In what should act as a warning to legal firms involved in debt collection, the Legal Services Commissioner has reprimanded Mr James Woods, principal of E C Legal, for conduct which the Commissioner was satisfied that there was a reasonable likelihood that VCAT’s Legal Practice List would find to amount to unsatisfactory professional conduct if Mr Wood were prosecuted for it. The Commissioner found E C Legal had appeared to have fallen short of the standards of conduct expected after Consumer Action Law Centre expressed concerns about letters of demand as well as the debt collection procedures adopted by the law firm.
Mr Woods cooperated with the Commissioner and voluntarily consented to a reprimand. By accepting the reprimand, Mr Woods is taken to acknowledge that his conduct fell short of the standards expected of the legal profession. Mr Woods has signed undertakings dealing with various issues including:
- Letters of demand will not request or demand legal costs unless there is an agreement between the creditor and debtor allowing the claim;
- A legal practitioner employed by E C Legal will review that agreement to ensure that the terms provide that the debtor is responsible for the legal costs;
- The creditor has instructed E C Legal and eCollect (E C Legal’s related debt collection agency) that to the best of their knowledge the terms of the agreement apply to the individual matter the subject of demand;
- The letter of demand will state that the creditor’s claim for payment of legal costs is made pursuant to a contractual term; and
- Maintaining control over E C Legal letterhead.
This reprimand comes six months after the Commissioner successfully took action against Victoria Nomikos of A’Beckett lawyers, and 14 months after he was successful action against Ms Pippa Sampson, of law firm Goddard Elliot, in cases which also centred around debt collection practices.
Consumer Action regularly receives complaints from consumers about debt collection conduct and letters of demand from lawyers, which commonly include claims for additional fees or legal costs. Consumer Action believes that letters of demand from lawyers that claim legal costs should not only state that it is relying on a term of a contract between trader and consumer that allows for collection of legal costs, but that the letter should also reproduce the term relied upon. This would assist consumers to seek advice about whether the term is fair, or whether the amount claimed is reasonable.
Consumer Action encourages consumers who are hassled by a debt collector or think that a debt collector might be acting unfairly to seek assistance. Consumer Action has a number of self-help kits available for consumers about dealing with debt and debt collectors on its website: http://consumeraction.org.au/help-for-consumers/fact-sheets/fact-sheets-dealing-with-debt/