Without Prejudice
Issue 31
Without Prejudice
Issue 31
In this Issue
Commissioner’s comments
Self Assessment and Audits
Fees for responding
Conflict of Interests
Appropriate assistance
Find a solution
Commissioner’s Comments
The main article in this issue of Without Prejudice discusses the self-assessment process that we have developed for incorporated legal practices.
Over the past two years, I have heard many reasons why practitioners might consider incorporating their practices. These included tax breaks, income splitting, structuring better salary packages and superannuation, limited liability and asset protection. Unfortunately, rarely do we hear the desire to improve management systems as the main focus for incorporation. As pressed by Bruce MacDermott of LawCover during the many seminars LawCover has run for those considering incorporation, improved management is, or at least should be, the prime driver for incorporation.
Our responsibility to review and investigate to determine whether or not incorporated legal practices have appropriate management systems has led us to develop the self-assessment process discussed in this issue. We believe this approach to “appropriate management systems” to be the best way of addressing this complex issue: since, due to the diversity of legal practices, no one size could ever fit all.
Also in this issue, we discuss the positive benefits of participation with our dispute resolution process, particularly in relation to costs disputes. While this is a somewhat contentious area, our staff have been very successful in resolving thousands of these disputes without the need to either engage in costs assessment or more costly litigation.
Steve Mark
Legal Services Commissioner
Self Assessment and Audits for Incorporated Legal Practices
Over the last twelve months, the OLSC has been working to ensure the development of appropriate management systems within Incorporated Legal Practices (ILPs).
One of the key responsibilities of a solicitor director of an ILP is to ensure that the practice has “appropriate management systems” in place. S47E (3)(a) Legal Profession Act 1987
In order to ensure that solicitor directors are fulfilling their obligations under the Legal Profession Act, throughout February 2004, all solicitor directors of ILPs will be asked to undertake a self-assessment of the management systems currently operating in their practices. Those practices which hold a recognised quality management certification (eg QLII or similar) will automatically satisfy the assessment.
The process of self-assessment was successfully trialled with a range of ILPs in late 2003 and those practitioners who engaged in the exercise found it provided a useful opportunity to assess their existing systems. The self-assessment document lists ten objectives and outlines key concepts for solicitor directors to consider. It also provides some suggested approaches to ensure that the ILP meets the stated objectives. However, the suggestions are not prescriptive or exhaustive as it is recognised that no “one size fits all”.
Working extensively with the Law Society of NSW, LawCover and the College of Law, the Commissioner has identified ten objectives that “appropriate management systems” should address:
- Competent work practices to avoid negligence;
- Effective, timely and courteous communication;
- Timely delivery, review and follow up of legal services to avoid instances of delay;
- Acceptable processes for liens and file transfers;
- Shared understanding and appropriate documentation from commencement through to termination of retainer covering cost disclosure/billing practices and termination of retainer;
- Timely identification and resolution conflicts of interest. Interests may conflict ion manu situations, including those where the practitioner acts for opposing parties, where a practitioner acts against a previous client and where the practitioner prefers his or her own interests to those of his client;
- Records management minimising the likelihood of loss or destruction of correspondence and documents through appropriate document retention, filing, archiving etc. This includes compliuance with requirements for registers of files, client items held in safe custody and relevant financial interests of the practitioner;
- Provision of undertakings, monitoring of compliance and timely compliance with notices, orders, rulings, directions or other requirements of regulatory authorities such as the OLSC, Law Society, courts, costs assessors;
- Supervision of practice and staff providing for compliance with statutory obligations covering licence and practising certificate conditions, employment of persons and ensuring proper quality assurance of work outputs and performance of legal, paralegal and non-legal staff involved in the delivery of legal services; and
- Ensuring that trust account procedures are carried out in accordance with s61 of the Legal Profession Act
All ILPs - particularly those that are also multi-disciplinary practices - will need to have considered the following:
- Awareness of the requirements and obligations imposed on solicitor directors contained in the Legal Profession Act and Regulations;
- Maintenance of separate and independent files, records and accounts for any non-legal services provided;
- practice planning and management systems which can differentiate between legal and non-legal services and any other businesses conducted by the ILP and provide scope for Conflict of Interest checks;
- costs disclosure procedures and disclosure of any “non-legal” services being provided, communication between the practice and clients and protection of client confidentiality and legal professional privilege; and
- proper licensing of individuals providing legal services and or managing the ILP
The self assessment process requires directors of ILPs to rate their approach to and implementation of policies and procedures that address each of the ten objectives. Participants are asked to use five ratings from “Non Compliant“ to “Fully Compliant Plus”. Solicitor directors are then required to certify their response and return the forms to the OLSC.
In lieu of a scheduled audit program, audits of ILPs will be “event driven” and triggered by events such as a referral from a Law Society Trust Account Inspector, a failure to respond to the request for self-assessment or ratings less than “Compliant” on the self assessment form.
It is important for solicitor directors to realise that audits can be undertaken even if there is no formal complaint. Following an audit, a period of 3 months will usually be given to ILPs to address any shortcomings before any follow up audit is undertaken.
In order to assist ILP solicitor directors to fulfil their obligations, a new training program is being developed by the College of Law and is due to commence shortly. In addition, it is planned that the mandatory Legal Practice Management course will be reworked to encompass the new requirements.
A new quality management standard (Law 9001) to replace the existing QLII program is also due for release soon by SAI Global (Standards Australia International) which will be of interest to those practices who wish to pursue such accreditation.
While the responsibilities of a solicitor director are quite onerous, more than 300 practices in NSW now provide legal services using the incorporated structure and numbers are expected to continue to grow. While to date the vast majority of ILPs are sole or small practices, an increase in ILPs is particularly likely when legislation permitting incorporated structures is passed in other states thus allowing a common structure for those larger practices with offices throughout Australia.
Fees for responding to complaints: Not On
A reminder to practitioners: it is not appropriate to charge a complainant for time spent responding to OLSC enquiries.
While legal practitioners are entitled to charge for their time and disbursements, they are not entitled to charge for tasks that do not relate to the legal services provided. The complaints process is separate from the retainer and no fee is appropriate.
Conflict of Interests Working Party: Progress Report
As reported in previous issues of Without Prejudice, the Office of the Legal Services Commissioner has established a Conflict of Interests Working Party under the auspices of the Attorney General. The second meeting of stakeholders was held on 3 December 2003.
The Working Party’s objectives are to enquire into and review the law and practice relating to conflict of interests. It is hoped that appropriate mechanisms, in addition to application to the court, will be developed to resolve such conflicts as they arise. Another primary concern is the negative impact on the reputation of the profession when lawyers act in situations where interests appear to conflict.
Relevant stakeholders include the Director General of the Attorney General’s Department, representatives from the Law Society, the Bar Association, the Law Reform Commission, the Legal Profession Advisory Council, Legal Aid Commission, New South Wales law schools, consultants to legal practices and a range of legal practitioners from sole practitioners to large law firms.
At the second meeting on 3 December 2003, draft proposals of preliminary recommendations were submitted. Participants were asked to provide comment on the drafts in order to progress the relevant issues.
The working party will develop recommendations for review and reform of the area of conflict of interests in a report to be prepared for the Attorney General by April 2004. It is hoped that positive steps can then be taken to resolve conflict situations as they arise and to alleviate the public perception that lawyers act despite potential or actual conflicts.
A forum will be held on 24 March 2004 to provide an opportunity for all views to be discussed and clarified before the final recommendations are prepared.
Working with practitioners and complainants with disabilities
All staff members of the OLSC have recently participated in training conducted by the Attorney General’s Department to ensure that our service is provided in a way that is accessible to all members of the community including those with a disability.
While it has always been the policy of the OSLC to ensure that appropriate assistance and flexibility are provided to those who need it, the Attorney General’s initiative has allowed us to review and reinforce existing procedures.
People with a disability that may have an impact on the way they access our service are encouraged to let us know if there is anything we can do to make things easier. This might be something as simple as enlarging documents for those with visual impairment or arranging a face-to-face interview for a client with an intellectual disability and their advocate.
Since it is a legal requirement that a complaint be lodged in writing, we are happy to assist those people who have difficulty reading or writing to fill out a complaint form.
People who are deaf or hearing impaired can contact us in the first instance via our TTY on 02) 9377 1855 or via email address olsc@agd.nsw.gov.au. At that stage arrangements can be made for an interview if necessary or for appropriate documents to be provided.
All our clients should be aware that all our documents are available online at www.lawlink.nsw.gov.au/olsc.
Find a solution: the best way to deal with complaints
Having someone complain about you may not be a pleasant experience but more and more practitioners are realising that finding a resolution to a complaint can benefit both parties.
Practitioners are becoming more aware of the benefits of resolving complaints, either through the OLSC or before the complaint is formally lodged; particularly when the complaint is about costs.
One of the core activities of the OSLC is assisting in the resolution of disputes between lawyers and complainants. We are often able to assist practitioners and complainants to find useful and sensible resolutions to their disputes where both parties are willing to cooperate in the process.
Where no disciplinary issues are raised but a complain concerns matters of customer service, the aim of the office is to find a resolution to the dispute where possible. These types of complaint issues are known as ‘consumer disputes’.
Consumer disputes are often about money. Clients lodge complaints when they feel the fees charged by their lawyer are too high. Often, this is in fact a communication issue: the complaint arises because the issue of costs has not been well enough explained by the practitioner.
Costs disclosure has been mandatory since 1994. While most practitioners abide by their obligation to disclose costs by providing a written costs disclosure, the issue of costs is often not discussed as openly as it should be. This reluctance to be up front can lead to problems down the track.
The complaints process through the OLSC allows the lines of communication to remain open with both parties given the opportunity to provide their side of the story. In some circumstances the practitioner uses the opportunity to let the complainant know why the costs are as they are. Another common outcome is the offer of a reduction in the bill from the practitioner.
Occasionally, OLSC staff may suggest that a practitioner consider making a reduction in a bill in the interests of resolving the complaint. It should be noted that the practitioner cannot be compelled to reduce costs and need only do so where he or she feels it is appropriate. Many practitioners opt to reduce their bill; acknowledging the benefits of resolving a complaint. While a proactive approach from practitioners to complaint resolution is encouraged, it is acknowledged that there will be circumstances where resolution is not possible.
Time spent dealing with complaints can be frustrating for practitioners. However, reluctance to resolve costs disputes often only serves to exacerbate the dissatisfaction of the client and increases the amount of time the practitioner needs to spend responding to the client or to the OLSC.
Even on circumstances where the practitioner feels the account is fair, willingness to negotiate a reduction in the bill can resolve a complaint quickly, allowing the practitioner to focus on the needs of current client and other priorities in their practice.
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