The Victorian Civil and Administrative Tribunal (VCAT) has suspended lawyer Michael Anderson and ordered that he undergo further education for refusing to follow his client’s instructions and instead transferring more than $120,000 of the client’s trust monies into the account of a debt collection agency that owned the firm. 

Despite receiving written instructions three times to deduct the firm’s owed fees and transfer the remaining $122,102 directly to the client, Mr Anderson took instruction instead from agency eCollect that requested that the money be paid to them.

VCAT senior member Elisabeth Wentworth said that although eCollect wholly owns the law practice, it “had no right to demand that any payment be made out of the trust account” and that a law practice should not “contract out” control of trust money. 

“The central principle in this area is that trust money is sacrosanct. Monies paid into the account should only be paid out to the persons to whom the money belonged or as they directed,” said Ms Wentworth. “Where the relevant conduct is dishonest or repetitive, practitioners are often struck off as being unfit to practice.” 

Mr Anderson followed the instructions of eCollect on the day it was given, despite acknowledgement in his instructions to the law practice’s account staff and eCollect that the client had instructed him to pay the trust money to him and that he would not be happy that it had instead been paid directly to eCollect. 

When the client told Mr Anderson and the firm that he was not happy that his money had been paid to the agency, eCollect deducted its commission of just $8,058 and transferred the remainder of the $122,102 back to the client. 

“Making the payment of the whole of the balance of the trust money to eCollect was a failure to act in the best interests of the client by preferring the interests of the associated firm, eCollect,” Ms Wentworth wrote in the judgement. 

VCAT was concerned that Mr Anderson had appeared before the tribunal in the past and was found guilty of three charges of professional misconduct for accepting instructions from a third party rather than his client. Ms Wentworth said that in other words, Mr Anderson “failed to recognise where his obligations lie”. 

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The tribunal was also concerned that Mr Anderson had failed to comply with the penalty decisions from the first hearing, particularly after giving an undertaking that he would. He was later reprimanded for breaching these instructions. 

Ms Wentworth took into account Mr Anderson’s plea of guilty, that he took steps to rectify the mistake, that there was no permanent deficiency in the firm’s trust account and that he did not personally benefit from the deficiency. 

“I make it clear that had it not been for the plea of guilty and other indications of insight and contrition, cancellation of Mr Anderson’s practicing certificate would have been under consideration,” said Ms Wentworth. 

Mr Anderson has been suspended for three months and will return with additional conditions on his practising certificate, including that he not be authorised to receive trust money or be a signatory to a general trust account. He has also been blocked from working for eCollect or any related entity or associate.

The entire judgement can be found on AustLII: Victorian Legal Services Commissioner v Anderson (Legal Practice) [2021] VCAT 71 (29 January 2021).