Professional Responsibility

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If the “clients” funds are controlled money under s 243(1), had P received written direction to open accounts at CU?[20] Had he maintained the controlled money accounts (CMA) in accordance with cl 75 of LPR 2005 and cl 76 based on a single controlled money receipt system?

Because of the incentive to deposit at call rate provided by the “merit points” scheme, would P then assert his undue influence on his clients to induce them to make deposits at call rate only even if there are other better alternatives? In any event, P should make known to his clients all material information regarding the transactions[21] including “merit points” scheme and that only deposits at call rate can earn merit points. Failure to do so amounts to a breach.

- Has Mr Presidio acted in contravention of any practice rule?

Based on the circumstances above mentioned, P has contravened r 4.1.1 to act in the best interests of his clients by putting his own interest before his clients’ including K’s. He also contravened r 4.1.2 to act honestly and courteously in all dealings by concealing his own interest and other material information.

In addition, P has contravened r 12 that he should not exercise any undue influence on his clients in order to gain a benefit in excess of his fair remuneration for legal services he provided: r 12.2. Therefore, he should not act for K and other clients in those transactions where there is conflict of interests and that his receiving benefits from CU does not fall under r 12.4.3 exception because he did not receive informed consent by his failing to disclose those benefits and inform the clients that they may refuse any referral.

- Should the investigator provide the Legal Services Commissioner with a copy of his report?

As noted in the facts, Wilton was appointed by the Law Society Council under s 531 to carry investigation. He’s also empowered by ss 267 and 268 to investigate P’s trust account affairs and s 660 to procure relevant documents and information. All confidential information and documents obtained in the course of investigation are permitted to be disclosed by Wilton: s 677.

Since the case was referred to Law Society Council by the Legal Services Commissioner to conduct the investigation, Wilton should report his discovery to the Council instead of directly reporting to the Commissioner, so that the Council can report back to the Commissioner under s 529 if required. Thereafter, the Council or the Commissioner can decide whether to bring a proceeding under s 537 or take any actions under s 540.

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