Peter Carter, Carter Capner Lawyers, Brisbane
7th National Annual APLA Conference
Hobart , October 2002

Thank you for attending this afternoon. I would firstly like to express my gratitude to APLA and the conference chairs Simon Garnett and Darren Moore for inviting me to speak. Having seen the extremely high quality of presentations at this conference over the last few days, it really is an honour to have been included on the program.

I was asked to speak on ‘Ethics’. I wasn’t instructed whether to speak about the topic as an academic topic – the theory of ethics – or whether I was supposed to speak about what is expected of ethical legal practice. It soon became clear to me after I started to research the paper, that an intellectual investigation of the theory of ethics is required before any exposition on ethical conduct can proceed. So the paper is a mix of both theory and some views, including my own.

I claim some licence as last speaker of the conference, to alter the topic slightly. I have styled it – “Ethics for Consumer Lawyers” this being the perspective that is most relevant to delegates. I should also note that I am speaking primarily from the perspective of a solicitor. I will not cover all ethical duties – these should be well known to you. I will express some views on some issues that I think are particularly relevant to contemporary practice. The final qualification I want to make in this introduction is that I don’t presume to have any special qualifications to assert what constitutes proper ethical conduct. Some ethical issues are matters of interpretation and your views on any issue will be equally or even more valid than mine.

THE LAWYER AS A PROFESSIONAL

Roscoe Pound was a practicing attorney, educator and legal academic who revolutionised the study of American jurisprudence in the 20th century. He taught and practised law as a social science rather than as legal doctrines. As dean of Harvard Law School he was also a champion in the struggle to raise the standards of the American legal profession.   His definition of a profession is: “A group … pursuing a learned art as a common calling in the spirit of a public service — no less a public service because it may incidentally be a means of livelihood.” The public service aspect of the practice of a profession is emphasised in all the text books. What are the hallmarks of a profession? I would suggest they include:

• specialised knowledge and skill
• enforceable standards of competence and conduct
• a responsibility to the public
• placing the client or patient before own interest

The last point is very important. As lawyers we are not entrepreneurs or land developers, we have eschewed those pursuits that are principally driven by the desire for profits for the interests of our clients which must always be placed above our own.

The nature of the professions particularly that of the law, has changed in recent years. As a result of the Hilmer report of 1993 adopted by Council of Australian Governments (COAG) in 1995, the professions were earmarked for special treatment. The changes adopted were to permit advertising, abolish any remaining form of price control (such as recommended fee scales) and allow structures to encourage competitive practices. The perceived benefits were lower prices to the consumer through competitive action and resulting efficiencies and the transparency that were thought likely to result.

Although I believe that it would be within the capacity of economic science to do so, there was no attribution of the economic value of ‘professionalism’ and it was therefore effectively priced into the equation at a nil value.

WHAT IS “ETHICS”?

When I studied ethics it was a professional subject required for admission as a solicitor and not a degree subject. The assigned reading then was “Conduct of the Legal Profession in Queensland” by WN Harrison QC published in 1947. It is a book about five millimetres thick, about the size you would expect of a text on the good deeds of Osama Bin Laden.

But as I hope to demonstrate here this afternoon, ethical conduct is probably the most crucial quality of the consumer lawyer’s practice.

“Ethics” is usually used as a term to describe proper professional conduct. More correctly, it is one part of the subject of professional conduct.

Professional conduct contains the following elements:

• legal duties
• professional etiquette
• ethical duties

The term ‘Ethics’ when used it its strict sense describes the “moral hazard” that practitioners face in managing potential conflicts among the different duties (for which there are no strict legal duties) they hold to their client, to the court, to colleagues, to the community and to their employer or themselves. When such a conflict arises it produces a moral hazard to the practitioner and an ethical dilemma.

By way of example the obligation on a solicitor to diligently attend to a client’s document disclosure duty does produce a conflict between the solicitors duty to the client to achieve the best outcome and the duty to the court. It does not however produce a moral hazard or an ethical dilemma as the lawyer must observe a strict legal duty governed by rules of court.

On the other hand the nature of any duty that might apply if for example, by error your opponent mails you a confidential advice intended for their client is not governed by any court or legal rule and produces the dilemma of whether or not you should read it.

Often also the interpretation of appropriate conduct in an ethical dilemma may change over time. But many things do not change. Consider the following from the Harrison text of 1947:

“By entering the legal profession a lawyer undertakes faithfully to maintain the existing law and assist in its enforcement.”

“It is submitted that it is now no more improper for a Barrister to accept a contingent fee that it is for a Solicitor.”

“Lawyers should strictly refrain in their conversation with laymen from casting doubts on the integrity of a judge; and although in private conversation with their friends they can hardly be expected to hide their opinion as to a judge’s ability, they should at least be cautious and charitable.”

“If the judge is uncivil or overbearing, counsel should offer fair remonstration, always observing however the outward form of respect.”

THE LAWYERS’ DUTIES

The client

The Court

The law firm

Colleagues

The community

There are five sets of duties in professional conduct. In the exercise of all of them, there are potential conflicts and moral hazards.

When there is any conflict among any duty, a lawyer’s duty to the court comes first and any obligation to the lawyer him or herself or to the law firm comes last.

COLLEAGUES

The behaviour among members of the profession often involves moral hazard issues (like what to do with the misdirected fax or letter from your opponent) but is more often a question of professional etiquette.

The exercise of civil and courteous behaviour among colleagues is in my opinion, the keystone of proper professional conduct. No practitioner can properly exercise any of the other duties unless he or she conscientiously practices courtesy, respect and civility to colleagues.

“Conflict among opposing lawyers distorts the adversarial system. The obstinacy of one lawyer lines the pocket of another and the escalating fees are matched by escalating tensions. It is enough for the ideas and positions of the parties to clash…the lawyers don’t have to.” Justice Sandra Day O’Connor, US Supreme Court.

There is a similar capacity for tension and obstinacy among lawyers who are opponents as competitors rather than in litigation. In my opinion, the requirement for professionalism is not diminished by business reality – division and conflict at any level and on any scale diminishes the lawyers involved and weakens us all as a profession.

How can we expect our clients and more importantly in the current political climate, the community, to count on fairness from us if we can’t practise it among ourselves? Exercising civility and respect to colleagues is a demonstration of sense of the lawyer’s sense of fair play that ought to be our basic stock in trade and what will help command public respect.

Practitioners should positively demonstrate their professionalism to colleagues at every opportunity. Senior practitioners have a responsibility to educate junior lawyers by example. Courtesies extended are never forgotten and discourtesies are always remembered.

My interpretation of some examples of etiquette issues vis a vis colleagues are the following:

Respect Seniority

Inspection of documents – should always offer that it be conducted at the office of the more senior practitioner. Don’t delegate dealings with a practitioner to a secretary or with a senior practitioner to a clerk.

Clients changing solicitors

If the client of a colleague calls you

• wanting a recommendation about their existing solicitors advice, don’t second guess the advice. Tell them to ask their solicitor to get a second opinion eg from a barrister.
• wanting to change solicitors, tell them to discuss their problems with their solicitor. I have a policy that I won’t accept clients of other solicitors unless they have raised the problems with their existing solicitor and the problem can’t be resolved. You should tell them that by changing solicitors, their overall costs will be increased. You should never encourage a person to break the retainer of another lawyer unless there are legal grounds to do so.

On accepting a job partly performed by another lawyer – respect the colleague’s right to retain records until paid for work properly done. If a solicitor has a contract with a client to perform work and the client wants to break that contract, the starting point for discussion is that the ‘former’ solicitor is entitled to be paid for work to date even if the work was no win no fee (assuming that is what is allowed for in the ‘former’ solicitor’s contract). By expecting the ‘former’ solicitor to wait until you finish the client’s case before being paid is imposing on a colleague to subsidise your case intake and investigation costs. What impression do you think a client and the public get of the legal profession and the legal system if you convey such imposition on a colleague as fair? If the law of the jungle is seen by the client to apply to relations among the profession, a client will think that’s what applies to the client’s relationship with you, the claim and the court. Such behaviour also signals to the client that he or she need have no commitment to the exercise, that the lawyer client relationship is just a one way street.

The competing duties are at work here. If I am the ‘new’ lawyer whom the client has approached, I could put the client’s interest first and counsel as to whether a change of lawyer is really warranted, I could put my interest first and jump over the client to sign him or her up as soon as possible; and/or I could consider whether there is also a competing wider duty – to the community – to uphold the public perception of the legal system and the profession.

On the other hand if there is good reason why client is transferring his or her case from you to a colleague eg incompetence or undue delay, you should consider waiting until the successful outcome of the case, for payment.

Fees

If asked to advise on another person’s fees, start from the position that the fees are probably reasonable until proven to the contrary.

General

• Always do what is expected of you in your part of a transaction. This is especially true in commercial matters. It is unprofessional to fail to perform the expected functions of a vendor’s solicitor, for example, in a conveyancing matter and leave the other side to have to do the things normally required of you.
• Never let professional jealousies colour remarks make a colleague. If you can’t say something positive about a colleague, the appropriate response “I don’t know his work”.

DUTY TO THE COURT

A solicitor is an officer of the court – a semi-public official and is sworn to perform that duty in a proper manner. Because codes of professional responsibility, are expressed in general terms practitioners are often left with some discretion with as to which way to conduct the affairs of a client.

This summary of some of the main points found in the texts relating to traditional issues of professional conduct. A lawyer must not:

• actively conceal relevant information;
• mislead the court;
• deceive an opponent. However there is no duty to inform an adversary of the existence of a witness who had helped the adversary’s case;
• make unfounded allegations about third parties;
• commence cases without legal merit for the sake of some related benefit for their client or themselves;
• obstruct the administration of justice;
• use the processes of the court to further interests other than the client, i.e. the practitioner’s own interests;
• coach a client to give evidence;
• present a knowingly deficient affidavit of documents

Coaching a client to give evidence.

According to Harrison, this goes so far as to take a sworn statement of facts before discussing the law that would apply to the particular situation. He says a practitioner must “not…give a hint that would give a client a chance to modify his statement to suit the relevant law”.

I think that in contemporary practice it is correct to draw the facts from the client before explaining the law but I do not believe it is a requirement of ethical practice to take a sworn statement before doing so. I also believe it is appropriate to advise a client as to the legal effect of different fact scenarios ie. to say to the client “if your instructions were this…” and let the client express in their honest view and then for the lawyer to test the client. It is appropriate for a lawyer to assist the client to articulate the interpretation of facts if there are different interpretations open.

It is never appropriate to tell the client what to say, although it is surprising the number of clients who seem to think that’s exactly what we are there for. It is never appropriate to explain the law in a way that the lawyer knows prompts the client to present facts in a particular way.

The most important thing is for the lawyer to conscientiously test the client’s version of the facts in interview. Lawyers do have the luxury of not accepting a claim and I encourage early the rejection of bad claims but they should avoid allowing the prejudice of third party witnesses to colour such decisions.

As we all know some clients are so convincing that the possibility of their version being untrue never occurs to the lawyer. For this reason, all clients should always be made aware of the consequences of untruthful accounts both under the client agreement to the firm and in respect of the claim itself.

Examples: failure to warn – ‘would you have proceeded with operation had the warning been given?”

nervous shock – ‘recognisable psychiatric injury brought on by witnessing the tragedy’

unidentified veichle – client must not be lead by lawyer to claim accident caused by an unidentified veichle.

If a client attempts to deceive the court, the practitioner must cease to act.

Proper Affidavit Of Documents

This duty was established as long ago as 1940 in Myers v Elman [1940] A.C. 282. In that case it was said that a solicitor cannot escape the responsibility of investigation and supervision of finding out what documents exist and what do not.

Concealing a document has always been regarded as unprofessional. The issue was recently explored in the recent case of McCabe v British American Tobacco Australian Services Ltd, Supreme Court of Victoria [2002] VSC73, 12 April 2002 per Eames J.

In that case, the Plaintiff sought to have the defence struck out on the basis of its failure to comply with discovery orders and rules had denied the plaintiff the opportunity of a fair trial.

There was some thirty thousand documents including a data base referencing them destroyed in an act His Honour described as “deliberate tactic designed to hide information as to what was destroyed……to gain an advantage………at the expense of the plaintiff and by misleading in the court.” The defendants argued that there was no breach of discovery obligations as at the time the documents were destroyed, there was no litigation on foot.

The defendant conceded that it had a document retention policy which the court ruled was an artificial method of disguising the destruction of sensitive documents that would disadvantage plaintiffs in negligence claims against the company. The company categorised it as simply the destruction of old records.

His Honour found that there was a course of conduct since 1985 was directed at the prospect of actual or potential litigation and that there was at the time of the destruction the likelihood of further litigation of which the defendant and its lawyers were aware. His Honour ordered the defence be struck out.

“In my opinion, the process of discovery in this case was so subverted by the defendant and its solicitor …… with the deliberate intention of denying a fair trial for the plaintiff and the strategy to achieve that outcome was successful. It is not a strategy which the court should countenance and is not an outcome which in the circumstances of this case can now be cured so as to permit the trial to proceed on the question of liability. In my opinion the only appropriate order is that the defence should be struck out and judgment be entered for the plaintiff, with damages to be assessed.”

It would appear that the duty owed to the court by practitioners was held in this case to extend beyond direct court work. The duty owed is not limited to legal proceedings which had been instituted.

It has not been determined whether the solicitors acting for the company were in breach of any obligation to the court.

DUTY TO THE CLIENT

Some of the classic duties that have been described are:-

• to act honestly
• to perform work with reasonable expedition and with diligence
• to charge a reasonable fee

Complaints against lawyers range widely:

• charges for photocopying;
• failure to conduct claims expeditiously;
• not responding promptly to telephone messages
• lack of clarity in correspondence;
• withdrawing from cases at the last minute
• drawing cases out unnecessarily.
• fees

Individual complaints are often due to communication failure – failing to point out costs obligations at the start, failing to tell clients of the risks in cases to say early that a case is a dog (if it is), failing to explain time lines. Many clients call these days in an initial enquiry, tell the facts and just about expect a cheque by the end of the month. The wide availability of no win no fee representation and competitive advertising has increased these expectations. A prudent practitioner will have a sound policy of communication to keep clients reasonably informed of the status of their matters, promptly complying with requests for information and assisting clients to make informed decisions about the conduct of the litigation.

As a result of the competitive environment following the Hilmer report, commercial pressures on law firms have increased. Firms have had to advertise even if they didn’t agree with it. The goal to win business has made firms more service oriented but often with an increasing lack of appreciation on the part of the client as to the intellectual endeavour, risk and responsibility exercised on the lawyer’s part that many would argue would have been more evident in a traditional professional relationship.

Clients’ hope their lawyers are spending every waking moment only thinking and working on their case, but only charging them for ultimate success, or at least only charging them for substantial progress towards ultimate success.

Fee Agreements

Most states have a requirement that clients enter into written agreements with lawyers relating to such matters as fees. Even if there is no legislative requirement, it is prudent for the lawyer to have a written agreement.

By specifying the respect of rights and obligations in the solicitor and client, many issues that might otherwise be regarded as “ethical” can be transferred to the realm of “commercial”. Apart from this it is prudent practice to inform the client of exactly what you will do for them and what their obligations to you are. It is important to let them know where they stand from day one.

My fee agreements contain obligations on the client for example to keep me informed of his whereabouts, to respond promptly to correspondence, to use the best endeavours to assist with the investigation, do not act dishonestly, to disclose all facts including medical histories etc. In return I agree to act professionally and use my best endeavours to achieve a good outcome.

I favour the term risk sharing rather than no win no fee. This term in my view better describes the service I am prepared to provide my clients where I will share the risk with the client of the success of the case. The lawyer contributes his time, and sometimes the costs of expenses. The client contributes time as regards case preparation and as well, some of the risk of the case not succeeding. The risk to the client is an order to pay the defendant’s costs if the claim fails. Some lawyers provide the client with an indemnity for that event. Naturally I must use all skill and diligence to avoid a loss and shield the client from such a disaster with accurate advice but I am not usually prepared to provide a general indemnity as part of my client agreement. To do so would again send the wrong signal that the client need have no commitment to the exercise, that the lawyer client relationship is just a one way street. I expect a commitment from the client to the outcome as this gives to the client some ownership of the risk and processes involved, however small and symbolic it might be.

The competing duties are again at play here. I could put the clients interest first and provide an indemnity; I could do so as part of my marketing strategy, thereby putting my interest first; or I could consider whether there is also a competing wider duty – to the community – to uphold the perceived value of the common law system that such ownership might provide.

Good professional practice and good business practice requires fees to be set out in the written client agreement in as much detail as possible. My practice is to discuss this fully at the initial client interview on day one. Clients respect this frankness. Even better if you can set a fixed fee or a range of fees related to milestones, it lets everyone know where they stand from day one and avoids anyone having to be sheepish about the bill at the end of the day.

The Reasonable Fee

According to Stephen Cominskey of Georgetown University, Washington in his book A Good Lawyer (available electronically on the internet) what Abraham Lincoln said nearly 150 years ago is still true today: “The leading rule for the lawyer, as for the man of every other calling, is diligence.” But diligence comes with a price: legal fees and lack of diligence often comes with a higher price: failure. “And all a lawyer has is his time and his advice.”

Businesses including law firms are entitled to make profits. Fees should reflect risk, responsibility, intellectual effort, time engaged and I believe the outcome. Remember you are entitled to charge a good fee for a good job.

However the sentiments expressed by the public and in the media against members of the legal profession over fees often reflect a realisation of the actual conflict of interest that underlies current billing procedures by lawyers in private practice which create disincentives for the early or prompt resolution of matters.

Currently most law firms would charge fees based on time (recorded work in progress), by reference to the scale of a court, or by a fixed fee for a particular milestone or outcome.

Both time based and scale based fee agreements have a number of deficiencies. They both reward inefficiencies and provide strong economic disincentives for the lawyer to settle matters expeditiously. Time based fees also are likely to involve a greater conflict between the duty of solicitors to their clients and their own self-interest and may encourage lawyers to ‘over-lawyer’. The potential for conflict ie. the moral hazard is high for both time and scale based fee agreements.

The pure contingent arrangement where the quantum of the fee is directly proportional to the outcome is without doubt the best for the consumer but probably not so good for lawyers as it would make small to medium sized claims of any complexity un-economic. It has all the desirable pro consumer elements:

	Rewards Efficiency	Rewards Promptness	Incentive to resolve	Highly Transparent	Fee Certainty	Outcome based	Low moral hazard
Time Based
Scale
Contingent Fee	X	X	X	X	X	X	X

Unfortunately for consumers that type of fee agreement is illegal in all Australian states as far as I know.

THE LAWYER AND THE PUBLIC

Advertising

I would like to talk briefly about the effect of lawyer advertising on undermining the public perception of lawyers’ professionalism. Advertising was to some extent forced on the profession as a result of the Hilmer reforms but lawyers and law societies must accept the greater blame for the sometimes scandalous way in which some members of the profession chose to market their services.

The APLA adopted a code of conduct in 1997 that contains the following relevant provisions:

9.APLA members shall not knowingly make any statement, whether to a prospective or existing client, or otherwise which may give the client false expectations.

10.APLA members shall not engage in promotional activities that might reasonably be regarded:-

(a) as being false, misleading or deceptive;

(b) as being vulgar, obscene or sensational;

(c) as devaluing the public protection role of plaintiff lawyers;

(d) as promoting litigation as a means of obtaining financial reward rather than fair compensation for an injury or loss sustained; or

(e) as bringing the common law right to claim damages for injury or the adversarial system into disrepute.

(f) as being likely to bring plaintiff lawyers or APLA into disrepute.

Some of the above concepts are subjective. In my opinion however a law firm advertisement offering “Cash for Injuries” is inappropriate. It would be difficult for a lawyer advertising such service to defend a suggestion that he or she has placed his or her own interest first and above any duty to the community to preserve the integrity of the common law system.

Other ads that many suggest are ‘unprofessional’ have been defended by their authors on the grounds that they are simply providing information using words and phrases that are comprehensible to that part of the public to whom they are directed. What about the billboard ad saying: “Where there’s blame, there’s a claim”. What do you think?

Ads such as this do draw criticism from the public against the profession. They have therefore probably brought plaintiff lawyers into disrepute. Regrettably I believe lawyers have shot themselves in the foot with some advertising and the damage done to their collective professional reputation is long lasting. It is also seriously regrettable that law bodies such as state law societies who have the ability to make rules that have the force of law, lacked the courage to deal with clearly unacceptable conduct on this front.

Public Protection Role

I would like to conclude with comments about the community role of lawyers. The notion that lawyers have a responsibility to their community is nothing new. All the text books on this subject talk about it. History shows it. Lawyers have been at the forefront of social and political improvement for centuries.

For a consumer lawyer it is a public protection role.

To quote again Justice O’Connor:

Lawyers have in their possession the keys to justice under a rule of law–the keys that open the courtroom door. Those keys are not held for lawyers’ own private purposes; they are held in trust for all those who would seek justice, rich and poor alike.

Doctors have the “hypocratic” oath that basically requires them to do no harm to the patient. If lawyers were to have an oath of professional service it would include much more than that. Of course we must do no harm to the client. We must serve the law. We must never be persuaded by popular opinion. We are the guardians of original thought. We must recognise the consequences of events for those who can’t. We must be the voice for the voiceless. We must be the last line of defence for the public.

Ever-increasing business pressures have made fulfilling the obligation to public service difficult. But as discussed above, public service marks the difference between a business and a profession. “A business can focus only on profits. A profession cannot. It must focus first on the community it is supposed to serve.” – Justice O’Connor.

My theory of the obligation of public duty of the consumer lawyer today, I mean right now is a responsibility to act as a public advocate against the tide sweeping away civil rights. We have heard a lot of calls to action at this conference to do this but now I am going to give you some tools and ideas of how to go about it – how to turn your office into an effective advocate for the public – how to perform your duty as the last line of defence of the public.

Advocating for the public

It is part of the lawyer’s duty to the public to use his or her skills to advocate against unfair laws. Like most of you, I didn’t know at law school that I would find myself as a champion of citizen rights. So rather than being requested, this role has been thrust on most of us.

It is a commonly held view that lawyers should be retiring in public advocacy role if the object of their advocacy coincides with their personal interest. I disagree. The theory of ‘ethics’ is the management of the conflict of the competing duties, the dealing with the resulting moral hazards. Conscientious professionals are aware of the potential conflicts and manage them daily.

I am sure every lawyer in this room conscientiously believes that the importance of public advocacy against the current and recent proposals to curtail consumer injury compensation rights is superior to any benefit any one of you would get personally in that such advocacy may ensure continuity of livelihood. That being so, it does not matter that the exercise of the duty to the public might also have benefits to the lawyer.

If challenged as to the perceived conflict, the appropriate response is that “My professional duty to the public requires me to advocate against unfair laws.” Or ” Yes, that’s how I earn my living. There’s nothing wrong with that.”

Abraham Lincoln, Roscoe Pound and great contemporary lawyers like Alan Dershowitz have all dismissed such challenges as nonsense. Hopefully this articulation of the nature of ethical professional practice will help you to confidently assert the arguments of reason and logic against self serving rhetoric that the opponents of civil rights are now perpetrating.

CONCLUSION

Some may call my lament of the loss of some of the traditional values of professionalism in the wake of increased commercial pressure as old fashioned.

On the contrary, this theory is a progressive one. I value professionalism so highly because in my thesis it has a high economicworth to everyone involved – client, court, colleagues, the public and not the least, to the law firm itself. Professionalism does fit well in the market economy and in a competitive business model. It is pro-consumer. The only trouble is that economists have as yet been unable to measure the social and price benefits quantitatively.

The management of potential conflict among the lawyer’s duties to the court and the client (as they conflict with the lawyer’s own interest) are now pretty well covered by legal duties contained in court rules and legislation. Not so the duties to colleagues and to the community. The horse has bolted on advertising much due the lack of will on the part of state law societies. Hopefully that lesson has been learned and they will now show some leadership in the enforcement of other ethical standards: the lawyer’s duty to colleagues and to the community. This is essential if we are to command respect for our calling, or the law and our public protection role. I hope that much is obvious from our discussion this afternoon.

Perhaps law societies could introduce CEE – continuing ethics education that mandates at least a minimum number of hours per year training or practice in ethical issues as a condition of practice.

Thank you for your attendance.