Blaming legal aid changes

August 22nd, 2013 at 1:00 pm by David Farrar

Hamish Fletcher at NZ Herald reports:

Lawyer blames on move

A high-profile defence lawyer who was declared bankrupt yesterday owing about $550,000 to Inland Revenue said his business dwindled and client numbers dropped because of changes to the legal aid system.

Really? I am sure it is possible the changes affected his business but are they why he went bankrupt?

Jeremy Newland Bioletti, who represented disgraced lawyer Barry Hart and Te Rangikaiwhiria Kemara during the “Urewera 4” trial, was adjudicated bankrupt yesterday by Justice Graham Lang in the High Court at Auckland. The application to bankrupt the 52-year-old barrister and solicitor was brought by the IRD, to which he owes about $550,000 in tax, interest and penalties.

The court heard that Mr Bioletti’s tax arrears dated back to 2006 and that his problems during this period were partly caused by some clients not paying their bills.

I also detest clients who don’t pay their bills. But I would also note that if someone is a bad debt, you no longer have to pay tax on the bill they didn’t pay. Of course it can affect profitability, but I am very suspicious that one ends up owing $550,000 in tax and penalties just because of bad debts. One can of course also sue your clients for their bad debts.

Mr Bioletti said outside court that a number of years ago he entered into arrangements with Inland Revenue to pay his tax bill. But when he entered into this deal people accused of complex fraud on legal aid could still pick the lawyer they wanted to represent them, he said.

Mr Bioletti said fraud was one of his specialties and that changes in 2010 meant people on legal aid accused of this sort of crime could no longer nominate the lawyer they wanted to represent them. Instead, lawyers for these cases were selected by legal services.

I’d be interested in how much debt was owing prior to the legal aid changes in 2010, and how much has been incurred since. My suspicion is the vast bulk was incurred prior to 2011 (when the changes were implemented), and may have already been at a level that could not be serviced.

Mr Bioletti said the bankruptcy would have a “pretty bad” effect on his family and that he would appeal against the adjudication.

The non payment of tax also has a pretty bad effect on all those who do pay their tax.

It’s sad to see anyone end up bankrupt, but I think blaming everyone else for what has happened is not the best strategy. Hopefully Mr Bioletti can get through the bankruptcy and carry on his legal career. In some ways bankruptcy can be preferable than having your debts remain a millstone for years to come. On the negative side, it obviously affects credit rating, ability to do certain jobs and run companies etc.

9 Responses to “Blaming legal aid changes”

  1. Graeme Edgeler (3,241 comments) says:

    One can of course also sue your clients for their bad debts.

    The generally understood position is that barristers cannot, in fact, do this.

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  2. F E Smith (3,504 comments) says:

    The generally understood position is that barristers cannot, in fact, do this.

    Yep.  However, if he was being instructed by a solicitor then there is a debt of honour between the solicitor and the barrister, regardless of whether the solicitor gets paid.  And the Solicitor can then sue the client.

    The problem is that we don’t have any way of suing the MoJ if they don’t pay us promptly, because there is no intervening solicitor. If most of your work is from legal aid (and it shouldn’t be, but sometimes there is little choice), then the MoJ quite literally controls your income.

     you no longer have to pay tax on the bill they didn’t pay. Of course it can affect profitability

    The problem is that if you have a big case, then that might be your only bit of income for months.  If it then takes the MoJ a few months to pay you, then you could conceivably go without pay for quite some time.  Means that you really have to budget well!

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  3. peterwn (4,289 comments) says:

    There is generally no reason why the authorities should not allow a bankrupt (especially through misfortune) barrister to continue practicing – this would generally be the best option for creditors. It would generally be unacceptable for a bankrupt solicitor to continue practicing unless they can be somehow kept well clear of money, trusts and conveyancing.

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  4. GPT1 (2,157 comments) says:

    He’s an idiot for letting the penalties accrue to the point he’s stuffed.

    Doesn’t detract from the fact that legal aid has been cut, on average, a further 10% (and established practices gutted by removing preferred provider) from the 1990s rates.

    Can anyone else tell me of a profession that is paid less than they were in the 90s? And does it work at all?

    Getting half a million in the hole is untidy and blaming it on legal aid when clearly the primary driver is your own stupidity does little to assist the argument.

    FES – the MOJ have improved on payment since taking over legal aid. There’s a shit load less money but it is being paid promptly as a general rule. I think we were owed just South of a hundred K at some point meaning we were paying OD rates on work we’d done for a third of a private rate. Great.

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  5. Chuck Bird (6,593 comments) says:

    “Lawyer blames bankruptcy on legal aid move”

    Ha, ha, ha bloody ha.

    I have just found out the former dead beat lawyer that owes me money and in fact has not applied for it yet. I have also told Legal Aid Services that he is a vexatious sociopath.

    I am making good progress and confident I will get a judgement against him as an other party recently has but like me they will have the problem of actually getting the money. The next step will be to bankrupt him and put get paid on the drip feed from his pension.

    I do hope that there are changes made both the civil and matrimonial court so that before one party gets legal aid there has to be an exceptionally good reason and the other party is notified and has a right to put in an objection why it may be unjust.

    I will no doubt get a few thumbs down from the beneficiaries of the legal aid system.

    I must put a few suggestions to the SST where they could tighten up in the criminal area. I think it is wrong that a violent criminal get legal aid so easy to appeal sentence.

    The only way they should be able to appeal sentence is that if it is manifestly unjust. If the Appeal Court finds the sentence was not manifestly unjust then there should be a cost – more years behind bars.

    Maybe if that lawyer gets declaried bankrupt he could try some honest labour.

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  6. lastmanstanding (1,734 comments) says:

    Methinks Mr Bioletti was and here I use the words of Charles Dickens “Income one pound expenditure nineteen shillings and six pence result happiness. Income one pound expenditure twenty shillings and six pence result misery” alas in the latter position.

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  7. andretti (150 comments) says:

    Getting behind with IRD is a game called Dancing with the Devil.Dont play this game (i did)the penalties are 10% per month so every 7 months or so the debt doubles its impossible to ever pay.Generaly the IRD never expects to get paid and will either liquidate or if a personal debt bankrupt.If you incure a debt under a company they will only enter into an arrangement if you can pay it back within 2 years (mostly impossible)even then they try to get you to sign a PG for the debt,no one in their right mind should do this.

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  8. Chuck Bird (6,593 comments) says:

    I have never never had a problem with IRD. When I find I have made a small error or omission I have always found them very helpful.

    The main people I have a problem with are dishonest arrogant lawyers.

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  9. Tauhei Notts (2,367 comments) says:

    A bankrupt lawyer confessed that fraud was one of his specialities.

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