A law firm employed suspended lawyer Ms X as a consultant without the consent of the High Court or Disciplinary Tribunal. Ms X was employed to undertake marketing and referral work for the law firm and was employed as a “non-lawyer” and paid for her services.

Although finding technical breaches of s 7(2)(a) and 7(3) of the Lawyers and Conveyancers Act 2006 (the Act), the Committee took no further action on the complaint; however, it took the opportunity to consider the scope of section 7.

The essence of subsection 7 (2)(a) is that it is misconduct for a lawyer (without the consent of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal or the High Court to knowingly employ any person in relation to the provision of regulated services if the lawyer knows the person has been suspended from practice.

Subsection 7 (3) provides that it is misconduct for a lawyer to share, with a non-lawyer, the income from any business involving the provision of regulated services.

The Committee agreed Ms X's “marketing and referral work for the firm … falls into a grey area in relation to the work restrictions that apply under section 7(2)(a)” of the Act, and it accepted that marketing and referral work for a law firm could be construed as being “not unrelated to the provision of legal services”; however, it found that the mischief that s 7(2)(a) of the Act “is intended to prevent is a lawyer suspended from practice continuing to provide legal services for any other person”. In this case, the Committee was satisfied that Ms X did not provide legal services to other persons.

The Committee also considered whether Ms X’ employment also breached s 7(3) of the Act which prohibits the sharing of income by a law firm “with any person other than another lawyer”. The terms of Ms X’ consultancy with the law firm involved the sharing of income with the law firm because Ms X was paid monthly by the firm on a commission basis. The Committee considered s 7(3) of the Act did not appear to be targeted at this type of behaviour and accepted s 7(3) was not intended to prohibit employer law firms from paying its employees for performance of their duties. Rather, the Committee expressed the view that s7(3) related to r 5.5 (‘Conflicting business interests’) of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 and it appears that its intent is in relation to the prohibition on conflicting or compromising business activities (i.e. a prohibition against genuine multi-disciplinary practices) in light of a lawyer’s primary obligation of independence in rr 5.1 – 5.3 of the Rules.

The Committee considered there a public interest in its considerations, “to raise awareness within the profession that care ought to be taken both when considering the engagement of a person who is under suspension from legal practice and when entering into commission payment arrangements with a non-lawyer that is calculated as a percentage of the income from any business involving the provision of regulated services to the public (such that it could amount to (prohibited) income-sharing.”