Fraud, blackmail allegations thrown around in lawyer’s dispute with firm

A disciplinary matter was brought before the courts following a “bitter and high stakes” dispute between a lawyer and his former employer.

Justices Lucy McCallum, David Mossop, and Verity McWilliam of the Supreme Court of the ACT have overturned a December 2024 decision of the ACT Law Society to refuse to renew the practising certificate of a senior associate, known only by the pseudonym LP7.

The refusal decision was made around the time LP7 was representing a lawyer who lodged a racial discrimination complaint in the Federal Court against his former employer, Firm A. The client also made claims related to billing practices and file management.

Early in the piece, the solicitor for Firm A, known as Mr Y, threatened to commence separate proceedings based on allegations of fraud if the client did not settle his matter on a walk-away basis.

In response, LP7 told Mr Y the proposed defence would involve adducing evidence of professional misconduct against Firm A. It was around this time that LP7 and his supervisor at Firm B formed the view that former clients of Firm A may have a claim of overcharging.

Firm A sought to quell this threat by negotiating a settlement that would include a regime to prevent LP7 and Firm B from acting for any former clients who may bring a class action against it.

LP7 and Firm B wrote back with an offer for Firm A to resolve the Federal Court proceedings, in addition to a payment of a “significant sum” to restrain it from acting for any further clients.

When this offer came to Mr Y’s attention, he formed the view “it was tantamount to blackmail” and lodged the Law Society complaint.

Justices McCallum, Mossop, and McWilliam did not accept that solicitors agreeing to restrict their client base for a fee was conduct that could render a solicitor unfit to hold a practising certificate.

“It is open to solicitors to act for one class of client and not for others if they are of the opinion that doing so will enhance their financial or other self-interest,” the Supreme Court bench said.

While accepting it may have been inappropriate for LP7 to propose a payment to Firm B that included it not providing services to potential clients who had already approached it, the bench said no agreement had “actually [been] entered into” at the time of the complaint.

Had the settlement proposal been pursued any further, LP7’s evidence was that he would then obtain the advice of counsel.

Turning next to the alleged breaches of duty arising from the involvement of Firm B’s commercial interests with the settlement of the client’s litigation and the involvement of the former clients, the bench said they were the product of the “first impropriety, seeking a substantial benefit from agreeing not to provide services”.

“However, such conduct is not so significant, either by itself or in combination with other matters, so as to indicate an unfitness to hold a practising certificate,” Justices McCallum, Mossop and McWilliam said.

The case: LP7 v Law Society (ACT) [2025] ACTSCFC 3 (19 December 2025).