Ethical issues arising in employment litigation

Article written by John Farrow and James Cowan for LexisNexis Employment Law Bulletin

Whilst most employment disputes resolve without an Employment Relations Authority determination and/or an Employment Court judgment, in 2024 the Authority issued 781 determinations (against 2,746 new applications)1 and the Employment Court cleared 198 cases (against 201 new cases filed).2 Fifty per cent of parties in the Authority were represented by lawyers. Presumably, that is even higher in the Court. This means there is plenty of litigation in the employment jurisdiction, and there are plenty of opportunities for ethical issues to arise.

After making some introductory comments, this article provides some brief commentary on the following topics:

• disclosure obligations and use of documents;
• evidence for the investigation meeting/hearing, including dealing with witnesses and cross-examination duties;
• duties to the court; and
• fee considerations.

A brief introductory comment on the Conduct and Client Care Rules 2008

The Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (Rules) confirm the overriding duty of a lawyer is as an officer of the court, and that a lawyer has an absolute duty of honesty to the court. “Court” is defined to mean a court or tribunal before which a lawyer may appear. So, a lawyer’s duties apply when representing a client both in the Authority and in the Employment Court.

A lawyer is required to treat all persons with respect and courtesy when acting in a professional capacity. Conducting dealings with a self-represented person with integrity, respect, and courtesy is specifically called-out.

A recent Legal Complaints Review Officer decision3 confirmed a finding of unsatisfactory conduct by an inexperienced lawyer for breaches of the rules as to respect and courtesy and professional standards. The lawyer was representing a client at an Authority-directed mediation. The mediator described the lawyer as being “condescending and unprofessional”, “somewhat extreme”, that “he resorted to harsh personal attacks to express his views”, and that his approach towards the mediator “was also high-handed and hostile”, especially in private sessions: “This was intended to undermine my role and authority. Their comments challenged my knowledge, experience, approach, and appearance.” The LCRO was satisfied the lawyer was disrespectful and discourteous towards the mediator, in breach of r 10.1. The lawyer was reprimanded for failing to maintain professional standards, and ordered to pay a fine of $1,500, to attend a mediation training course, and to pay costs of $1,000.

As an interesting aside for employment lawyers, the LCRO briefly discussed whether an Authority-directed mediation involved expectations of behavioural constraints because of the additional element of the statutory “good faith” overlay. The LCRO observed there does not appear to be any judicial commentary on the matter and mused that was likely because while the Authority had an ostensible power to deal with it, mediation confidentiality would mean there was no practical mechanism to bring it before the Authority.4

The Rules include some specifics when acting for a client in litigation that are worth noting in the introductory comments.

A lawyer has an absolute duty of honesty to the court (Authority and Employment Court) and must not mislead or deceive the court. A lawyer must not act in a way that undermines the processes of the court or the dignity of the judiciary.

A lawyer must not discuss any case or matter before the court with any judicial officer involved in the proceeding, formally or informally, except within the rules of procedure. This means copying the other side to correspondence with the relevant officer or registrar. It also means not putting Members or Judges in an awkward position when your paths cross informally.

A lawyer must (subject to the overriding duty to the court) obtain and follow a client’s instructions. Ultimately, it is the client’s call to make significant decisions about the conduct of litigation, after the lawyer has informed the client of the nature of the decisions and the potential consequences.

A lawyer must advise their client of alternatives to litigation that are reasonably available. Most obviously in the employment jurisdiction this will be mediation and negotiations. But this might also mean advising a client about requesting a judicial settlement conference.

A lawyer must be independent in litigation. This means a lawyer cannot act in a proceeding if the lawyer may be required to give evidence (of a contentious nature) in the matter. A lawyer must immediately inform the court if it becomes apparent the lawyer or a member of the lawyer’s practice is to give such evidence. A lawyer must not act in a proceeding if the conduct or advice of the lawyer or another member of the lawyer’s practice is in issue.

A lawyer must not make submissions or express views to a court on any material evidence or material issue in terms that convey (or appear to convey) the lawyer’s personal opinion on the merits of that evidence or issue. This seems to come up relatively frequently in employment disputes, where lawyers may stray into personal opinion about topical social issues.

Lawyers must also only use litigation for proper purposes, and not for the purposes of causing unnecessary embarrassment, distress, or inconvenience.

Disclosure obligations

Under the Rules, a lawyer must, to the best of their ability, ensure that discovery obligations are fully complied with by their client and that the rules of privilege are adhered to. A lawyer must also advise a client of their discovery obligations, and ensure the client understands those obligations. A lawyer must not claim privilege on behalf of a client unless there are proper grounds for doing so. Where privileged information has been inadvertently released (and privilege not waived), the lawyer must not disclose the contents of the privileged material to their client.

The Rules refer to “discovery obligations”. The Authority does not have a set discovery procedure — instead, documents are caused to be before the Authority either by the parties proactively providing them (often in a bundle of documents, with those documents referred to in witness statements) or through the Authority’s power to issue a witness summons which requires a person to produce relevant documents in that person’s possession or control.

But that does not usually require an individual to provide an affidavit of documents, or to depose what steps have been taken to identify relevant documents.

So, it might be observed the Rules in respect of discovery obligations are not so strictly engaged in the Authority. A lawyer is highly unlikely to have the same level of oversight of what relevant documents the witness would possess or control.

The Employment Court Regulations 2000 (Regulations) are again different to discovery in the High Court. The Regulations give a procedure for the exchange of relevant documents. A party can issue a notice requiring disclosure, and a party receiving a notice has a duty to comply with the tenor of it and to facilitate the mutual inspection of documents. The Employment Court retains a power to deal with challenges to objections and to verify disclosure. Additional care needs to be taken where a penalty is sought (as documents are not required to be disclosed to protect against self-incrimination).

A lawyer’s obligation to ensure discovery obligations are fully complied with would more obviously apply to the Employment Court’s disclosure regime, but not so obviously to the Authority’s.

The Employment Court’s disclosure regime is said to require a sensible proportionality approach. Interlocutory tussles about disclosure are perhaps less common in employment cases than in other types of disputes.

The Employment Relations Authority Regulations do not include any express requirement to preserve documents. But the Employment Court has observed it may be prudent for a representative to advise a litigant or potential litigant in Authority proceedings to preserve documents. Certainly, a failure to preserve relevant documents would be ripe ground for cross-examination, and for the court to draw an inference from.

Lawyers have a role in identifying the relevance of documents for disclosure, as that is not something a client will typically be equipped to assess. This will require lawyers to review the documents for both relevance and privilege claims.

Given a lawyer’s ethical obligations, an assurance given to the Court by counsel that documents are privileged will usually be accepted by the Court. It follows that where a party is not represented by a lawyer, the same trust and confidence between the Court and the bar is not present.

Parties (or lawyers acting for parties) should not allege another party’s lawyer has failed to discharge their disclosure obligations without appropriate evidence, given the high standard of proof required for a serious allegation of professional misconduct. Where both parties are represented by lawyers, issues about disclosure should be able to be resolved without recourse to the court.

Disclosure obligations endure during the proceedings, meaning relevant documents identified later should still be brought to the court’s attention.

Lawyers should advise their clients of the rule that documents obtained in discovery can only be used for the purposes of the proceeding. In the Employment Court, reg 51 is explicit that documents may only be used for the purposes of the proceeding, copies of documents must be returned (and not retained), and the information contained in documents must remain confidential.

Where there are concerns that (relevant) documents are being sought for a collateral purpose outside of the present litigation, the inspection of those documents can be limited to specified persons.5 Those viewing may also be asked to provide a confidentiality undertaking. Where parties are not represented by lawyers, or there are other confidentiality or ethical concerns, the court may need to control the process. Where litigation participants breach an undertaking about the use of confidential documents, the court could punish the party including by striking out a claim or defence.

Evidence for the investigation meeting/ hearing, including dealing with witnesses and cross-examination duties

A lawyer must not adduce evidence knowing it to be false (and there are specific requirements where the lawyer knows false evidence has been given).

A lawyer engaged in litigation must not attack a person’s reputation without good cause, and must not be party to the filing of any document in court alleging things like fraud or dishonesty unless the lawyer has taken appropriate steps to ensure that reasonable grounds for making the allegation exist.

A lawyer cross-examining a witness must not put any proposition to a witness that is either not supported by reasonable instructions or that lacks foundation by reference to credible information in the lawyer’s possession.

There is no property in a witness. But it is courteous to inform the lawyer representing the other side that the lawyer intends to interview “their” witness. Communication with any witness should be professional and courteous, giving a genuine and honest representation of the evidence required of them.

Specific cross-examination duties are spelled out in the Evidence Act 2006. A party must cross-examine a witness on significant matters that are relevant and in issue and that contradict the evidence of the witness (if the witness could reasonably be expected to be in a position to give admissible evidence on those matters). A lawyer acting in litigation must therefore be well-prepared to be aware of the contradictory evidence. In the Authority, the member is going to ask “cross-examination” questions first, so a lawyer should avoid unnecessary duplication.

Where a witness gives material supporting evidence that the lawyer knows to be false, the lawyer must, in the absence of a retraction, refuse to examine the witness further on that matter. Where that witness is the lawyer’s client, the lawyer must, in the absence of a retraction, cease to act for that client.

Where the evidence has been prepared in a witness brief, this risk may be controlled by the lawyer raising any

issues with the witness before those briefs are exchanged. But where the evidence comes out during the hearing, this will need to be carefully navigated. A lawyer can invite a retraction by asking a further clarifying question. Or where the witness is not the client, the lawyer will be obliged to immediately “move on”. This does not mean a lawyer is obliged to automatically correct a witness who has perhaps misspoken.

Witness statements or briefs must be in the words of the witness and not the words of the lawyer involved in drafting the brief. This ensures the witness’s evidence is credible and withstands cross-examination. This also provides an opportunity to test the evidence prior to finalising briefs, and to call the most compelling witnesses. Only admissible evidence confined to the matters in issue should be included. Less is more, and a simply presented case is often most compelling.

Obligations to the court

Our introductory comments addressed a lawyer’s overriding duty to the court.

A lawyer has a specific duty to put all relevant and significant law known to the lawyer before the court, whether it supports the client’s case or not. This means if a lawyer becomes aware of a binding authority that goes against their client (if it is relevant and significant), that authority should be addressed rather than ignored. Good advocacy, particularly in the Employment Court, will involve submissions distinguishing the authority on the individual facts.

A lawyer’s duties to the court become all the more important in the situation where the other party is selfrepresented or represented by a non-lawyer. It does not seem to us to be controversial to say that lawyers, having been legally trained, are more likely to be knowledgeable in the law than other participants in employment litigation. So, a lawyer may take on a greater ethical burden of ensuring the Authority or Court is apprised of the relevant legal principals and authorities, as it could not reliably be expected the parties or non-lawyer advocates will be aware of them.

In Young v Port of Tauranga Ltd,6 the Court of Appeal needed to remind an employment advocate that she did not have standing in that Court. The Justices, whilst giving the advocate the benefit of the doubt, noted their concern and observed it was inexplicable the advocate was not aware of the constraint. The Court of Appeal does, however, have a discretion to allow unqualified representation to be exercised sparingly. By a seemingly small margin, the Court in Young did not order increased costs in circumstances where the applicant’s submissions (drafted by the employment advocate) “were not especially clear and were effectively submissions in reply” requiring disproportionate time to address.

Another difference of the employment jurisdiction is the exception to the rule that a corporation has no right to carry on proceedings in a court other than by a lawyer.7 This runs the risk of companies conducting litigation in a way that puts the interests of the company’s director ahead of the company itself. If the company was instead represented by a lawyer (as would be required in the High Court), the expectation would be the company’s interests are better protected as objectivity is required. So, while corporateemployers are not required to be represented by a lawyer, lawyer representation may be an important guardrail for the company’s best interests, for example, where a director is alleged to be a person involved in a breach of employment standards, and the respondent-company’s interests (eg, financial consequences) may differ from the director’s.

It is not uncommonly observed that litigants in person cause substantial difficulty and delay in the court system. Arguably that is less-so in the Authority, given its specialist function and the more flexible procedure. But this also gives rise to ethical considerations. Undue cost and delay harm access to justice. Pleadings and evidence need to be scrutinised even more carefully, as the necessary competence, training, and required ethical duties are not present for the non-lawyer. The use of generative AI is one example. The risk of orders obtained by fraud arguably increases. Lawyers involved in the proceedings must be a watchdog for this, as officers of the court.

While advocates have recently faced increased scrutiny by the Employment Court (including by having costs awarded against the advocate personally), lawyers are not immune from judicial criticism. But where a lawyer has fallen short of the required standard, that is, in the authors’ opinion, a much more serious thing than if it were an advocate.

In fairly rare circumstances, the High Court has made costs orders against counsel for conduct that amounts to a serious dereliction of duty which results in wasted costs.

The Employment Court does not have the same inherent powers that the High Court does to award costs against persons who are not parties to litigation. This means a joinder application (under s 221 of the Act) may be a first step to awarding costs against a non-party. The Employment Court also does not have a specific supervisory role over practising lawyers, unlike the High Court. This led Chief Judge Colgan to comment, in Aarts v Barnardos New Zealand,8 that the Employment Court ordering costs against a party’s lawyer would therefore not be punitive as that would fall under the professional supervisory role of the High Court. That means the award should be compensatory for wasted costs.

More commonly, counsel’s conduct may justify an uplift in costs ordered to be paid by their client. So even where costs are not ordered against counsel personally (given the very high bar), a client may have a reasonable argument their lawyer should compensate them for the increased costs they are required to pay. The client could still, of course, consider complaining to the Law Society or pursuing a claim against the lawyer.

A lesson (and perhaps warning) here is that advocacy should be dispassionate.

Fees considerations

The Rules about a lawyer’s fees are seemingly straightforward: A lawyer must not charge a client more than a fee that is fair and reasonable for the services provided, having regard to the interests of both client and lawyer and having regard also to the factors set out in r 9.1.

The reasonable fee factors are set out in the Rules on an inclusive basis. While they include the obvious (time and labour expended), they also include any quote or estimate of fees given by the lawyer, and the fee customarily charged in the market and locality for similar legal services.

The Rules require a lawyer to, upon request, provide an estimate of fees and to inform the client promptly if it becomes apparent the fee estimate is likely to be exceeded. So, if a lawyer gives an estimate (either on request or unsolicited), that estimate must be considered when billing.

Especially relevant to litigation, another fee reasonableness factor is the importance of the matter to the client and the results achieved. It follows that success in litigation is relevant to the fee charged.

The litigation involving University of Auckland Associate Professor Siouxie Wiles has shone a light on what might be described as “uneconomic” employment litigation.

In the substantive Wiles judgment (reserving costs), Judge Holden had already observed “I assume that the main drivers for Associate Professor Wiles in pursuing this case were matters of principle and the potential for non-financial remedies”. Then in the costs judgment Judge Holden recorded:9

It would have been apparent to both parties that there was never any prospect that Associate Professor Wiles would have achieved financial remedies that matched or exceeded her costs or those of the University.

The costs judgment revealed Ms Wiles had incurred approximately $550,000 (including GST) for legal costs. She had been awarded $20,000 as general damages. The University was ordered to pay Ms Wiles approximately $205,000 in total for costs. So, it appears Ms Wiles, the successful party, was left approximately $325,000 in the red when the dust settled after the litigation.

The authors obviously do not have enough background or context to comment on that case, so we simply observe that the costs dwarfed the awards, despite being the “successful” party. Parties pursue disputes for reasons other than financial redress and often will do so standing on principle or to vindicate their position. That said, and again without commenting on that case, a key ethical requirement is ensuring our clients are aware of the possibility of a Pyrrhic victory or at least a realistic estimate of the legal costs against the possible outcomes (even on a bullish client’s “best day” in litigation).

A potential ethical quandary arises where a lawyer becomes concerned their fee may be at risk of not being paid. Conditional fee arrangements have specific rules, including that they must be recorded in writing and provide certain details (including the method to determine the fee). Those rules can give rise to ethical issues themselves. But a scenario we think is more common in employment litigation than in other dispute work is what might be described as a pseudo-contingency fee situation.

“Pseudo” contingency fee situations may happen when acting for employees and the anticipated outcome is a settlement involving the employee’s employer paying a contribution to the employee’s legal costs. Prior to the settlement being struck, the lawyer may be faced with a risk their client may be unable to pay the (whole) bill. The potential ethical issue is the lawyer’s interest in getting paid may motivate the lawyer to encourage their client to settle. The knowledge of this common situation is often used tactically in negotiations. Navigating this requires good communication with clients. A lawyer should advise a client about accepting a settlement offer. But the lawyer should also be transparent about the consequences, including the client’s obligation to pay the lawyer’s fee. That can be tricky to navigate, especially in a situation where the lawyer’s assessment of their client’s claim is that it is “worth more” than what is being offered.

A lawyer has a duty to complete the client’s retainer under r 4.2. But the lawyer can terminate the retainer for good cause and after giving reasonable notice. Good cause includes the client’s inability or failure to pay fees. Explaining that possibility to a client who may be unable to pay if they do not accept a settlement is important. The client can then make an informed decision.

Her Honour the Chief Judge recently addressed what she described as “the elephant in this specialist jurisdiction” in a speech titled “Barriers to Justice in Employment” as being costs. The speech mused whether representation is necessary or desirable in terms of a costs-benefit analysis but went on to observe that sufficiently high remedies can offset the costs of litigation and still make it worthwhile. What was not said explicitly was the inextricable link to the fee lawyers charge their clients.

So, lawyers should be appropriately up-to-date on expected awards (including costs) in litigation. If they are not, they will not be able to reliably advise their client of an accurate costs-benefit analysis. This will often require frank advice.

Final comments

Ethical advocacy is good advocacy, and there is little to be gained but much to be lost in pushing ethical boundaries. Over the course of their career, a lawyer may repeatedly sit across the mediation table from the same lawyers and appear before the same members of the judiciary. They will remember how lawyers conducted themselves and will rightly hesitate to accept representations at face-value where someone has been caught out in the past.

We have briefly commented on ethical issues arising in litigation in the employment jurisdiction, mostly through the lens of the Conduct and Client Care Rules. We have not discussed the consequences of breaching the Rules, which would amount to unsatisfactory conduct and may amount to misconduct under the governing Act.

This article did not set out to be another discussion of the desirability of regulating advocates, nor to discuss the relevance of lawyers in this specialist jurisdiction. But the topic of ethics in litigation does, we think, highlight the importance of lawyers in the proper functioning of both the Authority and the Employment Court resolving employment relationship problems. The Rules hold lawyers to a high ethical standard, meaning, by complying with the Rules, justice is more likely to be done as between the parties in litigation. 

1. Employment Relations Authority Annual Report 2024.

2. Employment Court Annual Statistics 1 January 2024–31 December 2024

3. MS v PC [2025] NZLCRO 036.

4. Interestingly regarding the evidence available for the disciplinary proceedings, the Legal Complaints Review Officer (LCRO) observed that mediation is confidential, but that neither party objected to the Standards Committee receiving and considering the other party’s evidence as to what occurred at the mediation.

5. See High Court Rules 2-16, r 8.28(3)), applied by analogy or by the Regulations’ objections procedure.

6. Young v Port of Tauranga Ltd [2025] NZCA 504.

7. Employment Relations Act 2000, s 236.

8. Aarts v Bardardos New Zealand [2013] NZEmpC 145 at [31].

9. Wiles v Vice-Chancellor of the University of Auckland [2025] NZEmpC 109 at [18].