Avoiding the double sting: Letters of Demand

by Pamela Taylor-Barnett

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It probably goes without saying that when your conduct as a lawyer is poor, you can be subject to discipline from the Legal Services Commissioner. But what if your actions meant a ‘double sting’?

The ACCC and ASIC also have powers where a lawyer’s conduct breaches the Competition and Consumer Act (CCA), for instance. In October 2011 the Federal Court found a Victorian lawyer guilty of misleading and deceptive conduct under s.18 of the CCA. So, she faced the sting of the ACCC and the sting of the LSC.

The lawyer, Ms. Sampson, had sent several letters of demand claiming that if legal proceedings were commenced the debtors would incur ‘significant legal costs’. She also had made statements about being entitled to recover costs and being able to use warrants, when such matters are a discretion of the court only.

The ACCC brought an action for misleading and deceptive conduct. The Federal Court issued a five year injunction on Ms. Sampson practising in a bulk debt collecting practice, imposed a $30,000 costs order and ordered she take corrective advertising (that cost her $14,000). Her own counsel’s fees were over $75,000.

Taking into account these already severe penalties, the LSC reprimanded Ms. Sampson on the charges of professional misconduct. She was required to obtain two additional CPD points in Ethics and Professional Responsibility for two years and to pay the half of the LSC’s party party costs.

So what’s the message?

  • Don’t exaggerate in a letter of demand. Read your letters carefully, could they be misleading?
  • Don’t say something is a definite consequence when it’s only a possibility.
  • Don’t say you are entitled to something unless you are certain you do.
  • The Law Institute of Victoria wrote us some guidelines – read them.
  • Take the time to know your Conduct Rules.
  • ASIC have Debt Collection Guidelines for collectors and creditors – read them too.
  • Err on the side of caution when you’re unsure and use precedents like the ones in the LIV guidelines.