The Privacy Act v solicitor’s lien

ONE of the most requested articles from previous editions of LawTalk is the opinion John Edwards* wrote in 1996 on the effect of the Privacy Act on solicitors liens ("W(h)ither the lien?", LawTalk 452, April 1996). John recently reviewed that opinion in light of subsequent developments and concluded that its general premise stood the test of time. The main opinion is reprinted here with some amendment and an additional endnote.

• Solicitors may continue to assert liens over files in their possession until fees due for work are paid in full.
• Where the client is a body corporate (not covered by the Privacy Act), the lien is subject only to the common law restraints as to the circumstances and categories of documents that may be withheld pursuant to the lien.
• Notwithstanding the lien, practitioners are under a fiduciary duty to the client to disclose all material matters arising form correspondence or from the instructions generally (see Rule 1.09 of the Rules of Professional Conduct).
• Where a request for personal information under information privacy principle 6 is received from a client, the practitioner is obliged to deal with the matter in accordance with that act.
• The Privacy Act does not permit the fact that outstanding accounts are due as a reason for withholding personal information.
• Under the Privacy Act the client is entitled to receive the information in the form he or she requests it. If the request is for a copy of the documents, a copy must be supplied.
• Practitioners are entitled to charge a reasonable amount for complying with such a request.

The solicitor’s lien has traditionally been seen as an important tool in law firms’ credit management. In 1996, the NZLS Privacy Working Group, in seeking to identify issues that might warrant clarification in a code of practice or guideline, found that while the right to claim a lien still existed, its practical effect might be significantly diminished under the Privacy Act. A lien is in the nature of a proprietary right, depending on possession of a thing; in the case of the solicitor’s lien, the thing is usually a document or a file. The solicitor’s lien, then, is asserted over paper and ink or the media (hard drive, CD, DVD) on which electronic information is stored.

The right of access given to individuals under information privacy principle 6 of the Privacy Act is to information, a more intangible commodity that does not lend itself well to analysis in terms of traditionally understood possessory or proprietary rights.

While the lien might enable the solicitor to retain the file of a defaulting client, decisions on access to the information may be based only on the reasons listed in the Privacy Act and consistent with the Rules of Professional Conduct.

There are various ways of giving access to personal information that is contained in a document. Section 42 of the Privacy Act lists giving an opportunity to inspect the document, furnishing oral information about the document and giving a copy of the document as options. That section further states that the access should be given in the way preferred by the individual, that is, the client.

The efficacy of the lien is therefore significantly undermined. The lien will continue to be effective where the client requires an original document or in relation to information that is not ‘personal’ information about the client. Note, however, that a lien cannot be asserted to prevent returning a passport to a client – Proceedings Commissioner v Vallant Hooker and Partners, CRT 22/98, 18 December 1998 refers. Liens over the documents and files of corporate clients are not affected.

A number of reviews of the privacy legislation have failed to register the act’s erosion of the solicitor’s lien as a matter of such concern that reform of the law is warranted. Although there will be opportunities to seek reinstatement of the lien when the Law Commission consults as part of its forthcoming wide-ranging review of the law of privacy, and when the Privacy Act is amended, such reinstatement is unlikely to be accorded a high priority.

The statement made when this opinion was initially published – that the public image of the profession might not be enhanced by lobbying for a change that would put law practitioners in a more favourable position than many other businesses or professions dependent on personal information for their profitability – would still seem relevant.

As stated in 1996, Parliament has removed all doubt as to health agencies' ability to refuse access to personal information for unpaid fees by s22F of the Health Act 1956. That section expressly states that the fact that a due payment has not been made shall not constitute a lawful excuse for not disclosing information.

In the current environment of greater individual and consumer rights, increased accountability for professionals and more businesslike practices being adopted by lawyers, a call to reinstate the lien may not be greeted with great enthusiasm or support.

Endnote

The approach outlined in this article has been endorsed by the NZLS by an amendment to the commentary to rule 1.09 of the Rules of Professional Conduct, which says:

(6) It is important to note that the fact that fees are outstanding does not provide a good reason to refuse a request for access to personal information. While the Privacy Act 1993 does not prevent a practitioner from claiming a lien over original documents, the client will still be entitled, under that Act, to obtain access to the personal information contained in any file or paper. The client is entitled to insist on receiving a copy of any document containing personal information at reasonable cost notwithstanding that a lien has been claimed. Adopted by NZLS Council resolution on 8 November 1996, in force from 1 July 1997.

The former Privacy Commissioner Bruce Slane has also had cause to consider the issue and found in at least two cases (Case Note 7837 [1997] NZPrivCmr 2, and 16579 [2001] NZPrivCmr 23) that the statutory right of access provided in the Privacy Act overrides the common law lien, and that the lien cannot therefore be invoked to prevent access to the information on a solicitor’s file.

Note: this opinion will be placed on the NZLS website at www.lawyers.org.nz/mempracticenotes.asp#privacy/

*John Edwards is a Wellington barrister and solicitor specialising in information and privacy law.