Reference no: EM132821744 , Length:

LLW3009 Lawyers Ethics and Professional Responsibility - Victoria University

1. Lara de Tramp (Lara), a politician, has been having an "on-again, off-again" relationship with Rudi Giulany (Rudi), the principal of Rudi G Lawyers. Their relationship is currently in the "off" phase.

2. Rudi G Lawyers is a 2-person law firm providing legal services largely in the fields of conveyancing, trusts, wills, uncontested probate and estate administration. The other practitioner is Sidney Bowell (Sidney), an employee solicitor, who is relatively new to the practice.

3. Lara is ambitious and passionate, so much so that she sometimes forgets to mind her words when speaking in public. She has just been served with a letter and a "concerns notice" under the Defamation Act 2005 (Vic) by Schone Legal, the solicitors for Stevie Bannen (Stevie) a rival politician and sitting Member of Parliament (MP). Stevie is threatening legal proceedings if Lara does not retract a statement that she made in a public speech asserting that Stevie had accepted bribes from a property developer, Mike Flinn, and is corrupt. Apparently the source of Lara's information is an email from one Jenna Ellipse, Mike Flinn's former secretary. Stevie is demanding that Lara publish in a national newspaper an unqualified apology and a retraction of her statement, and pay his legal costs.

4. "Concerns notice" and Schone Legal's letter in hand, Lara flounces into Rudi's office without an appointment and slaps them onto his table, demanding that he defend her. Rudi takes a quick look at the documents and tells Lara that he is not a litigation lawyer but can recommend one to her.

5. With a frown, Lara asks Rudi if he can remember the last time they were together. Rudi remembers it very well and replies that it was about 3 months back, to which Lara tells him, in no uncertain terms, that if he ever hopes to regain her "favours", he had better take up her case.

6. Rudi, who has been hoping for an "on" phase in their relationship to come round again, has a sudden vision of his hopes being permanently dashed. He hastily invites Lara to take a seat and tell him what is going on. Lara accepts the invitation graciously, crossing her legs and smiling at Rudi demurely.

7. Rudi spends the next 3 hours getting information from Lara about the matter, after which he tells her that he will do some research and update her. He asks her to come back to his office in 3 days. Fluttering her eyelashes, Lara sweetly suggests that he drop by her place that weekend so they can discuss the case in "a more relaxed environment".

8. Rudi agrees instantly. However, just before Lara leaves, he tentatively asks her whether she would rather consult a defamation expert instead, half-hoping that she would say no. Lara simply arches her left eyebrow and gives him a look, and Rudi surrenders, not unhappily, to his fate. She then sashays her way out of Rudi's office.

9. In the next 3 days Rudi reads up on defamation law. By that weekend, Rudi has formed the view that Lara has a defence of justification or in the alternative, a defence of honest opinion. However, he fails to appreciate that Lara had asserted a statement of fact and that while one defence relates to facts that are substantially true, the other relates to comments or expressions of opinion on matters of public interest for which proper basis can be demonstrated.

10. As agreed, Rudi goes to Lara's house on the weekend. He tells her that he thinks she has a good defence if Stevie sues her and is eager to discuss his thoughts with her, but she puts a finger to his lips and leads him to her bedroom.

11. In the afterglow of their passion, discussing the merits or otherwise of defending potential defamation proceedings is the furthest thing from Rudi's mind. He goes home enthralled by Lara, all over again. Significantly, it completely slips Rudi's mind to discuss with Lara the option of making an "offer of amends" to Stevie.

12. The following Monday, Rudi replies to the letter from Schone Legal refuting the allegations of defamation in the "concerns notice" and stating that Lara is standing by what she had said about Stevie. He sends a copy of his reply to Lara by email.

13. Schone Legal commence proceedings on Stevie's behalf in the County Court of Victoria against Lara for defamation and serve the court papers on Rudi G Lawyers as solicitors for Lara.

14. Rudi files a Notice of Appearance for Lara and starts drafting a Defence for her. He also drafts the "overarching obligations" and "proper basis" certificates pursuant to sections 41 and 42 of the Civil Procedure Act 2010 read with rules 4.09 and 4.10 of the County Court Civil Procedure Rules 2018.

15. Rudi asks Lara to attend at his office to "sign court papers". When Lara arrives, Rudi asks her to go through the draft Defence. Lara reads it over and tells Rudi, "I guess it's OK, but I have just been informed that Jenna Ellipse was sacked from her job by Mike Flinn. So I don't know ... . Is she reliable? Could she have made the whole bribery and corruption thing up? But I believed her at the time. That was why I said Stevie took bribes and was corrupt. Does it make a difference? I really believed her then and I still do, I think ..."

16. Rudi tells Lara that he does not think this new information makes a difference to her defences of justification or honest opinion*. He asks Lara to sign the "overarching obligations" certificate, telling her that it is "a formality". There is no discussion about what the certificate means. Lara signs the certificate without any questions. (*Note: As a matter of law, this is questionable)

17. Lara casually asks Rudi about costs. Rudi tells Lara that it will cost "at least $50,000 to run the case" but that they may discuss the question of costs later. Lara flirtatiously says to Rudi that she is sure that they "can come to some sort of arrangement to pay for services rendered ...", which sends a thrill through him. Rudi replies, "Just for you darling, if we don't win, you don't have to pay". Lara then kisses Rudi passionately before departing for her own office.

18. Rudi finalises and signs the Defence and the "proper basis" certificate. He files them in court together with the "overarching obligations" certificate that Lara has signed. He effects service of these documents on Schone Legal and emails copies to Lara.

19. Two days later, Rudi prepares a "Legal Services Agreement" and emails it to Lara together with a cover letter. The cover letter states that the "Legal Services Agreement" is on a "no-win, no-fee" basis and that she should keep it for reference. The cover letter is silent on what a "win" is.

20. The "Legal Services Agreement" is reproduced on the next page.

Legal Services Agreement
Part 1 Appointment of Legal Representative

Part 2 No-win, no-fee agreement

21. The cover letter draws Lara's attention to Clause 2.3 of the "Legal Services Agreement" that provides for disbursements to be borne by her and requests Lara to pay a deposit of $3,000.

22. The cover letter also draws Lara's attention to Clause 2.2, reiterating that Rudi usually charges $800 an hour under a standard costs arrangement but as this is a "no-win, no fee arrangement", his fee will be "uplifted" to $1,000 per hour if Lara is "successful". The cover letter does not specify what "successful" means.

23. A few days later Lara's staffer, Dolly drops in at the offices of Rudi G Lawyers. She gives Rudi $3,000 in cash and tells him that the money is for Lara's case. An hour later Rudi receives a text message from Lara telling him that he may reimburse himself for any disbursements that he has incurred out of the $3,000 cash.

24. Rudi had advanced $1,000 from the office account of his law practice to pay for the filing and service fees for Lara's court documents as well as for other expenses. Encouraged by Lara's text message, Rudi puts $1,000 of the cash deposit into the office account of his law practice as reimbursement and deposits the balance of $2,000 into the general trust account of his law practice.

25. Later that same day, Rudi emails to Lara a formal request for payment of $1,000 for reimbursement of the disbursements incurred, an office account receipt for $1,000, a trust account receipt for the $2,000 in trust and a cover letter.

26. Rudi's cover letter explains to Lara that as authorised by her, he has reimbursed himself $1,000 out of the $3,000 cash he received from Dolly, that the request for reimbursement of disbursements is merely a "formality for the record" that may be ignored, and that he is holding $2,000 in the trust account of his law practice for future disbursements and professional fees in her case. The following day Lara texts a message to Rudi acknowledging receipt of the documents that he emailed her.

27. 2 weeks later, David Schone (David), the principal of Schone Legal, contacts Rudi and proposes a mediation to attempt a settlement. Rudi tells David that he will take further instructions from Lara.

28. Rudi requests Lara to attend a client conference to discuss and take further instructions. He asks Sidney to join the client conference and gives her Lara's file to familiarise herself with the facts.

29. While perusing Lara's file, Sidney realises that Stevie is represented by her former employers, Schone Legal. Sidney recognises Stevie as a long-standing client of Schone Legal although she herself had never handled any of Stevie's matters when she was working there. Sidney had heard many stories from former colleagues, including David himself, about Stevie's character, his way of thinking, how he deals with opponents and his approach to negotiations.

30. Sidney devises a strategy on how to handle the case against Stevie and discusses it with Rudi before the client conference. Rudi is very pleased with Sidney's initiative as he sees that it may give Lara an advantage over Stevie.

31. At the client conference with Lara, Rudi and Sidney spend a few hours discussing the case in detail with Lara and the various options open to her. Accepting Rudi's advice, Lara instructs him that she is prepared to offer a qualified apology to settle the matter but not to pay any damages or costs.

32. David and Rudi organise a mediation. The mediation fee is $4,000 to be shared equally by the parties. Rudi pays Lara's share out of the balance of the deposit in the trust account, leaving a zero balance in trust.

33. The mediation is unsuccessful. David files and serves a Reply on Stevie's behalf and the parties
proceed to the next stage of the litigation process.

34. At their tryst on the weekend following the unsuccessful mediation, Rudi requests Lara for a further deposit of $17,000 to cover further disbursements, including barristers' fees. The following Monday, Dolly turns up again at Rudi's office with $17,000 in cash.

35. By this time Rudi has incurred a further $1,000 in expenses. Out of the $17,000 cash, he reimburses himself by putting $1,000 into the office account and deposits the balance of $16,000 into the trust account.

36. The following day, Rudi emails to Lara an office account receipt for $1,000, a trust account receipt for the $16,000 in trust and a Bill of Costs setting out the disbursements. His email explains that he has taken $1,000 from the further deposit as reimbursement of his expenses.

37. The Court schedules a judicial resolution conference. Directions are given for the parties to prepare relevant documents that may facilitate the resolution of the dispute without a trial, and that their legal representatives must be equipped with full instructions. The personal attendance of the parties is optional.

38. The judicial resolution conference is conducted by a Judicial Registrar (JR). Rudi and David attend on behalf of their respective clients. Each solicitor is given time and opportunity to address the issues, make offers and counter-offers and present their respective cases.

39. The documents prepared by Rudi includes a copy of the email from Jenna Ellipse alleging her former boss Mike Flinn gave bribes to Stevie. In the course of presenting Lara's case, Rudi refers to the email and suggests that Jenna is a truthful person by rhetorically asking, "Who would risk saying such things if they were not true? You would just be asking for trouble, to be sued". Rudi also implies that Jenna is a reliable witness by asserting that his client Lara "would not be defending the case if she does not have a witness who can vindicate her". Further, Rudi takes a stab in the dark, "Don't think that Miss Ellipse is the only one who knows about all this hanky-panky, other witnesses can be produced if necessary," even though he has no idea whether any such witnesses exist; in fact, he has not even interviewed Jenna.

40. The judicial resolution conference is unsuccessful and the JR gives directions for the proceedings to progress towards a trial. The parties and their respective solicitors resume working through the next step in the litigation.

41. A few weeks after the judicial resolution conference, a reputable newspaper publishes an exposé of MPs who had made fraudulent claims over travel, accommodation and other allowances, which were collectively worth hundreds of thousands of dollars. One of the MPs named in the scandal is Stevie Bannen. The acts of dishonesty uncovered were so egregious that all the MPs implicated resigned from their respective seats in Parliament.

42. In light of these developments, Schone Legal withdraw Stevie's defamation proceedings against Lara. The Court orders Stevie to pay Lara's party and party costs assessed at $35,000.

43. Rudi reckons that he has put in 30 hours of hard work into the case. He decides to charge Lara at the rate of $1,500 per hour because he underestimated the level of complexity of the case when he drew up the Legal Services Agreement. He sends an email to Lara explaining the increase in his rate of charges and attaching a Bill of Costs; however, at the same time, he tells her that he is waiving any further disbursements incurred. He explains in his email that Lara does not have to pay the Bill of Costs as he intends to recover what is due to him from the balance in trust and from the party and party costs of $35,000 that he is expecting to receive from Schone Legal. Rudi further assures Lara that she will get some money back.

44. The Bill of Costs, reproduced below, contains no information other than what appears on it.

45. The day after he sends the email and Bill of Costs, Rudi receives from Schone Legal a cheque for the
$35,000 party and party costs. Rudi deposits the whole amount into the general trust account of his law practice. He issues a trust account receipt to Schone Legal for the $35,000.

46. The next day Rudi transfers $45,000 from the trust account to the office account for the balance of his costs and issues a trust account cheque payable to Lara for the balance of $6,000 in trust. He issues an office account receipt for the $45,000. He then posts to Lara the $6,000 trust account cheque, the office account receipt for the $45,000 transferred from trust into office account and a Statement of Account fully accounting for all monies received and used.

47. The Statement of Account is reproduced below. Lara is left wondering how she can win the case and yet still lose $14,000.

48. Meantime, 2 prospective new clients, Bruce Castro (Bruce) and his aunt Cleta Michel (Cleta) wish to engage Sidney. Sidney sees Bruce in the office. Bruce informs Sidney that he wishes to enter into a loan/investment arrangement with his aunt who is a retiree with money to spare. Bruce needs start-up capital for a proposed business which Cleta is prepared to provide. They have agreed on the amount that Cleta would inject into the business with an expectation of some return after 12 months. Further, Cleta will not play any role in the business.

49. Sidney tells Bruce that she is happy to assist both of them in drawing up the documentation and suggests that he bring his aunt Cleta to see her together, which Bruce does the following week. Sidney interviews both of them. However, it soon becomes clear to Sidney that Bruce and Cleta have not really thought things through. For example, they have not addressed their minds to the following:
» How much return on her investment Cleta may expect after 12 months;
» Whether and if so, when Cleta may withdraw her investment;
» Whether Bruce may "buy out" Cleta's investment; and
» How Bruce and Cleta would like to resolve a dispute if one should ever arise between them.

50. Bruce and Cleta ask Sidney to advise them. Sidney proceeds to provide advice to both of them.

51. Sidney lives with her partner Michael Van Deek (Michael) in the latter's apartment. They have been together since university. Michael is an only child and both his parents are deceased. He wants to make a will leaving half his estate to Sidney and the other half to charity. He asks Sidney to draft a will for him and Sidney readily agrees as drafting wills is a major area of practice for Rudi G Lawyers.

52. Rudi volunteers with the charity Refugees & Asylum-seekers Foundation of Australia (RAFA). RAFA is a company limited by guarantee and is managed by a Board of Directors (BOD). Rudi is a volunteer director. Apart from discharging his duties as director, Rudi also provides legal advice and services, usually pro bono, to RAFA.

53. RAFA receives funding from the Commonwealth government and also raises funds from the public for its refugee and asylum-seeker assistance programs. Bodies such as RAFA are regulated by the Australian Commission for Charitable Organisations (ACCO), a statutory authority established to oversee organisations that engage in charity work.

54. ACCO comes under the purview of the Ministry for the Homeland. The BOD provides an annual report to ACCO on how RAFA utilises the funds that it receives from the Commonwealth government for its programs.

55. The Homeland Minister, Pete Button (Pete) is a hard-liner against refugees and asylum-seekers from certain countries. As the majority of refugees and asylum-seekers whom RAFA assists are from those countries, Pete attempts to influence RAFA to re-direct its programs to assist migrants from other countries of his preference.

56. Pete tries to bring pressure to bear on RAFA by directing ACCO to demand access to all of RAFA's
financial records regarding its programs, including programs funded by public donations.

57. The BOD seeks Rudi's advice on whether it is obliged to provide ACCO access to RAFA's financial records. The BOD offers to pay Rudi for his service, but he declines the offer of payment. However, to assist him in formulating his advice, Rudi requests the BOD to commission a confidential expert report from a reputable audit firm regarding RAFA's financial records.

58. The BOD engages the audit firm of Capitol, Ovalofice & Whitehouse (COW) to provide the confidential expert report that Rudi requests. The BOD subsequently also requests COW to include recommendations on improving RAFA's financial governance procedures in its report. In accordance with the BOD's instructions, COW delivers its completed report to the BOD, sends one copy directly to Rudi G Lawyers and provides another copy to RAFA's Financial Controller. Having received COW's report, Rudi formulates his advice in writing and tables it at a BOD meeting.

Assignment 2A

Consider paragraphs 52 to 58 of the Facts.

Suppose the BOD declines to provide ACCO access to RAFA's financial records. Subsequently ACCO learns that the BOD had commissioned the COW Report and sought advice from Rudi, and demands copies of these 2 documents.

Discuss whether the BOD may lawfully refuse ACCO's demand.

Assignment 2B
Refer to paragraphs 20 to 22 of the Facts. Discuss any issues with the Legal Services Agreement.

Note: Do 2A ONLY

Attachment:- Ethics and Professional Responsibility.rar