Office of the Legal Services Commissioner
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Annual Report 1999-2000


The Office of the Legal Services Commissioner
Annual Report 1999-2000


    Vision
    We want to lead in the development of an ethical legal services market which is fairer, more accessible and responsive.

    Mission
    To improve consumer satisfaction with legal services through:
    • developing and maintaining effective complaint-handling processes;
    • promoting compliance with high professional and ethical standards;
    • encouraging an improved consumer focus within the profession to reduce causes for complaint; and
    • promoting realistic community expectations of the legal system.

    Values
    • Fairness
    • Accessibility
    • Reliability
    • Problem solving
    • Education
    • Teamwork
    • Social justice
    • Reform
    • Empathy



    Contents


    COMMISSIONER'S REPORT
    Our mission is to improve consumer satisfaction with legal services in New South Wales in four key ways:
    • developing and maintaining effective complaint-handling processes
    • promoting compliance with high professional and ethical standards
    • encouraging an improved consumer focus within the profession to reduce causes for complaint
    • promoting realistic community expectations of the legal system.
    If we are successful, our long-term goal of reducing the incidence of complaints against legal practitioners should ultimately be realised. In this report I am pleased to present an overview of the strategies we have implemented and the progress we have made towards these goals, in addition to providing a record of our accountability.

    While the performance of the office can be found both generally and specifically elsewhere in this report, I would like here to highlight several issues.

    We experienced a 23 per cent increase in the number of phone inquiries received, but with no significant increase in the number of written complaints as a result of those contacts. This means that our telephone staff have been incredibly successful in empowering consumers to either resolve their own disputes over the phone, mediate those disputes or resolve them through the provision of information and explanation.

    One of our important indicators is that the number of complaints we finalise within each year is equal to or greater than the number of complaints we take on. This year we got within one per cent of achieving this goal (2,183 complaints handled; 2,108 complaints finalised), but also reduced our backlog of complaints from previous years by a massive 597 files. Of these, 412 were first raised in 1998-1999 and 170 were received in 1997-1998. We have given priority to finalising these older matters in order to help both the complainants and the practitioners involved to put their disputes behind them. The older matters that we still have on hand are typically of an intractable nature, with one party or the other unwilling or unable to let go, or the collection of evidence to support the allegations has proven complex and difficult. In other instances the complaint-handling process cannot be completed until matters which are currently before the courts are finalised.

    At the same time, the fact that we had 745 of the complaints from 1999-2000 still open at the end of the reporting period - compared with 496 of the 1998-1999 complaints open on 30 June 1999 - is a matter of concern. We have been placing greater emphasis on our initial diagnosis of complaints in an attempt to identify those which are more likely to be resolved in just a few letters or phone calls, and these are tackled promptly. As a result, we managed to finalise over half of the new complaints within three months. We have introduced procedures to ensure that the backlog is addressed in the next reporting year, and that where there are delays both parties are kept informed of our progress.

    This year we further reduced the percentage of complaints received by this office that are referred to the Professional Councils for formal investigation (25 per cent of complaints this year compared to 28 per cent last year). This reduction is a result of two factors. First, improved initial assessment processes have enabled us to identify matters which would be better resolved by mediation in the interests of a mutually satisfactory outcome. The vast majority of these are consumer disputes retained and handled by the OLSC. Second, during the year the competence and confidence of my investigative staff increased to the extent that we have become less reliant on the Professional Councils for assistance in a range of more complex matters.

    Finally, the number of educational programs run by the office for the profession, consumer groups and law schools almost trebled over the year when compared to last year. These educational activities are viewed by my office as crucial in achieving our long-term goals.

    Client satisfaction survey
    Early in 2000 we conducted a survey of complainants and practitioners who had experienced the complaint-handling system, both through our office and in relation to those complaints that we had referred to the Professional Councils, seeking their opinions and comments on our performance and calling for suggestions for improvement.

    The results of the survey showed a clear distinction between perceptions relating to consumer disputes and investigations for alleged breaches of the professional conduct rules. Complainants reported that they are significantly more satisfied with our handling of consumer disputes where there is greater scope for a flexible resolution of the problem they have been having with their lawyer, as distinct from formal investigations into professional conduct. This finding will form part of our submission to the proposed review by the Law Reform Commission of the Legal Profession Act. As part of our submission, we will again be proposing that participation in the dispute resolution process should be compulsory, rather than voluntary.

    The rate of negative comments concerning the service we provide was higher than we would have liked it to be, but similar to - or slightly better than - the results of surveys by other complaint-handling bodies. To address specific issues raised by survey respondents we have already changed our standard procedures. For example, we are updating people more regularly on progress being made in the handling of their complaint and giving expanded reasons for our decisions.

    Overall, the major benefit of conducting the survey is that it has provided a benchmark against which we will be able to measure improvements in our performance. We will be aiming for higher satisfaction ratings, amongst both practitioners and complainants, when we conduct the survey again next year.

    Court decisions
    As discussed in more detail later in this report, judgement in a number of matters arising from disciplinary proceedings in the Legal Services Division of the Administrative Decisions Tribunal, on appeal to superior courts has included criticism of Part 10 of the Legal Profession Act and the way it had been implemented by OLSC and the Councils. Following this criticism, we participated with representatives of the Law Society, the Bar Association and the Attorney General’s Department in drafting proposals for the Attorney General to consider for amendments to the Legal Profession Act. In addition, we put in place a number of procedures which are geared to ensuring that what we have learned from the guidance given to us by the courts has been incorporated into our standard practices and will ensure smooth running in future.

    Future directions
    All in all, this has been another exciting and very productive year for the OLSC. We have established improved systems for progressing and monitoring our work and introduced procedures aimed at providing better standards of service to both complainants and practitioners. We will continue to develop these systems and procedures in the coming year and look forward to continuous improvement in our results.

    I would like to take this opportunity to publicly thank and commend my dedicated staff for all their hard work, commitment and empathy shown during the year. I would also like to thank the staff of the Law Society and the Bar Association for their support and excellence in the service that they have provided to the profession and the community in this reporting year.

    Steve Mark
    Legal Services Commissioner


    DEVELOPING AND MAINTAINING EFFECTIVE COMPLAINT-HANDLING PROCESSES
    During 1999-2000 the OLSC continued to act as an effective point of first contact for people who experienced difficulties in the use of legal services.

    Telephone inquiries and informal complaints
    In most instances complainants first called the OLSC inquiry line. All professional staff of the office are rostered to answer calls and try to encourage people to resolve their problem with the practitioner themselves. For example, callers received assistance in clarifying the points in dispute, understanding their rights and accessing appropriate legal advice. In apparently simple or urgent cases, staff followed up the inquiry with phone calls and attempted to resolve the problem without a formal complaint being submitted or recorded.

    There was a striking increase of 23 per cent in the volume of calls taken on the inquiry line: from 7,402 calls in 1998-1999 to 9,089 calls in 1999-2000. These figures do not include people who left their name and asked for a call back or people who made further calls to a particular member of staff following an initial inquiry line call. At the same time, improved management of the inquiry line queuing system meant that fewer calls went unanswered: a decrease from 18.9 per cent of call attempts to 11.4 per cent. As inquiry line calls last an average of eight minutes there will always be some callers who choose to call back another time, however the office is working towards a call abandonment rate of only 10 per cent.

    The nature of telephone inquiries did not change significantly, as shown in Tables P1 to P5 in the Appendix (page 25). The areas of law which gave rise to most calls in 1999-2000 remained conveyancing, family law, personal injuries and general civil law. The most common grounds for complaint remained costs, including overcharging, and communication. Complaint forms were sent to almost a quarter of callers, often as a back-up in case the other courses of action proposed or undertaken by the inquiry officer failed. Less than 20 per cent of the forms were returned as written complaints. This is an indication that staff were successful in explaining the complaint-handling system and leading callers through alternative problem-solving processes.

    Formal written complaints
    As shown in Table W5 in the Appendix, there were 2,901 formal written complaints submitted to the office in 1999-2000. Compared with 1998-1999, this is a marginal increase of only 32 files. Of this total, 2,183 were investigated as conduct complaints or mediated as consumer disputes by the OLSC and 718 raised serious allegations which were referred to the Law Society of NSW or the NSW Bar Association (“the Councils”).

    There was little change in the nature of the complaints, as shown in Tables W1 to W3 in the Appendix:
    • Once again, the majority of complaints were submitted directly by practitioners’ current clients and former clients. Opposing clients were the third most common source of complaints, however their complaints rarely resulted in disciplinary action or successful mediation. There are two reasons for this: first, the practitioners could generally claim to have been acting on the instructions of their own client; and second, practitioners in such cases often have the protection of legal professional privilege.
    • The areas of legal practice with which people had most trouble remained conveyancing, family law and personal injuries. Wills and probate matters gave rise to fewer complaints, however, as in previous years, these continued to present some of the more intractable problems raised with the OLSC.
    • There was little change in the types of conduct about which people complained, with costs, negligence and communication again prominent. Anecdotal evidence and matters raised during the mediation of disputes indicate that poor communication was actually the cause of a far higher proportion of complaints than these figures indicate, because many complaints could most likely have been avoided by effective, timely communication between the client and practitioner.

    As shown in Table W6 in the Appendix (page 29), 2,910 complaints were finalised during the year: 2,108 by the OLSC and 802 by the Professional Councils. The OLSC resolved 1,235 of these through conciliation and mediation, for example by brokering a satisfactory compromise between the complainant and the practitioner in a series of letters and/or phone calls. Results included a reduction in a bill, the offer of an apology, work performed at no charge to rectify a problem, and so on. The Councils resolved a further 77 complaints.

    Together the OLSC and the Councils dismissed 1,464 complaints, mostly on the grounds that the practitioner was unlikely to be found guilty of unsatisfactory professional conduct or professional misconduct. It would be preferable to have fewer complaints dismissed than resolved, but allegations of misconduct - which typically result in investigations by the Professional Councils - rarely lend themselves to resolution.

    It can take time to resolve or investigate a complaint due to the complexity of cases, the requirements of procedural fairness, complainants’ lack of legal knowledge and capacity to explain their problems clearly, and the other demands on practitioners’ time. Nevertheless, as shown in Table W7 in the Appendix (page 30), 53 per cent of all complaints handled by the OLSC in 1999-2000 were finalised within three months and almost 75 per cent were finalised within six months. Systems have been developed to give a degree of priority to older matters.

    Referrals to the Administrative Decisions Tribunal
    In addition to seven ongoing matters in the Administrative Decisions Tribunal, in 1999-2000 the OLSC filed four Informations arising from complaints. Each of these four matters related to a breach of s.152(1) of the Legal Profession Act -a section which relates to the Commissioner’s power to request information and documents from a practitioner. In three of these matters the Tribunal made a finding of professional misconduct and fined and publicly reprimanded the practitioner involved. One of the three cases involved a senior practitioner who had been the subject of previous disciplinary action. He was fined $20,000 and ordered to pay within 90 days.

    In the fourth matter referred to the Tribunal during the year, the respondent practitioner ceased to practise and provided undertakings to the Commissioner and the Law Society that he would not apply for a Practising Certificate for a period of two to five years. The Commissioner therefore applied to the Tribunal to dismiss the matter, pursuant to the new s.155A of the Legal Profession Act, as being not in the public interest to pursue.

    Reviews
    The OLSC received 149 requests for reviews of Council decisions about complaints in 1999-2000, eight more than in 1998-1999, and completed 130 reviews. As shown in Table R1 in the Appendix, the Councils’ decisions were confirmed in 115 of the reviews completed; only five resulted in the complaint being re-investigated. In two cases the review resulted in the resolution of the original complaint. The remaining eight review requests were either out of time or withdrawn.

    The significant difference in the conduct of reviews during this reporting year is that the average turnaround time was 3.5 months, compared with 4.4 months the previous year.

    Action resulting from earlier Tribunal referrals
    In 1999-2000 a number of superior court decisions gave consideration to the meaning and effect of various aspects of Part 10 of the Legal Profession Act 1987. Of particular note are the matters of Barwick v The Law Society of New South Wales, on which the High Court delivered judgement on 3 February 2000, and Carson v The Legal Services Commissioner, on which the Supreme Court delivered judgement on 23 February 2000. This latter decision has been the subject of appeal by Mr Carson and cross-appeal by the OLSC.

    Barwick v The Law Society of New South Wales
    The Barwick matter principally concerned the question of whether the Law Society and Bar Association (“the Councils”) were subject to a three-year limit in respect of complaints they had self-initiated. The High Court, overturning the decision of the New South Wales Court of Appeal, confirmed that the Councils were subject to the limitation period and that only the Commissioner, under the discretion afforded by (then) s.138 of the Act, could accept complaints lodged out of time. The other important guidance provided by the High Court now requires that:
    • a matter filed in the Tribunal must not contain any allegations that were not in the original complaint, and
    • before proceedings are commenced a formal investigation must have been held for each and every complaint made under the Act.

    There was, in the various individual and joint judgements delivered by the full Court, a significant amount of criticism levelled at the wording and construction of Part 10 of the Act. In response, a working party was established with representatives of the OLSC, the Law Society, the Bar Association and the NSW Attorney General’s Department. The working party made submissions which resulted in an amendment to the Act in July of this year (the Legal Profession (Complaints and Discipline) Amendment Act 2000). The amendment sought to overcome some of the ambiguities in the legislation and gave the Councils the discretion to accept self-initiated complaints out of time without the need to refer them to the Commissioner.

    Carson v The Legal Services Commissioner
    The matter of Carson v The Legal Services Commissioner commenced with the Commissioner’s filing of an Information in the Legal Services Tribunal (as it then was) in December 1996, alleging that Mr Carson was guilty of professional misconduct in respect of a number of grounds. In early 1997 Mr Carson issued a summons in the Supreme Court, seeking orders that:
    • the Tribunal be restrained from conducting a hearing into the allegations
    • the Commissioner’s decision to refer the matters to the Tribunal was void
    • the Information should be permanently stayed.

    The matter proceeded to hearing in 1998 and Her Honour Justice Simpson delivered judgement in February of this year. She found that Mr Carson had been denied procedural fairness in not being given a proper opportunity to respond to the allegations before the Commissioner filed the Information. Her Honour, however, refused to hold that the decision was void and, after consideration of each ground of the Information, determined that a full Tribunal hearing should be conducted into three of the seven grounds alleged. Mr Carson has appealed this decision.

    Future directions
    The experience gained by the OLSC in running a number of complex prosecutions during the reporting year provided us with an excellent opportunity to rationalise and develop our prosecutorial role. We welcomed the guidance provided by the courts in the major cases outlined above and have embarked on a re-evaluation of a number of ongoing investigations to ensure that the explicit and implicit procedural requirements of Part 10 of the Legal Profession Act have been thoroughly met. The OLSC is acutely aware of its obligation to act as a model litigant and is currently developing policies to ensure a consistently high standard of approach to Tribunal prosecutions.


    PROMOTING COMPLIANCE WITH HIGH PROFESSIONAL AND ETHICAL STANDARDS
    One of the Legal Services Commissioner’s functions is to assist the Professional Councils to enhance standards in the legal profession.

    To fulfil this function, in 1999-2000 the Commissioner contributed to reviews of the Legal Profession Act, Part 10, and the Conveyancers Licensing Act, seeking to make these more effective instruments for handling disputes arising from the provision of legal services and for dealing with malpractice. He also took a high profile in discussions surrounding proposed legislation on the incorporation of legal firms and multi-disciplinary practices, highlighting the practical and ethical issues that need to be addressed if the accountability of practitioners and the quality of legal services are to be maintained.

    Professional and ethical standards are also embodied in the custom and practice of individual lawyers and their firms, as through their dealings with each other and with the community they are constantly re-defining how the profession operates and how it is perceived. The Commissioner used forums such as visits to Regional Law Society meetings to raise awareness and stimulate debate about a range of issues that have an impact on legal practice; some of these are canvassed below. Engaging in such debates will assist lawyers not only to comply with established professional and ethical standards but also to contribute to raising them.

    Reviews of legislation
    What follows are examples of some of the submissions we made in relation to legislative reform during the reporting year.

    Legal Profession Act
    The NSW Law Reform Commission (LRC) is currently reviewing Part 10 of the Legal Profession Act, which deals with complaints and discipline. The review’s terms of reference draw particular attention to recent case law and practical experience of the operation of the statutory provisions.

    The OLSC’s preliminary submission to the LRC review addressed a number of recent major court decisions - particularly in the cases of Murray v The Legal Services Commissioner and Barwick v The Law Society of New South Wales - which criticised Part 10 and the manner in which it had been implemented by the Commissioner and the Law Society. Some of the problems arising from these court decisions were addressed in amendments to the Act, as discussed earlier. Other problems remain to be addressed through further legislative change. For example, in our preliminary LRC submission we proposed the mandatory disclosure of documents by practitioners where the Commissioner believes this is necessary during the course of an investigation.

    In the LRC submission the OLSC also suggested amendments relating to broader policy issues that the office is interested in pursuing. These included:
    • incorporation of the principles underlying the Professional Practice and Conduct Rules into the Legal Profession Act
    • expanding the compensation power of the Legal Services Division of the Administrative Decisions Tribunal, or alternatively, granting the Commissioner a power to make compensation orders in certain cases
    • clarification of the definition of unsatisfactory professional conduct so as to incorporate some complaints involving negligence
    • the need to clarify the Commissioner’s powers and the legislative provisions concerning complaints about a practitioner’s failure to disclose their costs or to advise their clients of significant changes to estimated costs
    • the introduction of a public complaints register.

    When the LRC’s discussion paper on the review of Part 10 is available the OLSC will be making a more detailed submission in relation to the issues outlined above.

    Conveyancers Licensing Act
    In April 2000 the Department of Fair Trading (DFT) released an Issues Paper on the National Competition Review of the Conveyancers Licensing Act 1995 to which the OLSC made a detailed submission focusing on two points. First, the OLSC submission to the DFT proposed clearer links between the Conveyancers Licensing Act and the Legal Profession Act. According to the provisions in s.82 of the Conveyancers Licensing Act, Part 10 of the Legal Profession Act applies to licensed conveyancers. However, complaints about unlicensed conveyancers and those whose licences had lapsed at the time of the conduct in question are beyond the jurisdiction of the OLSC. In these cases, consumers have little protection. Even though much conveyancing is carried out by solicitors rather than licensed conveyancers, this is a significant concern, given that conveyancing is a large area of complaints to both the OLSC and LawCover.

    Second, the OLSC proposed that the Conveyancers Licensing Act be amended to make conveyancers subject to the same ethical and practice standards as apply to solicitors and barristers. This would not only make the complaints and discipline system more effective but also give the public greater confidence when approaching a conveyancer.

    The OLSC looks forward to these questions being addressed in the DFT’s final report.

    Incorporated legal practices
    In late 1999 the Professional Conduct and Practice Rules were changed by the Law Society so that solicitors no longer have to have majority voting rights, or receive at least 51 per cent of receipts, in multi-disciplinary practices (MDPs) offering legal services. Subsequently the government introduced the Legal Profession Amendment (Incorporated Legal Practices) Bill which will allow for the incorporation of legal practices, including MDPs. The Bill proposed in part that one of the directors of an incorporated practice must be a solicitor, and that the solicitor director will be responsible for the provision of legal services by the company.

    The Commissioner raised a number of concerns about the proposed legislation:
    • The disciplinary system operating under Part 10 of the Legal Profession Act requires a relatively high standard of proof to establish responsibility for misconduct. Liability is restricted to individual practitioners, as are penalties. It might be difficult to hold a solicitor director accountable for the actions or omissions of one or more of the incorporated company’s employees.
    • A solicitor director of an incorporated legal practice could face conflict between their professional and ethical duties as a certified legal practitioner and the interests of the company’s shareholders. Questions might arise as to the manner in which business motives could impact on the operation of incorporated legal practices and the ethical standards that apply to legal services. The Bill provides that where there is conflict between the requirements of the Legal Profession Act and the Corporations Law, the Legal Profession Act will prevail. However, it is not clear how this will operate in practice.
    • Some provisions of the Bill appear to extend the professional obligations of legal practitioners to all service providers in incorporated legal companies. While this would maintain the company’s accountability for advice provided by a cross-disciplinary team of employees, it raises other problems. First, it might be resisted by non-lawyers. Second, it could lead to a dilution of the professional obligations of legal practitioners.
    • The provision of cross-disciplinary services could put significant pressure on legal professional privilege. For example, if a non-lawyer, such as a financial adviser, is party to case details, then the confidential relationship between a client and a lawyer would be threatened.
    • On a positive note, incorporation might serve as a mechanism for the regulation of multi-disciplinary practices which provide a range of professional services including legal advice.

    The OLSC will watch the progress of the Bill and developments in the incorporation debate with interest.

    Other questions for debate
    The following are some of the issues which will — or already do — have an impact on the operation and regulation of the legal services industry. The Commissioner raised these issues at various forums in 1999-2000 and puts them forward here to stimulate further debate in the profession and among consumers.

    What skills are essential?
    It is clear that communication difficulties between legal practitioners and their clients account for a significant proportion of complaints made to the OLSC. A practitioner’s difficulty in communicating with clients is often the result of the pressures of running a legal practice in an increasingly competitive legal market. The OLSC considers that there would be considerable merit in ensuring that practitioners undertake training which will assist them with these recurrent problems.

    The current Professional Conduct and Practice Rules stipulate that all legal practitioners who hold a New South Wales practising certificate must, from 1 April to 31 March the following year, complete continuing legal education (“CLE”) courses which are designed to assist in their general professional development. The only special requirement is that at least once every three years the practitioner’s CLE must cover EEO, unlawful discrimination (including unlawful sexual harassment) and occupational health and safety.

    The OLSC advocates the inclusion in any year’s CLE courses, mandatory programs which provide effective instruction in:
    • communicating with clients
    • responsive, efficient practice management
    • the ethical commitments of the profession.
      It is hoped that such a scheme would contribute to the satisfaction of consumers of legal services and the ongoing success of legal service providers.

      Should mediation be compulsory?
      One of the OLSC’s primary functions is the mediation of disputes between legal practitioners and the consumers of legal services. Under the Legal Profession Act, this is a voluntary process and practitioners may decline to participate on whatever grounds they consider appropriate.

      The OLSC is making a submission that the Commissioner be given the power to make attendance at a mediation conference compulsory for legal practitioners. Obviously such a power would not be invoked in all cases, however it would provide a valuable incentive for the timely resolution of consumer disputes.

      The OLSC views the mediation process as a means through which a legal practitioner and a client can come to an appreciation of each other’s position. Often a client will not realise precisely how much time and effort a practitioner has to put into a matter and will be suspicious of what are character-istically meticulous records of time spent on phone conversations, perusing correspondence, and so on. Likewise, practitioners are often unaware of clients’ expectations and their understanding of the way legal services operate.

      The participation of both parties in mediation in a neutral, constructive environment is often the best way of ensuring a lasting resolution to consumer disputes and can also provide a valuable educational experience for practitioner and client alike.

      Does the public have a right to know?
      It is axiomatic that consumers, when shopping for legal service providers, will wish to seek out practitioners who have a record of both competence and integrity. There is something of a global movement toward transparency and accountability in all areas of public and private enterprise, including the legal services industry. In the USA, for example, Florida, Oregon and New Jersey have mechanisms whereby members of the general public can access information about the number and nature of complaints made against solicitors.

      Under current New South Wales law, all information obtained pursuant to the administration of Part 10 of the Legal Profession Act 1987 can only be disclosed in limited circumstances. Unless a legal practitioner has been found guilty of professional misconduct by the Adminis-trative Decisions Tribunal, there are no means for a member of the public to assess the history of solicitors and barristers, even though they may be accredited specialists in certain areas of law.

      A complaints register would provide the profession with an added incentive to perform with competence and diligence in all dealings with clients and members of the public. It would also provide the public with a means of gauging consumer satisfaction with particular practitioners or firms before they entrust them with their business. Historically, the profession has strenuously resisted reform of this nature.

      The OLSC is interested in the views of both practitioners and consumers regarding this issue and the form a possible complaints register would take.

      Should compensation apply to consumer disputes?
      Under the current provisions of the Legal Profession Act, compensation of up to $10,000 can be payable to complainants only as a result of a conduct investigation:
      • If the Commissioner or one of the Professional Councils determines that a generally competent and diligent practitioner is guilty of unsatisfactory professional conduct, the practitioner can be offered a formal reprimand. The practitioner’s payment of compensation to the complainant can be a condition of the reprimand.
      • If satisfied that there is a reasonable likelihood that the practitioner would be found guilty of professional misconduct, the Commissioner or the Professional Council must refer the practitioner to the Administrative Decisions Tribunal. The Tribunal can award compensation to the complainant if it finds the practitioner guilty of misconduct.

      Most complaints received by the OLSC are consumer disputes, not conduct investigations. They do not involve unsatisfactory professional conduct or professional misconduct (as defined by the Act) so they cannot result in compensation. Nevertheless, compensation might be appropriate in many of these cases. For example, there are instances of practitioners who have advertised that a first consultation is free but have sent the client a bill after an initial one-hour meeting, with the explanation that a “consultation” is 20 minutes. As it stands, disputes of this nature have to be resolved through mediation.

      Due to the lack of compensation provisions in respect of consumer disputes, for many clients the only source of redress is taking action against the practitioner for professional negligence. This can be a daunting prospect.

      Should relationships between practitioners and their clients be regulated?
      Lawyers have a professional duty to care for their clients’ well-being and have to be able to consider the clients’ best interests objectively. Lawyers’ access to their clients’ confidential information means that they are in a position to manipulate their clients, but clients have to feel they can trust their lawyer. Adding a sexual relationship to the already complex professional lawyer/client relationship can make the professional relationship unworkable. It is therefore not surprising that sexual relationships between lawyers and their clients trigger a number of OLSC inquiry line calls and complaints.

      For conduct to be the subject of investigation and/or disciplinary action, it must take place in connection with the practice of the law. Forming personal or sexual relationships with clients is generally characterised as personal conduct which is not associated with the practitioner’s delivery of legal services. There are currently no rules prohibiting practitioners from forming or continuing such relationships with clients, or from continuing to act for a person once such a relationship has begun. The existing solicitors rules which prohibit the solicitor preferring their own interests over those of a client are seen by some as being sufficient to deal with this issue.

        The Commissioner is currently not in a position to take any investigative or disciplinary action in cases of sexual relationships between clients and practitioners unless they are of a nature that could breach the existing rules of professional conduct. However, there has been some discussion, both within the Law Society and at the OLSC, about possible amendments which would make just the existence of such a relationship a breach of professional practice standards.

        The Commissioner sees this issue as connected to the broader question of sexual harassment in the professional environment, which is currently being examined and debated both in Australia and overseas.

        Is there a hierarchy of obligations?
        Solicitors have a range of professional responsibilities, and when these are in conflict it can be difficult to determine which should be given priority. For example, there has recently been considerable discussion between the OLSC and the Law Society about the relative value of a client’s instructions and personal undertakings given by a practitioner on a client’s behalf.

        Historically, great importance has been given to personal undertakings made by solicitors in their professional capacity. If the practitioner has not made it clear that the client will be responsible for fulfilling the terms of the undertaking then that responsibility will fall on the practitioner. At the same time, the instructions of a client are at the heart of the professional lawyer/client relationship, and breach of a client’s instructions is an equally serious matter. Where instructions directly contradict the terms of an undertaking, a solicitor is placed in an invidious position.

        To date there are no clear rules which specify which obligation should be preferred by the practitioner. The Commissioner is of the opinion that in circumstances where a solicitor is faced with both a responsibility established by a personal undertaking and conflicting instructions from a client, the undertaking should prevail. However, this is a general principle only and it will be interesting to see if firmer guidelines can be developed in future.


        ENCOURAGING AN IMPROVED CONSUMER FOCUS WITHIN THE PROFESSION TO REDUCE CAUSES FOR COMPLAINT
        Reducing the need for formal complaints against legal practitioners is an important overall objective of the OLSC. During the reporting year we continued to address this objective by presenting sessions on ethics and best practice for lawyers in training, by supporting the Best Practice Program and accreditation scheme and by engaging with members of Regional Law Societies and practitioners at other forums.

        Working with universities
        OLSC staff have been regular speakers at the Law Faculties of the major universities in NSW, in courses at both graduate and undergraduate levels. To support these presentations we developed and are continuing to improve an interactive package which:
        • explains the operation of the complaint-handling system
        • illustrates how and why complaints occur
        • assists students in the analysis of the causes of common problems
        • encourages students to discuss ways of maintaining effective client relationships and avoiding disputes

        Some of the materials developed for delivery by OLSC staff have also been used by other guest speakers, students and teachers at other educational institutions and in TAFE courses.

        Best Practice
        The Commissioner liaised closely with the Best Practice Board during the year and has continued his strong support for the Best Practice accreditation scheme. For example, at his direction the OLSC contributed to the development of the Best Practice standard by drafting a protocol for responding to complaints. The starting point for the protocol is the contention that any complaint, whether justified or not, is an opportunity to improve a professional relationship. By responding to the complaint constructively and promptly the practitioner can not only regain and reinforce the client’s confidence and loyalty but also learn how to work with other clients better.

        An OLSC representative participated in the NSW College of Law Best Practice Program in the second half of the year and offered organisers constructive feedback from a complaint-handling perspective. His reports and program materials have since assisted other members of OLSC staff to identify instances where training in client-oriented practice management policies and procedures would enable practitioners to reduce their risk of time-consuming, expensive consumer disputes and conduct investigations. This information can be conveyed to practitioners in the course of dispute resolution by the office.

        Leading and stimulating debate
        The benefits of Best Practice were also conveyed to practitioners by the Commissioner at Regional Law Society meetings and other legal forums during the year. In addressing practitioners he drew attention to common problems raised with the office by consumers and members of the profession, discussing ways that these problems could be overcome. He also used these forums as opportunities to stimulate debate on broader issues of short-term and long-term interest to the legal services industry. For example, he encouraged discussion of the implications of the proposed incorporation of legal firms and multi-disciplinary practices, amendments to the Legal Profession Act, and some of the other issues raised in this report.

        As well the Commissioner made presentations at conferences and seminars attended not only by legal practitioners but also by members of related professions and by other stakeholders in the legal services industry. For example:
        • Resolving Grievances in a Grieving World - 11th Women, Management and Industrial Relations Conference
        • Complaints Against Lawyers - Motor Accidents Compensation Conference
        • Costing: Everyday Issues for the General Practitioner - NSW College of Law
        • Designing Resolutions: From Techniques to Self Knowledge - Australian Dispute Resolution Conference
        • Debate: That Lawyers Have No Ethics - Australian Plaintiff Lawyers Association
        • Ethics and Family Lawyers - 9th Annual Family Law Conference.

        Presentations by the Commissioner and OLSC staff emphasise the importance of effective communication to identify core values and common goals in the delivery of legal services. Shared understandings of the purpose and processes of the law will decrease both dissatisfaction with, and complaints against, members of the legal profession.


        PROMOTING REALISTIC COMMUNITY EXPECTATIONS OF THE LEGAL SYSTEM
        Practitioners are responsible for establishing and maintaining effective working relationships with their clients, however this can be difficult when clients have limited understanding and/or unrealistic expectations of the legal system.

        To help overcome breakdowns in client/practitioner relationships, OLSC officers on the inquiry line often explain legal practice issues to callers and help them to clarify the points they need to discuss with their lawyer themselves, as shown in Table P5 in the Appendix.

        The mediation of consumer disputes created further opportunities for OLSC staff to help individual members of the community understand their rights and responsibilities as consumers of legal services. For example, on examination of a written complaint it might be apparent that a complainant is objecting to being charged for services they did not specifically request, however these services might have in fact been essential to the orderly conduct of their case. In such instances the OLSC officer handling the complaint will explain the need for the legal procedures that the practitioner followed. Such advice was typically provided by OLSC staff when dismissing complaints in 1999-2000.

        Publications
        As a more general aid to consumers of legal services the OLSC produced a series of concise fact sheets covering the questions that most commonly underpin consumer concerns:
        • costs disclosure
        • types of costs
        • cost disputes
        • regulated costs
        • negligence
        • liens
        • opposing legal representatives
        • hiring a legal practitioner
        • conflict of interests
        • deceased estates
        • settlement
        • file ownership and handling.

        The fact sheets are written in plain English. They explain legal language, outline basic principles and give up-to-date referrals, for example to the Supreme Court of NSW Cost Assessment Scheme and the Community Assistance Service run by the Law Society of NSW. As well as being sent to callers and complainants, the fact sheets were supplied to some public libraries. A second edition of the fact sheets will be published in both printed and electronic formats and distributed more widely in the coming year.

        The OLSC also published three editions of the newsletter Without Prejudice, which is distributed to practitioners, educators, community centres and groups, parliamentarians and interested members of the public. Topics covered in Without Prejudice included the regulation of migration agents, formal mediation, dishonest defaults and the fidelity fund, accounting for amounts paid by clients, and the implications of major decisions by the Administrative Decisions Tribunal. An index of all editions since 1994 was developed so that back issues with relevant articles can be sent to people inquiring about specific aspects of legal practice.

        Liaison
        We further increased community awareness of the operation of the legal system, and the legal complaint-handling system in particular, by working with representatives of other agencies which operate as community access points. For example, the Commissioner and other members of staff liaised with representatives of community legal centres and local courts, which serve as distribution points for OLSC brochures and forms. The Commissioner also held meetings with the leaders of other regulatory agencies in the Attorney General’s Department and with other complaint-handling bodies in the public sector, such as the Independent Commission Against Corruption and the Judicial Commission.

        Insufficient progress was made with the development of the OLSC website during the year, in part because the position of Education Officer was vacant for an extended period. Now that the position has been filled we anticipate expanding the range of information services we provide to the community and improving our liaison with community legal networks in the coming year.


        OPERATING EFFICIENTLY AND EQUITABLY
        The OLSC aims to function as a model of best practice, with effective financial and risk management systems and an efficient office infrastructure. Equally important, the office strives to maintain a values-driven work environment where client service is a priority, the culture is informal and enriching, diversity and creativity are welcome, and all members of staff take an active part in the achievement of office objectives.

        Financial and risk management
        Although the OLSC is administered within the NSW Attorney General’s Department it is funded by the Public Purpose Fund, not the State Treasury. As shown in the following balance sheet and notes, in 1999-2000 the OLSC operated within its overall budget allocation with some variance in different areas of expenditure:
        • Total employee-related expenditure was $254,435 less than anticipated largely because two positions were vacant for an extended period and two staff members took extended unpaid leave.
        • Overexpenditure on consultancy was indicative of ongoing difficulties with the implementation of the Complaints Tracking System (CTS). This was more than offset by underexpenditure on a CTS maintenance contract, which has been delayed pending resolution of outstanding issues under the original CTS Request for Tender Document.
        • Due largely to the complexity and duration of Court and Tribunal matters at which the Commissioner was represented by Counsel, the budget allocation for fees was exceeded by $13,250.

        All administrative and complaint-handling procedures of the office were audited by Deloitte Touche Tohmatsu during the year and were found to meet the requirements of the Act and our client groups. We have also implemented improved systems for security and control.

        Computing and Y2K
        In the first half of the reporting year all of the OLSC software and equipment was tested and Y2K contingency plans were developed in consultation with Information Technology staff from the Attorney General’s Department. No difficulties arose.

        In the second half of the year, refurbishment of the OLSC office created three additional workstations for complaint-handling staff. All workstations have computers networked with the complaints tracking system (CTS) and phones linked to the inquiry line queuing system.

        Throughout the year there were continuing issues with implementation of the CTS, and consultations with the suppliers are continuing. Already we have agreed to the development of a Telephone System Helpdesk which will enable us to record and report telephone inquiries and informal mediations in the same way as formal complaints. Subject to performance testing, this extension of the CTS will be implemented early in 2001.

        Through investigation and analysis of some of the problems encountered with the CTS we have identified ways that we can make it a more effective support for office operations. We have streamlined procedures to reduce our risk of errors in data collection and identified training needs that we are continuing to address. As a result we expect that the reporting of complaints will require less effort in future years.

        Human resource management
        As at 30 June 2000, the OLSC had 18 full-time positions for administrative and professional staff, however some of these positions were shared by part-time staff or filled on a temporary or casual basis while staff were on extended leave. Vacant positions were re-designed to match the changing requirements of the office, then re-evaluated before they were advertised and filled.

        The OLSC also employed casual staff - mostly law students towards the end of their training - to assist with our inquiry line. This has proven highly successful as it has provided us with a pool of trained staff to call on when needed. We expect that the young lawyers who have had experience working within the OLSC will eventually join the profession as model practitioners.

        OLSC staff are selected not only on the basis of their skills and knowledge but also on the basis of their own values and their commitment to the values of the OLSC, as determined by staff. These values include: fairness, accessibility, reliability, problem solving, education, teamwork, social justice, reform, empathy.

        These values are applied to our relationships with all of our clients - complainants and practitioners alike - and with each other. We maintain a cooperative work environment which fosters commitment and enables staff to integrate their personal and professional development with the achievement of OLSC objectives. The mutually supportive culture of the workplace assists all staff to cope with the stress of bearing clients’ frustration and distress.

        The OLSC office is family-friendly and work arrangements are flexible. Ongoing learning is strongly supported, whether it be directly work-related - for example, participation in seminars on the application of the GST to the legal services industry - or related to other fields which broaden the perspectives and knowledge base of individual members of staff.

        Business planning and performance management
        The OLSC business plan was prepared to meet Attorney General’s Department guidelines in a way that satisfied our requirements for participation and teamwork. With assistance from Coverdale & Associates, the legal/policy, complaint and administration teams analysed their own needs and the needs of their internal and external stakeholders. The strategies developed by each team to meet the perceived needs were then shared and integrated as the overall business plan for the OLSC.

        The OLSC business plan was broken into individual work plans which are the starting point of the OLSC performance management system. At least once every six months all staff members review their work plan with their manager and discuss their progress. This process ensures that training or other support is provided as required, the job descriptions, duty statements and actual work performed are directed at meeting OLSC objectives, and the performance targets for the office and staff are achieved.


        CASE STUDIES

        Savings
        Even though they had been successful in their complex commercial case, a couple were upset about the way their solicitor had handled it and treated them. There was further work to be done but they cancelled the solicitor’s retainer and asked for their bill, which came to over $50,000 - more than they had won. The solicitor was demanding payment within 31 days. They wanted the bill reduced.

        The relationship between the complainants and the solicitor was poisonous by the time it reached the OLSC, as shown in the large volume of correspondence that both sides presented. Each side’s allegations and assumptions were numerous, heated and apparently to some extent misguided. In order to save everyone time, money and stress, the OLSC case officer suggested addressing the dispute through formal face-to-face mediation on neutral territory with an impartial OLSC mediator, and both sides agreed.

        The mediation session was a forum for both parties to express the frustration, anger and fear that gave their allegations their intensity. It was also an opportunity for the misconceptions of each side to be addressed; for example, the couple were relieved to learn that the solicitor was not in fact attempting to seize their home through underhand legal manoeuvres, and the solicitor was relieved to learn that the complainants were not trying to raise funds to institute proceedings against him.

        At the end of the three hours the bill was reduced a little as a token of goodwill and the couple understood and accepted their position. The instigator of the complaint concluded by saying to the mediator: "Thank you. It's been so good to get that off my chest."


        A useful letter
        An elderly woman had visited a solicitor who agreed to write a simple letter to her club for her for $100. She phoned the solicitor a few weeks later to find out whether the letter had been sent, but the solicitor was not available. She phoned again the following week and the week after that and the week after that, but could not get past the receptionist.

        Eventually she told the receptionist that she wanted to see the solicitor herself to find out what had happened, and the receptionist offered her an appointment either in the city or near her home. She took the latter. At that second appointment with the solicitor she was assured that the letter had been sent. She then phoned her club to find out that it had brought the result she wanted.

        Later she received a bill for $500 from the solicitor: $100 for the first appointment and the letter, plus $100 for the second appointment, plus $300 travelling expenses. The OLSC Inquiry Officer advised her to write a letter to the solicitor explaining that

        a) the second appointment would not have been necessary if the solicitor had either sent her a copy of the letter after the first meeting or returned her phone calls, and

        b) if she had been told that she would be charged for the solicitor’s travel she would have chosen an appointment in the city.

        She was also sent a complaint form to complete and return if she was not satisfied with the solicitor’s response to the letter. A month later she returned the form blank, with a note to say that the bill had been reduced to $150 and she was satisfied.


        Failure to respond
        In mid-1999, the OLSC received a complaint alleging that a legal practitioner had failed to take action on a number of a client’s claims for almost three years, despite giving her assurances to the contrary.

        The OLSC provided the practitioner with a copy of the complaint and sought his comments on the allegations. When the practitioner failed to respond, the OLSC issued him with a warning that unless he responded within a further fourteen days, he would be issued with a notice under s.152(1) of the Legal Profession Act 1987, requiring the information to be provided. Failure to respond to such a notice without reasonable excuse is professional misconduct.

        Again, the practitioner didn’t respond and the s.152 notice was issued and served personally on the practitioner at his practice. When no response was received, the Commissioner initiated a complaint against him and invited him to submit what his ‘reasonable excuse’ for not complying was.

        Yet again, the practitioner made no response. The Commissioner referred him to the Administrative Decisions Tribunal pursuant to s.155(2) of the Act. The practitioner did not appear at the directions hearings but he did obtain representation immediately prior to the hearing of the matter. Under cross-examination, the practitioner testified that he was under a lot of pressure at work and had no reasonable excuse for not responding to the Commissioner’s correspondence.

        The Tribunal noted that the Act prescribed a serious penalty for practitioners who failed to respond to the Commissioner’s notices. The Tribunal ordered that the practitioner be publicly reprimanded, fined $2,000 and pay the Commissioner’s costs. The Tribunal also made orders restricting the practitioner from undertaking certain litigation matters in the course of his practice.

        An investigation into the initial complaints is still proceeding.


        A difficult decision
        A brother and sister, co-executors of their father’s estate, turned to their father’s solicitor for advice and assistance. At first the brother was impressed with the solicitor’s approach: he not only explained their responsibilities and processes such as applying for probate but also expressed his respect for their father and seemed to take an interest in their well-being. However, after several months the brother learnt that the solicitor - a married man - had formed an intimate relationship with his sister.

        In a complaint to the OLSC the brother expressed his fear that the solicitor was taking advantage of his sister at a vulnerable time in her life, exploiting his position of trust for personal and perhaps financial gain. He was concerned that the solicitor was delaying proceedings so as to create excuses for continuing the relationship and in order to increase his professional costs. The brother could not talk to his sister about the situation but he wanted it resolved before their mother found out.

        An OLSC case officer phoned the solicitor to discuss the legal and personal aspects of his handling of the matter. The advice the solicitor had provided appeared to be in accordance with the terms of the will and there had been no undue delays. However, it was explained to the solicitor that although there are no statutory impediments to a relationship between practitioners and clients, they are generally discouraged due to the distinct potential for conflicts of interests and at least the perception of abuse of a professional relationship.

        The solicitor acknowledged that the situation that had developed could give rise to suspicion and misunderstandings, and that this could detrimentally affect his professional reputation. In order to avoid further conflict within the family, whom he held in high regard, he waived his fees and stopped acting in the matter.


        Agreement reached
        Unhappy with the outcome of her family law matter, a complainant scrutinised every detail of the $5,320 bill she received from her solicitor, an accredited specialist who charged above the family law scale of costs. On the bill she found items that she did not think she should have to pay for because she had no evidence that the work had been done.

        The OLSC case officer who contacted the solicitor was informed that all of the work listed on the account had been performed with diligence and care. The solicitor had comprehensive records of her handling of the case and was confident that she could fully justify every item on the bill to a knowledgeable third party. She also had file notes of extended informal meetings she had conducted with the complainant over coffee, providing moral support and fostering goodwill, for which she had not charged. The complainant had simply not understood what was involved.

        Communication between the solicitor and the complainant had broken down so the case officer agreed to try explaining the legal jargon of the bill - terms such as "engrossing documents" - to the complainant in plain English. She asked the solicitor for a copy of her cost agreement to use as a reference in that conversation.

        The solicitor could not produce the cost agreement. She promptly recognised that she therefore had no option but to re-draw the account at the family law scale. The costs were reduced by almost $1,000.

        A written costs agreement, signed by both the client and the solicitor, must be entered into if a solicitor wishes to charge above the prescribed scale in family law matters. Failure to do so can have significant consequences, regardless of the quality of the work done.


        Compromise
        A court date was fast approaching but a solicitor had been unable to get his client’s file from her first solicitor, who had withdrawn from the case “due to unforeseen circumstances”. The first solicitor had taken the case on a “no win, no fee” basis and was not asking for payment of his professional costs - only for disbursements, including fees for medical reports which were crucial to the case. He was exercising his lien over the file, i.e. his right to hold it until his bill was paid.

        The second solicitor complained to the OLSC on his client’s behalf, claiming that it was unreasonable for the first solicitor to hold back the file for three reasons:
        • The first solicitor had not sought payment at the time the expenses were incurred.
        • The matter was not yet concluded.
        • The reason the first solicitor had ceased to act for his client was that he had taken on another matter which presented him with a potential conflict of interests.

        Nevertheless, the costs agreement between the complainant and the first solicitor, signed in 1995, did state that the client was to pay for expenses incurred during the course of the matter, regardless of the outcome. The lien was valid.

        An OLSC case officer negotiated with both solicitors and the file was eventually transferred. The second solicitor gave the first solicitor an undertaking that on completion of the case the disbursements would be paid irrespective of the outcome and all professional fees would be paid if the case was successful. He would hold sufficient money in trust to cover these expenses.

        This result represented a significant compromise, particularly on the part of the first solicitor. It serves as a reminder that clients must read a cost agreement with care, and that before they sign it they should clarify anything in it that they do not understand. “No win, no fee” usually does not apply to disbursements.


        Conflict and compassion
        A very distressed woman from a regional centre phoned the inquiry line to discuss a potential conflict of interests. Her daughter was engaged in a family court matter against her former son-in-law, who had been physically abusive to several members of her family. The caller had found out that he was being represented by the same firm as her daughter, and her instinct was that this was not right.

        With encouragement and assistance from the OLSC Inquiry Officer, the woman wrote to her solicitor, asking her whether - and how - she would be able to ensure that information relating to the two parties would not be exchanged within the firm. After this the woman called the Inquiry Officer several times to discuss her progress.

        Some weeks later the caller reported that her solicitor had gone on maternity leave and a senior solicitor from the firm had taken over her files. He had arranged to meet the caller and discuss the concerns raised in her letter, which had been placed on the file. At their meeting he agreed that it was appropriate for her to seek alternative representation. In view of the trauma and indignity that she and her family had already suffered, he then gave her the details of a solicitor from another firm who was happy to take over the case. He had already tentatively briefed the new solicitor and offered to waive his firm’s fees.

        The woman’s last call to the OLSC was to say that she had confidence in her new solicitor and wanted to thank the Inquiry Officer for her compassion and support at this most stressful time in her life.


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