Auckland lawyer guilty of misconduct over $50,000 deposit

by Sol Dolor28 Sep 2016
An Auckland lawyer has been found guilty of misconduct after instructing a client to deposit $50,000 to his personal account.
 
Richard Zhao faced a single charge of misconduct stemming from the dealings of the lawyer with a client referred only as Ms L in the Lawyers and Conveyancers Disciplinary Tribunal’s decision.
 
Apart from having money deposited into a personal account and earning interest, the lawyer also held on to the client’s dossier which included passports after the client wanted to terminate the relationship.
 
After being referred by a family friend, Ms L, who is originally from China but has been living for a long time in Malaysia, became Zhao’s client from March 2013 for assistance with family, immigration and other issues.
 
The lawyer travelled to China to meet the client on 28 March 2013 and gave him a folder containing various information including a client engagement letter which summarised the work to be done and an agreement that the client “would make an initial deposit of $50,000 with us for fees, expenses and other payments to be used on your behalf.”
 
Before leaving China for New Zealand, the lawyer who is a trained Trust Account Supervisor either directly or through a friend gave the client his personal bank account into which the deposit would be made.
 
The client made a $49,975 deposit on or around 11 April 2013 into the lawyer’s personal bank account. On the same day, Zhao transferred the money to his wife’s bank account.
 
Zhao claimed that the client wanted to pay in cash but he deemed this unacceptable. He didn’t have his trust account details with him at the time which is why he gave his personal account information, he added.
 
The lawyer said he wasn’t aware the client made payment until more than six weeks after the date of the deposit. As the money was transferred to various accounts owned by Zhao, he earned an interest of $767.75 partly because of the deposit.
 
The lawyer ultimately transferred the client’s retainer to his law firm’s trust account.
 
The Tribunal said that the lawyer “should have been exquisitely aware of the need to monitor the funds coming in and to ensure that they were directed to the trust account.”
 
“Instead, the funds were wrongly held in Mr Zhao’s personal accounts for a period of more than six weeks. We regard this a lengthy period in the context of the case,” it added.
 
The Tribunal also questioned why the lawyer could not give the client his trust account details at an earlier stage “when he provided Ms L with a compendium of information about his legal services.”
 
“Mr Zhao did not have a clear explanation for this,” the Tribunal added.
 
Zhao also refused to return the client’s full file including their family’s passports when the client tried to terminate the relationship.
 
The lawyer claimed he was suspicious of the client which he deemed to possibly be attempting forgery since she produced new identity information for her children which changed their father’s details.
 
The Tribunal said, however, that the lawyer should have immediately submitted the documents to the authorities instead of holding on to them for a year before doing so.
 
The action “aggravated the ‘offending,’” the Tribunal said.

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