- March 28, 2023
- |Concise Law Reports (CLR), Legal Practitioners
LEGAL PRACTITIONERS – OBLIGATIONS OF LEGAL PRACTITONERS TOWARDS CLIENTS AND THE PUBLIC
The Law Society of Namibia v Mukonda NAHCMD (28 March 2023)
In making certain findings in respect of an application by the Law Society against a legal practitioner and his law firm, the court discussed the obligations of legal practitioners towards their clients and the public, in particular, the obligations relating to trust funds:
‘[37] In Law Society, Transvaal v Matthews Law Society 1989 (4) SA 389 (T), the court stated that a legal practitioner is a person from whom the highest standards are exacted by the profession and the court. If a legal practitioner wishes to digress from that standard, he may do so but he must then first cast aside his profession by resigning and then pursue his chosen course. He cannot serve two masters. The Court said:
‘An attorney is a professional man whose independence and freedom in the conduct of his practice are recognized and preserved. Within the limits of the law and the rules of professional conduct an attorney conducts, and in fact should so conduct, his practice with a high degree of independence. The profession itself is not a mere calling or occupation by which a person earns his living. An attorney is a member of a learned, respected, and honourable profession and, by entering it, he pledges himself with total and unquestionable integrity to society at large, to the courts and to the profession … only the very highest standard of conduct and repute and good faith are consistent with membership of the profession which can indeed only function effectively if it inspires the unconditional confidence and trust of the public. The image and standing of the profession are judged by the conduct and reputation of all its members and, to maintain this confidence and trust, all members of the profession must exhibit the qualities set out above at all times.
The attorneys’ profession can only fulfil its obligations to the community and comply with its role in the administration of justice in the land if it inspires and maintains the unconditional confidence of the community and if its members devote their absolute integrity to the conduct of their profession and to the fulfilment of all the requirements demanded of the profession and its members.
The integrity of an attorney should inter alia manifest itself in a situation where he must prefer the interests of his client above his own. It is required of an attorney that he observes scrupulously, and complies with, the provisions of the Attorneys Act and the rules ….
In pecuniary matters the attorney must be most punctual and diligent. He must not retain money belonging to his client longer than is absolutely necessary and must account to his client for moneys received by him in a proper and diligent manner. ‘[My emphasis]
[38] To the sentiments expressed by the authorities quoted in this judgment, I add the words of the late Mr. Justice Davis in the foreword to the fifth edition of Herbstein and Van Winsen: The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa, that:
‘The precepts of the law are these” says Justinian at the beginning of the Institutes, “to live honourably, to injure no one and to give everyone his due”. It is obviously impossible for anyone, who is not himself prepared at least to try to order his life in accordance with those precepts, to make even a pretence of practising law.’
[39] Having briefly outlined the conduct that is generally expected from a legal practitioner, I now return to the obligations of a legal practitioner as it relates to money matters.
[40] Section 26(1) of the Act in mandatory terms obliges a legal practitioner who holds or receives moneys for or on behalf of any person, to open and keep a separate trust banking account at a banking institution in which he or she shall deposit all such moneys. Where trust money is paid to a legal practitioner it is his duty to keep it in his possession and to use it for no other purpose than that of the trust. It is inherent in such a trust that a legal practitioner must at all times have available liquid funds in an equivalent amount. In Incorporated Law Society, Transvaal v Visse and Others; Incorporated Law Society, Transvaal v Viljoen 1958 (4) SA 115 (T) at 118F – H, the court said:
‘The very essence of a trust is the absence of risk. It is imperative that trust money in the possession of an attorney should be available to his client the instant it becomes payable. Trust money is generally payable before and not after demand … An attorney’s duty in regard to the preservation of trust money is a fundamental, positive, and unqualified duty. Thus, neither negligence nor willfulness is an element of a breach of such duty. …’
[41] Rule 17(1) of the Rules of the Law Society obliges every legal practitioner who, in terms of the Act, is required to hold a fidelity fund certificate, to keep his or her books of account in the official language of Namibia and in such a manner as to fairly present, in accordance with generally accepted accounting practice, the state of affairs and business of the firm and to explain the transactions and financial position of the firm. Rule 17(2) provides that:
‘In determining what is meant by “generally accepted accounting practice” regard shall be had inter alia to any rulings of the council published to members.’
[42] Rule 17 of the Law Society’s Rules thus obliges legal practitioners to keep proper records and books of account in accordance with generally accepted accounting practice and procedure containing a full and accurate record of all financial transactions and distinguishing in readily discernible manner between trust account and business account transactions.
[43] Rule 18(5) of the Rules of the Law Society provides that a firm shall ensure that withdrawals from its trust banking account are made only:
- a) to or on behalf of a trust creditor; or
- b) as transfers to its business banking account, but only in respect of money claimed to be due to the firm.
[44] The courts (Incorporated Law Society, Transvaal v S 1958 (1) SA 669 (T) at 675; Incorporated Law society, Transvaal v Goldberg 1964 (4) SA 301 (T) at 303 G – 4) in South Africa have observed that the rule requiring legal practitioners to keep proper books of accounts is an absolute rule; it has to be so – the public is at risk. It is so that the particulars and information of trust moneys must be contained in the narrative of the entries of the books of account and it must not be necessary to resort to documents and files to obtain such information (Incorporated Law Society, Transvaal v Visse and Others 1958 (4) SA 115 (T) at 123B – F). The courts have further commented that the requirements relating to the proper keeping of books of accounts contemplates proper books of account which must be kept in such a way as, in a business sense, to show the true state of affairs as regards the trust account.
[45] In Cirota and Another v Law Society, Transvaal 1979 (1) SA 172 (A) at 193F – G, the court observed that failure to keep proper books of account is a serious contravention and renders a legal practitioner liable to be struck off the roll of practitioners or liable to suspension; and the courts have repeatedly warned practitioners of the seriousness of such a contravention.
The Law Society of Namibia v Mukonda (HC-MD-CIV-MOT-GEN-2022-00328) 2023 NAHCMD 149 (28 March 2023) Obligations of LPs