wishes to be called to the Bar and at one stage enrolled in the Bar Practice Course but did not complete it because he did not wish to return to legal practice until these proceedings were completed.

13. He has served on a senior Committee of the Law Society. He is embarrassed about the matters now before this Tribunal and we think it important to reflect that on all the no doubt hundreds of matters that this solicitor has dealt with over his professional career, only two matters have come before us for determination.
14. The Law Society has sought an order that the solicitor be reprimanded, that he be fined and that his Practising Certificate be endorsed with a condition restricting the solicitor from acting as a solicitor other than as in the course of employment by a solicitor holding an unrestricted Practising Certificate.

15. In all of the circumstances we rather think that all of those orders may well be an over-reaction to the two matters that have come before us. We do not think that it will advance the course of justice to fine the solicitor for his conduct although it unarguably amounts to professional misconduct in five of the six complaints.

16. Similarly, we do not think there will be any advantage in endorsing the solicitor's Practising Certificate in circumstances where, as we understand it, he is not in fact practising and has not in fact practised since September 1996. It may be that the proper course to adopt is to grant liberty to the Law Society to apply to this Tribunal for the imposition of any restriction that may be thought appropriate if and when the solicitor applies for a Practising Certificate. Perhaps we should express the opinion that if the solicitor was minded to apply for a Practising Certificate in the very near future then we would impose such a restriction. However he has not indicated any such present intention and the requirements for the grant to him of a Practising Certificate when he applies may determine at that time what restrictions ought to be imposed having regard to the findings of this Tribunal.

17. Subject to that reservation, we have no hesitation in reprimanding the solicitor and we have no hesitation in ordering that the solicitor to pay the costs of the Law Society. Other than those orders and reservations, we are of the view that nothing further is required.

I HEREBY CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF THE ADMINISTRATIVE DECISIONS TRIBUNAL.

REGISTRAR / ASSOCIATE

Last Updated: 01/04/99