OVERVIEW

4.1 Following on from the Commission's identification of the general (or "best practice") principles which should govern the system of handling complaints against legal practitioners and the testing of the existing system against those principles in the previous Chapter, the Commission now sets out its recommendations for major reform, with supporting commentary. For reasons of convenience only, we present the "core" recommendations in this Chapter, which relate to the internal workings of the proposed system. The remainder of recommendations, which deal with external scrutiny, education and prevention, and ancillary matters (of no less importance), are presented in Chapter 5. (Chapter 6 contains a summary of all recommendations.)

4.2 In the preceding Chapter, we concluded that the design of a proper system of complaints handling must recognise that there are multiple aims which must be met: (1) there is a consumer dimension, with the consequent need to redress the complaints of dissatisfied users of legal services, but there is also (2) the need to ensure the diligence and competence of individual practitioners, as well as (3) setting and maintaining high standards of ethics and practice for the legal profession generally. Our central criticism of the operation of the existing system is that it is geared mainly to the second aim, fails to achieve even this adequately in relation to lower-level unsatisfactory professional conduct, and does not sufficiently address the other two aims.

4.3 Consequently, the vast bulk of complaints in any year are dismissed, which leaves complainants cold and sends the legal profession the quite incorrect message that, apart from some rare and spectacular lapses by a few individual lawyers (usually involving some aspect of dishonesty), there is really no need to improve the general standard of services provided. In fact, the Commission's File Survey confirmed that while a few complaints are completely insubstantial, most of them do point to genuine problems of service delivery, such as inordinate delay, poor lawyer-client communications, discourtesy and so on, for which the consumer gains no redress and the legal practitioner no sanction or incentive to improve.

4.4 Thus, the Commission has endeavoured to design a new system which is much more consumer-oriented and which actually will deal seriously and effectively with most complaints and disputes. Among other things, this will require educating the public about the nature of legal services and their rights and remedies under the disciplinary system, and educating the legal profession about the standards of practice and common courtesy to which clients should be able to feel entitled.

4.5 Briefly, the key features of the recommended new system include:

• both the perception and the reality of much more independence from the legal profession, through the establishment of the office of Legal Services Ombudsman, and changes to the provisions regarding the appointment of lay and legal participants in the disciplinary system;
• strengthening the mechanisms for ensuring the accountability of the legal professional associations and the other institutions involved in the complaints handling system, through the reinforcement of the powers and resources of the lay person-dominated Conduct Review Panel (as well as by the creation of the office of the Legal Services Ombudsman);
• much easier access to the system for potential complainants, in terms of information, language, physical access and so on;
• a more simple, streamlined structure to the system, with the central intake of all complaints about the (non-)delivery of legal services (including disputes about fees and costs), a central source of advice and assistance about making complaints (through the Legal Services Ombudsman), and a single Legal Services Tribunal to conduct hearings with greater and more flexible powers to sanction lawyers and make compensatory orders in favour of complainants;
• redress of the current imbalance of rights and safeguards between complainants and lawyers, with the creation of a statutory Complainants' Charter of Rights;
• a clearer distinction between consumer-type disputes and disciplinary matters, with a much greater emphasis on consensual dispute resolution, arbitration and compensation in the former cases; and
• increased attention to education and prevention measures, such as compulsory training in legal ethics for law students, feedback to the legal profession from the disciplinary system, and the emphasis on "Client Care" principles and practices in solicitors' offices.

4.6 The centrepiece of the reforms is the establishment of the office of Legal Services Ombudsman, around which the rest of the proposed system is designed. At the conclusion of the preceding Chapter, the Commission discussed the powerful concerns about independence and accountability which led us to the conclusion that the primary responsibility for the regulation and discipline of the legal profession could no longer be left to the profession itself, and which led us to prefer the strategy of using a Legal Services Ombudsman, rather than a Legal Services Complaints Commission.

4.7 Throughout the recommendations the Commission proposes that the independent bodies involved in the complaints handling system be referred to as the Legal Services Ombudsman, the Legal Services Tribunal and the Legal Services Conduct Review Panel. The current legislation uses the prefix "Legal Profession" to designate the various disciplinary bodies now in existence; ¹ however, the Commission believes that there should be no possibility of confusion between those institutions which are controlled by the legal profession (such as the Councils of the Law Society and the Bar Association, and the committees which operate under the delegated authority of the Councils) and those which are designed to be independent of professional control.

RECOGNITION OF THE MULTIPLE AIMS OF THE LEGAL PROFESSION'S DISCIPLINARY SYSTEM

1. Part 10 of the Legal Profession Act 1987 should expressly recognise that the multiple aims of the disciplinary system are: (1) to redress the consumer complaints of users of legal services; (2) to ensure compliance by individual legal practitioners with the necessary standards of honesty, diligence and competence; and (3) to maintain the ethical and practice standards of the legal profession as a whole at a sufficiently high level.

2. Fulfilment of the multiple aims of the disciplinary system requires a comprehensive, integrated approach, which provides for: community education about the legal system and the role of lawyers; assistance for complainants to facilitate access to the complaints system; the prompt, thorough investigation of complaints; the diversion of appropriate matters for consensual dispute resolution; the formal hearing of allegations of unsatisfactory professional conduct and professional misconduct; a flexible range of sanctions and remedies which satisfy the needs of complainants and the public interest in effective discipline; and education, counselling, and other assistance programs for lawyers.

Commentary (Recommendations 1-2)

4.8 The Commission stated in DP 26 that the complaints handling system should be:

more attuned to redressing the grievances of individual complainants, but this should not be at the expense of the general public interest in ensuring that licensed legal practitioners conduct their work with honesty, diligence and competence, and that the standards of practice required of lawyers generally are maintained at a sufficiently high level.²

4.9 Thus, the system for handling complaints against lawyers must serve at least three aims: to address promptly the consumer-type concerns of particular complainants; to secure the compliance of individual legal practitioners with the standards of professional practice; and to ensure that the standards of the profession generally are maintained at a high level. At the same time, it must be remembered that rights of professional practice must not be arbitrarily removed or limited, nor should a practitioner's professional reputation be capriciously tarnished, so that a lawyer who has been complained about should be entitled to expect a fair hearing before suffering any penalty or being subject to any criticism.

4.10 In the preceding chapter, in relation to "best practice" principles for complaints handling, the Commission noted that the "one procedure fits all" approach which has applied in NSW has largely lost sight of the (first and third) aims of client/consumer satisfaction and maintenance of high professional standards. In practice, the traditional approach has had the flavour of litigation, with the focus on whether the complainant has made sufficiently strong allegations to put into question the respondent lawyer's continued rights of practice.

4.11 In DP 26, the Commission stated that one of the biggest problems with the existing system has for some time been the "profound gap between what angered clients and what lawyers and their professional associations saw as important enough to merit disciplinary action." ³ While clients overwhelmingly complain about such matters as negligence, incompetence, delay, poor communications, discourtesy and overcharging, these complaints are rarely proceeded with and rarely result in any censure, sanction or compensation. Even where the complainant has achieved the desired result - the reduction of a bill or the surrender of files, for example - the lengthy delays involved may take the gloss off the successful resolution. It is clear from the submissions received and from the Commission's own research - especially from the survey of Law Society complaint files - that this was fair criticism and that the problems are still pervasive.

4.12 The systems for handling complaints against solicitors in Victoria and in England and Wales have changed in recent years, putting far more emphasis on the prompt resolution of clients' grievances through the use of consensual dispute resolution techniques and the ready award of compensation.⁴ The submissions of both the Law Society and the Bar Association recognise the need to move in this direction and propose mediation schemes for lawyer-client disputes.

4.13 The Commission generally supports these initiatives and makes numerous recommendations aimed at increasing the use of mediation and arbitration, and making compensation more readily available for the settlement of consumer-type disputes. However, the Commission stands by its caveat, quoted above, that a greater orientation towards client concerns must not come at the expense of the other aims of the system. What is needed is a comprehensive system with a number of separate components which, when taken together, meet all of the desired aims. ⁵

THE LEGAL SERVICES OMBUDSMAN

3. An office of Legal Services Ombudsman should be established as an independent, statutory authority. The Legal Services Ombudsman should be appointed by the Governor in Council for a term not exceeding seven years, after which the person is eligible for reappointment.

4. It should be open to the Governor to appoint one or more persons (in the same manner) to the position of Deputy Legal Services Ombudsman if the workload of the office so requires.

5. The office should have a secretariat providing sufficient professional, support and technical services to discharge its statutory responsibilities promptly and effectively in the public interest.

6. A person is qualified to be appointed as the Legal Services Ombudsman if he or she is a person who is broadly familiar with the nature of the legal system and legal practice and possesses sufficient qualities of independence, fairness and integrity. The Legal Services Ombudsman need not be legally qualified, nor should legal qualifications or experience be a disqualifying factor; however, in the event of the appointment of a non-lawyer, legal advice should be available within the office.

7. The functions of the Legal Services Ombudsman should be to:

• handle the initial intake of all complaints against legal practitioners - including non-lawyers who offer legal services, such as conveyancers;
• provide complainants and potential complainants with the appropriate level of advice and assistance about making complaints or pursuing other avenues and remedies;
• regularly monitor sources of public information, such as news and current affairs reports and court decisions, which may contain information about the conduct of legal practitioners;
• investigate directly complaints made against lawyers who currently serve or have recently served on one of the professional Councils or are otherwise associated with a Council or the complaints handling process, as well as those complaints which the Ombudsman believes should be handled directly in the interests of justice and public confidence;
• refer all other complaints to the relevant professional Council for investigation (such reference may contain a recommendation to investigate, divert to mediation, or both);
• commence an investigation or refer a matter to one of the professional Councils on his or her own initiative, such as where allegations have been aired publicly;
• prosecute disciplinary matters before the Tribunal, following an investigation or upon the request of the Conduct Review Panel or a professional Council;
• be responsible for community education about the regulation and discipline of the legal profession;
• assume a general duty to assist in the enhancement of professional ethics and standards, through liaison with institutions which provide training and education for service providers, as well as through direct efforts, such as by sponsoring research, publishing, and holding seminars and workshops; and
• report annually to Parliament through the Attorney General, and at least semi-annually to the professional Councils.

8. In the proper discharge of the functions of the office, the Legal Services Ombudsman should be entitled to:

• have access, on a confidential basis, to all of the files and other records kept by the professional associations in relation to the assessment and investigation of complaints against lawyers and the disciplinary system generally;
• have sufficient powers to conduct its investigations effectively, including the same powers available to the professional Councils in this respect;
• have the power to dismiss a complaint after investigation, on the same bases available to the professional Councils in this respect;
• attend and participate in any meeting of the professional Councils (or their committees) considering complaints;
• attend the hearings of the Legal Services Tribunal as an observer;
• attend any dispute resolution (mediation or conciliation) conference as an observer; and
• protection from all liability for anything done in good faith in the course of executing his or her statutory responsibilities.

10. The Legal Services Ombudsman should, on a regular basis, conduct surveys of the views and levels of satisfaction of complainants and respondent lawyers with the complaints handling system. Such surveys should be published in the Legal Services Ombudsman's Annual Report.

Commentary

Generally

4.14 The Commission's recommendation for the establishment of an office of Legal Services Ombudsman is based variously on the need for perceived independence, fairness and external scrutiny.

4.15 As discussed in some detail in DP 26, ⁶ there is now a Legal Services Ombudsman in England and Wales, who mainly has a review function.⁷ However, in the model we recommend in this Report, the Legal Services Ombudsman would have a greater and more direct role in the process, including providing assistance in the formulation of complaints and investigating some complaints. (Thus, for reasons of natural justice and potential conflict of interest it would be inappropriate for the Legal Services Ombudsman also to serve as the external monitor, and we prefer to leave that function to the Conduct Review Panel.)

4.16 The Commission has chosen to use the title "Legal Services Ombudsman" for the person selected to play the central role in ensuring the independence, accountability and efficiency of the complaints handling system. As we wrote in DP 26:

The term is well-known and understood by the general public and the media (notwithstanding its Swedish origins), and carries the clear connotation of the independent and impartial investigation of complaints. While the title Ombudsman initially was used mainly in relation to complaints against governments or government officers,⁸ there is a recent trend towards a more general usage.⁹

4.17 A "Banking Ombudsman" has been established in England ¹⁰ and in Australia, ¹¹ and there have been calls in this country for similar positions to be created in the insurance and telecommunications industries. A number of newspapers (including the Sydney Morning Herald) have experimented with an in-house Ombudsman, supplementing the loose regulation provided by the Australian Press Council.

4.18 The preliminary submission of the Australian Consumers Association pointed out that a single ombudsman could be expected to attain a higher public profile than a complaints commission, leading to greater awareness of and trust in the complaints handling system. ¹²

4.19 The Commission agrees that "putting a human face on the complaints handling system" has significant advantages, and considers the title "Ombudsman" to be the most appropriate one. However, the proposed title of the office is much less crucial than the proposed role of the office. The Commission notes, for example, that the Victorian Law Reform Commission recommended that an office of "Legal Services Commissioner" be established in that state.¹³ The NSW Department of Community Services (DCS) recently has released a discussion paper favouring the creation of a "Community Services Commissioner" who would "investigate, mediate and conciliate serious complaints about programmes or services". ¹⁴ However, DCS also has left open the possibility of the appointment instead of a "Deputy Ombudsman (Community Services)", with a similar role.

4.20 The broad role of the office of Legal Services Ombudsman is described in Recommendation 7, and the powers necessary to fulfil those functions effectively are listed in Recommendations 8-10. The establishment of the Office itself, and the qualifications for appointment, are the subject of Recommendations 3-6.

The Office of Legal Services Ombudsman (Recommendations 3-6)

4.21 In Recommendation 3, the Commission formally proposes the establishment of the Office of Legal Services Ombudsman as an independent, statutory authority. The Office itself should have a secretariat (Recommendation 5) with sufficient resources - secretarial, clerical, administrative, professional, technical and technological - to enable the Legal Services Ombudsman to discharge his or her functions effectively. For example, the Office will require a good computer system, adequate telephone facilities and premises for dealing with members of the public, some library facilities, modern filing systems, and so on. Funding for the office is the subject of Recommendation 64, discussed in Chapter 5, below.

4.22 The Commission recommends (Recommendation 3) that the Legal Services Ombudsman should be appointed by the Governor in Council for a term of up to seven years, with the possibility of re-appointment, which is consistent with the nature and terms of appointment of other similar, independent, statutory office holders, such as Law Reform Commissioners, ¹⁵ the Ombudsman, ¹⁶ and the principal Commissioner of the Independent Commission Against Corruption.¹⁷ The period of tenure is designed to promote the perception and actuality of independence, while retaining a degree of accountability that appointment-until-retirement (as in the case of judges) does not.

4.23 The method of appointment is important from the point of view of assuring public confidence in the new institution. In DP 26, the Commission wrote:

Without doubt, the Legal Services Ombudsman must actually be, and be seen to be, above partisan political and sectional interests. As with all statutory office holders, the formal appointment should be by the Governor in Council (that is, the Governor acting on the advice of the Cabinet), after nomination by the Attorney General. The position should first be advertised in the media to attract a suitable field of candidates.¹⁸

We continue to believe that this is the most appropriate course. Regard should be had to the merit selection processes mandated in the Public Sector Management Act 1988 (NSW). If a Public Council on Legal Services were to be established, ¹⁹ it could play an important (advisory) role in the selection process.

4.24 We have not specifically recommended any method of removal of the Legal Services Ombudsman, but this also should be consistent with the position in respect of other statutory officers; ie, removal by the Governor (for proven misbehaviour) upon the address of both Houses of Parliament.²⁰

4.25 The Commission anticipates that the appointment of a single Legal Services Ombudsman would be sufficient initially, assuming adequate support staff are provided as recommended. However, it may be that in future the workload of the Office will require the appointment of one or more Deputies to assist the Legal Services Ombudsman, at his or her direction (Recommendation 4). Such appointments should be made in the same manner as the appointment of the Legal Services Ombudsman - that is, by the Governor in Council, for a period of up to seven years. We note that provision is made in the governing Act of the Ombudsman's Office for the appointment of a Deputy and one or more Assistants, ²¹ and in the Independent Commission Against Corruption's Act for the appointment of Assistant Commissioners. ²²

4.26 The Commission gave careful attention to the qualifications of the Legal Services Ombudsman. The "threshold question is whether appointment to the office of Legal Services Ombudsman should be limited to persons without legal qualifications". ²³ In England and Wales, for example, the legislation specifies that the Legal Services Ombudsman "shall not be an authorised advocate, authorised litigator, licensed conveyancer, authorised practitioner or notary".²⁴

4.27 In DP 26, the Commission wrote:²⁵

The main rationale for limiting the position to non-lawyers is that the external monitoring function is best performed by a person who is not, and would not be suspected of being partial to the interests of the legal profession.

The Commission agrees that the external monitor, whether a Legal Services Ombudsman or some other officer, must be free from any reasonable suspicion of bias (for or against the profession). However, it is less certain that the essential characteristic of independence means that anyone with legal qualifications automatically should be debarred from holding the office of Legal Services Ombudsman. Among practising lawyers, academic lawyers, magistrates, judges and non-practising lawyers (ie, those with legal qualifications who are working in management, banking, journalism and so on), there must be many persons with sufficient personal qualities of independence, fairness and integrity to warrant appointment. Conversely, among non-lawyers, there obviously will be many persons who would be inappropriately sycophantic, insensitive to the needs of consumers, or otherwise unsuitable for appointment.

The Commission believes there are some important advantages in having a Legal Services Ombudsman who understands the substance, context and procedures of legal practice. The process of appointment, discussed above, which involves consultation and careful consideration, should ensure that the particular person chosen has the attributes and community standing to be, and be seen to be, independent of the profession. If a lay person was appointed as the Legal Services Ombudsman, he or she should could, where appropriate, take legal advice from some perceptibly neutral lawyer, such as an academic lawyer or retired judge.

4.29 This still represents the Commission's considered view (Recommendation 6). The Legal Services Ombudsman should be a person of demonstrable independence (and impartiality), fairness and integrity. Legal qualifications probably are desirable, but not essential. The submission from the NSW Commissioner for Consumer Affairs, Mr John Holloway, favoured the appointment of a person with legal qualifications.

4.30 It should be noted that the appointment of a legally-qualified Legal Services Ombudsman would not in itself depart from the Commission's stated aim of increasing lay participation and external scrutiny, since elsewhere in this Report we propose the continued (indeed, the increased) involvement of lay participants in other parts of the disciplinary system - such as on the Professional Conduct Committees of the Law Society and Bar Association, on the new Legal Services Tribunal, and on the Legal Services Conduct Review Panel.

Functions of the Legal Services Ombudsman (Recommendation 7)

4.31 Reception of all complaints. The office of the Legal Services Ombudsman should be the central intake agency for all complaints relating to the provision (or, sometimes, non-provision) of legal services. Generally this involves complaints by clients or former clients against their own lawyers, but the system is not so limited, and it may be that complaints against lawyers will be received from (eg) other lawyers, judicial officers, opposing parties, government officials, or members of the public. (In Recommendation 11, below, we specify that any person may make a complaint.) The system already deals to some extent with complaints against persons employed in lawyers' offices,²⁶ and there are provisions prohibiting the practice of law by "unqualified practitioners". ²⁷ With the trend towards the deprofessionalisation of certain legal services, the system also should be able to accommodate the reception of complaints against providers of legal services who are not lawyers with practising certificates. For example, residential conveyancing, soon will be performed lawfully by licensed conveyancers as well as by solicitors. Under the new legislation, ²⁸ the discipline of conveyancers is to be handled by the Law Society Council and the existing disciplinary bodies (the Legal Profession Standards Board, Disciplinary Tribunal, and Conduct Review Panel).

4.32 The use of the office of the Legal Services Ombudsman as the central intake agency has several major advantages. First, it affords prospective complainants the confidence to approach a clearly independent and impartial body. In DP 26, the Commission noted that:

The initial step in the complaints-handling process may well be the most important, especially from the point of view of the complainant. Persons making complaints must be assured that their problems will be handled promptly, efficiently, sensitively and impartially. ²⁹

The fact that a complaint about a lawyer must be made to that lawyer's professional association may have the effect of dissuading some dissatisfied clients and others from lodging a complaint. ³⁰

4.33 The American Bar Association's Commission on Evaluation of Disciplinary Enforcement has characterised this latter issue as "the familiar criticism that the fox is guarding the henhouse", which, given a certain existing level of public distrust, is likely to be made even where the disciplinary system is in fact "fair to both respondents and complainants". ³¹

4.34 Secondly, a central intake agency would permit the establishment of a single registry of complaints and inquiries,and permit the follow-up of some inquiries which do not result in a formal complaint. The legislation currently requires complaints to be in writing before a formal investigation can commence, ³² and the Commission believes that this is appropriate. However, the Commission is aware that there are some dissatisfied clients and others who go to the trouble of making the initial contact but then do not follow this up with a written complaint for one reason or another:

There are many reasons why people may fail to follow up their concerns about a lawyer's conduct with a formal complaint. These include: the perception (correctly or incorrectly formed) that they were treated unsympathetically when they made the initial contact; the inability or unwillingness to put things in writing; the lack of opportunity to make use of the complaints assistance services provided during working hours; uncertainty over costs; or a sense of futility in complaining about a lawyer to that lawyer's professional association. ³³

4.35 Unfortunately, neither the Law Society nor the Bar Association currently keep detailed records of telephone calls to, or personal attendance at, their offices by persons who may wish eventually to complain about the conduct of a legal practitioner. In DP 26, the Commission contrasted this approach with that of the Complaints Unit of the New South Wales Department of Health:

which does carefully record all inquiries made by telephone or in person. There are several good reasons for preferring the latter approach. The initial recording allows for follow-up, after a time, in those cases in which there appeared to a problem of some significance but a formal, written complaint providing full particulars has not been lodged. The Health Complaints Unit has decided that this issue is so important that it has reorganised its operations in recent times to dedicate more resources to the initial intake and follow-up phases of their complaints-handling procedures. This has involved the development of the necessary computer software to track complaints, the use of more senior staff at the initial stages, and regular meetings of staff to consider follow-up. ³⁴

4.36 The Commission believes that the statutory requirement to take "all reasonable steps" to assist complainants ³⁵ should involve a proper system of recording, monitoring and following up initial contacts from potential complainants. This would now become the responsibility of the office of the Legal Services Ombudsman. Since there is to be increased use of mediation and conciliation (see Recommendations 15-20, below), persons who contact the Legal Services Ombudsman with complaints should be encouraged to participate in these informal dispute resolution processes in appropriate cases where the lawyer-client relationship has broken down, even though the complaint does not raise clear evidence of unsatisfactory professional conduct or professional misconduct.

4.37 This more active approach to the reception of complaints not only benefits individual complainants, but "also provides far more information about the general pattern of complaints, which is ultimately useful for developing policies and strategies aimed at preventing disputes and raising the standards of professional conduct and ethics." ³⁶ (See Recommendation 63, discussed in Chapter 5, below, regarding the need for feedback from the disciplinary system to assist in the enhancement of professional standards.)

4.38 Thirdly, the provision of a single point of entry into the disciplinary system makes the process far more simple and efficient from the perspective of complainants. As discussed in the previous Chapter, one of the Commission's main aims is to streamline the system quite dramatically, to eliminate having the complainant shuttling back and forth before different agencies and institutions, and to avoid the necessity of the complainant having to launch multiple actions in different forums.

4.39 Advice and assistance. It should only be necessary for a person to identify that he or she has a dispute of some kind with a provider of legal services; the Legal Services Ombudsman should then be able to provide full and effective advice and assistance about how best to remedy the problem. In Recommendation 14, discussed more fully below, the Commission specifies that the right to comprehensive (and comprehensible) advice and assistance should be included in a statutory Complainants' Charter of Rights.

4.40 Media monitoring. Another important responsibility of the office of the Legal Services Ombudsman should be to monitor court decisions and, especially, press reports for information or allegations about the conduct of legal practitioners. The American Bar Association's Commission on the Evaluation of Disciplinary Enforcement has made a similar recommendation, commenting that:

Proactive research includes actively monitoring such sources of information about possible lawyer misconduct as media stories and court decisions. Without the staff resources to monitor this information, lawyer misconduct that is public knowledge may escape disciplinary counsel's attention. ³⁷

4.42 Referral and direct investigation. In many or most cases, the Legal Services Ombudsman will, having assisted the complainant to formulate a proper complaint, refer the matter to the relevant professional Council(s), possibly with an attached recommendation to investigate or divert for consensual dispute resolution, or both. The Legal Services Ombudsman likewise may refer matters to the professional Councils which have commenced on the Ombudsman's own initiative (such as where the Legal Services Ombudsman is aware of publicly-aired allegations of misconduct on the part of a lawyer).

4.43 However, it is an essential part of the Commission's recommended system that the Legal Services Ombudsman also be entitled to investigate a matter directly, in certain circumstances. Direct investigation should be obligatory where the subject of a complaint (or an investigation commenced on the Legal Services Ombudsman's own initiative) is a current or recently retired member of one of the professional Councils or is otherwise associated with a Council or with the complaints handling process. This latter category might include (but is not limited to) certain current or past employees of the professional associations (especially those who serve as senior managers), lawyers who serve on important Council committees (especially complaints committees), spouses or other close relatives of Council members, and so on.

4.44 The Commission sees this power as fundamental to ensuring that there is a public perception that the complaints handling process is independent and impartial, and is not part of a "club" in which prominent lawyers look after each other's interests. The natural justice protection also runs in the other direction - a professional Council should not be placed in the position of feeling the pressure to deal unnecessarily harshly with a former member or employee in order to avoid adverse allegations.

4.45 One of the major precipitating factors in the recent changes to the regulation of the legal profession in England and Wales (including the establishment of a Legal Services Ombudsman) was the considerable public outcry and agitation in 1982-1983 over the so-called "Glanville Davies affair". In that matter, ³⁸ a complaint of gross overcharging was made by a client against the named solicitor , who at that time had been a member of the Council of the Law Society of England and Wales for 15 years. Although the solicitor's bill was reduced after "taxation" (review) by court officers from [[sterling]]197,000 to less than [[sterling]]68,000, the Law Society Council refused to pursue any disciplinary action and this decision was not challenged by the then-existing Lay Observer. The client was finally forced to take judicial action, and the Court found that Glanville Davies had been guilty of "gross and persistent misconduct", ordering that he be struck off the Roll of solicitors.

4.46 The Commission recommends that the Legal Services Ombudsman also have a more general power to investigate directly "in the interests of justice and public confidence". The decision whether to refer a matter to a Council or to investigate directly should be entirely at the discretion of the Legal Services Ombudsman. In practice, the decision to directly investigate may be because the particular matter has some special or unusual element in it, or has been the subject of public attention or controversy, or involves the possibility of a real or perceived conflict of interest if referred, or even because the Legal Services Ombudsman simply wishes to handle a representative selection of matters in order to provide a "control group" vis-a vis the professional Councils. No doubt practical considerations also will be taken into account, for there is little value in the Legal Services Ombudsman taking on such an active caseload that he or she cannot devote sufficient attention and resources to each retained matter. (See also below, the power of the Legal Services Ombudsman under Recommendation 9, to take over the investigation of a complaint from one of the professional Councils.)

4.47 Prosecution of matters before the Legal Services Tribunal. Where the Legal Services Ombudsman has conducted the investigation of a complaint (or taken over the investigation under Recommendation 9), and has decided that the matter must proceed to the Legal Services Tribunal for a hearing, the Legal Services Ombudsman normally should also prosecute the matter before the Tribunal. Similarly, the Commission has recommended in this Report that the Conduct Review Panel, after review, should be entitled to refer matters directly to the Tribunal, without the intervention of the Attorney General. (See Recommendation 54, below.) In such cases, the Panel may request that the Legal Services Ombudsman or one of the professional Councils (as appropriate) prosecute the matter before the Tribunal. It also may be that on occasion, after completing an investigation, the Legal Services Ombudsman or a Council might believe that it is desirable for the prosecution be handled by the other, eg to avoid a potential conflict of interest. In such circumstances, it should open for a request to be made along these lines and such a request normally should be favourably acted upon.

4.48 Community and professional education. The general nature of the office and the specific role of the Legal Services Ombudsman in the complaints handling process make it necessary and appropriate for the Legal Services Ombudsman also to have responsibilities for community education, and for continuing legal education aimed at lifting standards of professional ethics and practice. This will involve, among other things, "promoting and conducting research; holding seminars, conferences and public meetings; publishing materials for public and professional use; utilising the media". ³⁹

4.49 In their submissions, the NSW Commissioner for Consumer Affairs, the Registrar of the Legal Profession Disciplinary Tribunal, and the Australian Consumers' Association (ACA), all agreed that there was a strong need for greater public awareness of the role of lawyers, the delivery of legal services, and the processes for complaining about the conduct of lawyers. The preliminary submission of the ACA noted that an advantage of the Legal Services Ombudsman proposal was that a "single Ombudsman can achieve a higher public profile leading to greater public awareness, trust and therefore greater accessibility". ⁴⁰

4.50 Reporting requirement. Finally, the Legal Services Ombudsman should be under a statutory obligation to report annually to the New South Wales Parliament (through the Attorney General), and at least semi-annually to the Law Society and the Bar Association. ⁴¹ The importance of this is twofold: first, it helps to ensure the public accountability of the office of the Legal Services Ombudsman itself; secondly, it affords the Legal Services Ombudsman a regular, formal mechanism for reporting on the state of the complaints-handling system, and for making suggestions about the improvement of that system and the enhancement of professional standards. Both the reports to Parliament and to the profession should be privileged. Such reports are likely to receive media attention, which will assist matters in terms of both community education and external scrutiny.

Powers of the Legal Services Ombudsman (Recommendations 8-10)

4.51 Investigatory powers. In order to discharge his or her responsibilities effectively in the public interest, the Legal Services Ombudsman needs to be given sufficient power both to investigate some complaints directly and to provide oversight of the handling of the remainder of complaints by the professional associations.

4.52 In respect of the former, the Legal Services Ombudsman should have the same powers as the legal professional Councils ⁴² and other similar bodies ⁴³ to investigate complaints, such as to compel a reply or the supply of other relevant information from a respondent lawyer, to obtain files and other records from the lawyer involved, and so on. (See also Recommendation 23, below.) Where the Legal Services Ombudsman has directly investigated a complaint, he or she should be able to dismiss the complaint in the same manner (that is, with or without a reprimand) and on the same bases as the professional Councils. ⁴⁴ Following an investigation, the Legal Services Ombudsman should forward to the relevant professional Council any material which bears upon the issuing, suspension or cancellation of a practising certificate. ⁴⁵

4.53 Powers to observe. The Legal Services Ombudsman should be entitled to have access at all times, on a confidential basis, to all files and records kept by the professional associations relevant to the assessment and investigation of complaints against lawyers. For example, it may be important for the Legal Services Ombudsman in some cases to know the "complaints history" of the particular lawyer to decide whether to reprimand the lawyer or to refer the complaint to the Legal Services Tribunal for a hearing.

4.54 Such open access to the complaints files and records of the professional association also is essential to the Legal Services Ombudsman's oversight function. Similarly, the Legal Services Ombudsman should be free to attend any Council meeting or meeting of a committee of Council, dispute resolution conference, disciplinary hearing or other related proceeding in order to satisfy himself or herself that the proceedings are conducted in a fair and effective manner. The preliminary submission of the Law Society acknowledged this need in its proposal for an upgraded Lay Observer scheme. ⁴⁶

4.55 Protection from liability. The Legal Profession Act 1987 already provides that "no matter or thing" done in good faith for the purpose of executing statutory responsibilities for complaints handling by a Council, the Conduct Review Panel, the Standards Board or the Disciplinary Tribunal, shall subject a person to "any action, liability, claim, or demand". ⁴⁷ The Act should be amended to extend this protection from liability for acts done in good faith to the Legal Services Ombudsman when this office is established.

4.56 Power to take over an investigation. One of the most important of the Legal Services Ombudsman's recommended powers (Recommendation 9) is the discretion to take over the conduct of the investigation of a complaint which has been referred to one of the professional Councils, where in the opinion of the Ombudsman, "the interests of justice so require". In such cases, the Legal Services Ombudsman should be entitled to uplift the complaints file and any other relevant material from the Council, in order to complete the investigation properly. In practice, this power would likely be used in circumstances in which (for example) an actual or possible conflict of interest arose, or there was a substantial and unreasonable delay in the conduct of the investigation, or there was public disquiet with the Council's handling of the matter.

4.57 The Commission hopes that this discretion will not have to be exercised often, and it should certainly be open to a Council to request that the Legal Services Ombudsman take over an investigation in appropriate circumstances. However, the ability of the Legal Services Ombudsman to take over an investigation should serve as a very powerful check on the powers of the professional Councils and an important safeguard of the public interest, which should re-assure the public of the independence and effectiveness of the disciplinary system.

4.58 Conduct of "satisfaction surveys". In Chapter 2, the Commission detailed its failure to gain the cooperation of the Law Society to conduct a survey of complainants and respondent lawyers to assess the relative levels of satisfaction with the various aspects of the existing disciplinary system. In DP 26, the Commission wrote that it is necessary, in order to preserve public confidence in the fairness and efficacy of the system:

to put in place mechanisms throughout the disciplinary process which are responsive to the concerns of complainants and which assess the satisfaction of complainants with the manner in which their complaints are being handled. ⁴⁸

4.59 The Solicitors' Board in Victoria has recently begun surveying complainants and respondent solicitors to determine their relative levels of satisfaction with the dispute resolution process, thereby providing information which may help to improve services. ⁴⁹ Such surveys also are common in the evaluation of disciplinary processes by the legal professions in the United Kingdom ⁵¹ and the United States.

4.60 The Commission feels sufficiently strongly about this matter to make a separate recommendation (Recommendation 10) that the Legal Services Ombudsman expressly be made responsible for surveying the views and attitudes of complainants and respondent lawyers with respect to the complaints handling system(s). The results should be published as part of the Legal Services Ombudsman's Annual Report. This requirement should help to ensure a high level of public accountability and provide some of the information needed to "fine tune" and improve the system over time.

THE POSITION OF COMPLAINANTS

11. It should be open to any person to make a complaint alleging that a provider of legal services is guilty of conduct that may constitute unsatisfactory professional conduct or professional misconduct.

12. The lodgment of complaints should be subject to a limitation period of six years from the time of the conduct which is the subject of the complaint. It should be open to a complainant to seek leave from the Legal Services Tribunal to pursue a complaint outside the time limit, where the matter involves a question of professional misconduct.

13. A "Complainants' Charter of Rights", having statutory force, should be inserted into the Legal Profession Act 1987, in order to clarify the position of complainants (and respondent lawyers) and to emphasise the fairness and integrity of the system.

14. The Charter should provide that:

• Complainants are entitled to receive sufficient advice and assistance in order to prepare a complaint in writing in the prescribed form, and to understand the nature of their rights and responsibilities in the disciplinary process.
• Complainants are entitled to effective access to the office of Legal Services Ombudsman and other relevant institutions.
• Complainants - and respondent legal practitioners - are absolutely immune from civil suit for all communications made to the officers of the agency responsible for the handling of complaints, for all communications made to the various disciplinary bodies exercising direct or delegated statutory powers, and for all statements made within the disciplinary proceedings.
• Complainants must receive regular and adequate notice of the status of disciplinary proceedings at all stages of the proceedings. In general, a complainant should receive, contemporaneously, the same notices and orders the respondent receives as well as copies of the respondent's communications to the agency, except information that is subject to another client's privilege.
• Complainants must be permitted a reasonable opportunity to rebut statements of the respondent before a complaint is dismissed.
• Complainants must be notified in writing when a complaint has been dismissed (with or without a reprimand to the legal practitioner). The notice should include a concise recitation of the specific facts and reasoning upon which the decision to dismiss was made. The complainant should normally be given a copy of the investigator's report, unless there are good reasons for not doing so in a particular case (such as problems of confidentiality).
• Complainants must be given proper notice of any disciplinary proceedings, and should have the right to attend any hearing. Complainants should have the right to appear as a party to the proceedings on the issue of compensation, and may appear as a party in respect of other matters with the leave of the Tribunal or Court, subject to the risk of costs.
• Complainants have the right to have the dismissal of a complaint or any other adverse decision reviewed by the Legal Services Conduct Review Panel.

Commentary

Who may complain? (Recommendation 11)

4.61 Under the present arrangements, any person may make a complaint to the appropriate professional Council alleging that a legal practitioner is guilty of conduct amounting to unsatisfactory professional conduct or professional misconduct. ⁵¹ In practice, it is usually a client (or former client) who makes a complaint, but complaints also are received from other lawyers, judicial officers, the professional associations themselves, Members of Parliament, the Legal Aid Commission, executors, and others. ⁵²

4.62 One of the matters of controversy which led to the recent withdrawal by the Minister for Health, the Hon Ron Phillips, of the Health Care Complaints Bill 1992 (NSW), for further consideration and consultation, was the provision which limited the category of complainants to: the client, the parent or guardian of the client, a person chosen by the client to be his or her representative for this purpose, "a health service provider who has sufficient interest in the matter the subject of the complaint", the Director-General of Health or a delegate, and the Minister for Health or a delegate. ⁵³ The provision came under attack from such groups as the Medical Consumers Association and the Chelmsford Victims' Action Group, who claimed that the exposure of "another Chelmsford" might be prevented in future if journalists, concerned individuals, and human rights groups, could not make the running on an issue for the benefit of current or former patients.⁵⁴

4.63 It is outside the Commission's brief to comment upon the health care complaints system, but the Commission does feel strongly that the present position in the legal complaints system - that any person may make a formal complaint - should be maintained, and we have made a Recommendation to that effect.

4.64 The Commission is unaware of any evidence that the open-ended provision in the Legal Profession Act 1987 has been abused or has been the source of any mischief, and in any event the investigating authorities have sufficient powers to dismiss summarily frivolous or vexatious complaints. ⁵⁵ Perhaps the most dubious use of the legal complaints system has been as a form of collection agency: in the Commission's survey of Law Society and Bar Association complaint files it seemed that some creditors (such as interpreters, expert witnesses, accountants, real estate agents, valuers, and other lawyers) lodge complaints about unpaid bills primarily for the purpose of pressuring or embarrassing the lawyer to pay. Unless there is evidence of a persistent pattern of poor business practices, it is likely that such matters will be sent for mediation in future.

4.65 The Commission was told in some submissions, and observed in a few complaints files, that complainants who are not present or former clients of the lawyer complained about are occasionally discouraged by the professional associations from pursuing their complaints through the disciplinary system. This is not the law, and any such practice should be discontinued. In our view, the benefits of a more open system in terms of public confidence and public protection greatly outweigh any problems which may be caused by the occasional complaint by a person without a legitimate interest in the matter.

Limitation period (Recommendation 12)

4.66 In DP 26, the Commission considered that a limitation period of six years on complaints against lawyers could be appropriate, having regard to the limitation period in respect of civil actions for professional negligence, as well as the limitation period for complaints against lawyers in Victoria. ⁵⁶

4.67 The Bar Association's submission proposed a limitation period of six months from the time when the complainant became aware of the conduct ⁵⁷ which is the subject of the complaint. ⁵⁸ In the only other submission received on this subject, the Kingsford Legal Centre preferred to impose no limitation period at all, but agreed with the Commission that if there has to be one, six years is appropriate. ⁵⁹

4.68 In the United States, the American Bar Association's Model Rules for Lawyer Disciplinary Enforcement specify that disciplinary proceedings shall be "exempt from all statutes of limitations." ⁶⁰ This is justified on the basis that:

Statutes of limitation are wholly inappropriate in lawyer disciplinary proceedings. Conduct of a lawyer, no matter when it has occurred, is always relevant to the question of fitness to practice. The time between the commission of the alleged misconduct and the filing of a complaint predicated thereon may be pertinent to whether and to what extent discipline should be imposed, but should not limit the agency's power to investigate.

Discipline and disability proceedings serve to protect the public from lawyers who are unfit to practice; they measure the lawyer's qualifications in light of certain conduct, rather than punish for specific transgressions. Misconduct by a lawyer whenever it occurs reflects upon the lawyer's fitness. ⁶¹

4.69 The Commission believes that there is considerable force in this argument. However, there is a reasonable countervailing interest in prescribing a limitation period, from the point of view of certainty as well as guarding against the abuse of process. Without any time limit on complaints (or limitation on who can complain), a practitioner may be placed in the position of having to defend allegations where it would be unreasonable for there to be lasting memories or documents or witnesses to the relevant circumstances.

4.70 In the Commission's view, the legislation should specify a limitation period of six years from the time of the conduct which is the subject of the complaint. To provide a measure of flexibility, a complainant or a professional association should be able to seek leave from the Legal Services Tribunal to pursue a claim outside the time period, where the matter involves a question of professional misconduct. (Lesser allegations of unsatisfactory professional misconduct should be statute barred outside the time period.) At the same time, it is always open for the legal practitioner to argue that a complaint - whether made inside or outside the limitations period - amounts to an abuse of process and should be stayed. ⁶²

4.71 In Recommendation 74, and the accompanying text in the next Chapter, the Committee deals with the more limited issue of complaints based on conduct which occurred before the coming into force of Part X of the Legal Profession Act 1987 (on 1 January 1988).

4.72 Generally. In DP 26, the Commission noted that the "tenor of much of the Legal Profession Act 1987 suggests that complainants and complaints are to be treated with caution, while legal practitioners who are the subject of a complaint are to be accorded full procedural rights." ⁶³ The Commission suggested that the best remedy for this situation would be to have a legislative statement of a "Charter of Rights" for complainants "in order to make clear the position of complainants and to emphasis the integrity of the system." ⁶⁴

4.73 The proposal to establish a Complainants' Charter of Rights was supported in the submissions of the NSW Commissioner for Consumer Affairs, Mr John Holloway, the Australian Consumers' Association, the Kingsford Legal Centre, and the Registrar of the Legal Profession Disciplinary Tribunal, Mr Robert Bennett. The professional associations were less enthusiastic. The Law Society wrote that it "does not agree that complainants are at any disadvantage in respect of the treatment of their complaints under the present system", but maintained that it was "always ready and willing to review its procedures to ensure that complainants have every reasonable opportunity to present their complaints and have them thoroughly investigated". ⁶⁵ The Law Society did agree with most of the specifically enumerated "rights" proposed by the Commission, but considered that "such procedures can be followed without the requirement of a formal 'Charter of Rights'." ⁶⁶ Similarly, the Bar Association agreed with most of the specific principles proposed for incorporation, but stated that

it does not approve of the concept of a ''Complainants Charter of Rights". Such a charter runs the risk of introducing inflexibility into the disciplinary proceedings. Further, there is, in the Bar Association's view, no room for a charter weighted in favour of one or other party to the disciplinary proceeding. ⁶⁷

4.74 The Commission fundamentally disagrees with the notion that while the specific principles and procedures aimed at ensuring fairness for complainants are appropriate, their statement within a statutory "Charter" is not. The Commission believes that it is symbolically very important for the legislation expressly to support the position of complainants, and it is practically very useful to present the various rights and procedures collectively in Charter form, which will make these matters accessible to the general public in a way that the legislation (and subordinate rules, regulation and practices) ordinarily cannot. The Commission does not believe that with sensible application these broad principles - which really (and properly) do no more than make clear what natural justice requires in the circumstances - would cause any undue inflexibility or other problems.

4.75 Because of the existing imbalance in the Legal Profession Act, most of the recommendations in this Report are aimed at supporting the position of the complainant; however, the Commission also does make a number of recommendations aimed at ensuring fairness for respondent lawyers. ⁶⁸

4.76 Access, advice and assistance. The Legal Profession Act currently requires that the professional Councils "take all reasonable steps to ensure that a person who wishes to make a complaint is given such assistance as is necessary" to comply with the statutory formalities. ⁶⁹ Under the general regulatory scheme recommended by the Commission in this Report, this responsibility would largely pass to the office of the Legal Services Ombudsman.

4.77 The submission from the NSW Combined Community Legal Centres Group emphasised that, in its collective experience, the existing complaints procedures were clearly inadequate to meet the needs of persons from non-English speaking backgrounds, or persons with low literacy skills or other disabilities, preventing them from making an effective complaint. ⁷⁰

4.78 Ideally, much of the advice and assistance should be provided face-to-face. The office of the Legal Services Ombudsman should have access to interpreter services (in-house, or through the Ethnic Affairs Commission) and should liaise with the Disability Council of New South Wales and other relevant organisations about the best way to ensure that people with a disability have effective access to the office and that effective communication can be facilitated.

4.79 As the Commission noted in DP 26, this effort also will involve the production of:

Brochures, pamphlets, videos and other means of communication ... to provide a clear statement (in Plain English) of: the rights and responsibilities of complainants; the assistance which is available to prospective and actual complainants; the general nature of the disciplinary process, including the remedial orders which may be given; and the other forums for the resolution of disputes about the provision of legal services (mediation, civil suits, the Consumer Claims Tribunal, etc). It must be remembered that while some complaints are received from other lawyers, judges, court officials and public officials, the great bulk of complaints are initiated by members of the public (usually clients), who begin the process with very little information about how the disciplinary system works. ⁷¹

4.80 Having regard to the multicultural nature of the community in New South Wales, all of this literature and other media should be available in a wide range of community languages, with careful thought given to the question of "how to convey the information to targeted groups in a manner which most effectively identifies the way in which they actually, commonly receive information. ... More imaginative marketing techniques must be employed to reach more people and convey the information more effectively." ⁷²

4.81 The Commission acknowledged in DP 26 that the principle of making the disciplinary system more "accessible" to complainants means more than using accessible language, and also includes such practical matters as "location, working hours and minimal formality". ⁷³ Thus, the office of the Legal Services Ombudsman should be able to be reached by public transportation and should be physically accessible to people with a disability. The office should allow some "after normal working hours" access (eg, on Thursday evenings or Saturday mornings), at least by appointment, so that it is not necessary for a person to miss a day's work or to have to make difficult or expensive child care arrangements in order to get advice or make a complaint.

4.82 These matters should be uncontroversial - the submissions of the Law Society, the Bar Association, the Australian Consumers' Association, the Commissioner for Consumer Affairs, the Community Justice Centres, and the Combined Community Legal Centres Group all agreed with the Commission's proposals in DP 26, upon which the recommendations in this Report are based.

4.83 Immunity for complainants and respondents. In DP 26, the Commission wrote that:

In order for any disciplinary system to be effective, prospective complainants must feel free from any suggestion of intimidation or retaliation. The findings and recommendations of Royal Commission of Inquiry into Chelmsford Hospital pointed out the urgent need for complainant immunity in the medical disciplinary area ⁷⁴... The need for immunity in the legal disciplinary system is at least as plain, for prospective complainants will be acutely aware that lawyers will have the necessary expertise, access to the courts, and financial resources to sue or threaten to sue them, if they are so minded, in order to forestall or force a withdrawal of the complaint. ⁷⁵

4.84 Consequently, we proposed that "Complainants should be absolutely immune from civil suit for all communications made to a body with disciplinary responsibilities in respect of a complaint against a legal practitioner, and for all statements made within any disciplinary proceedings", ⁷⁶ and that "all communications made in the course of making a complaint, and in the subsequent proceedings involving the resolution of that complaint, whether involving the complainant, the respondent lawyer, any person responding to a request for information from the authorities, the authorities involved, or the agents or staff of any of the aforementioned, should be privileged in respect of defamation and ... absolutely immune from other civil actions." ⁷⁷ (It is already the case that members of the Standards Board, the Disciplinary Tribunal, the Review Panel, and the Bar and Law Society Councils, are immune from liability for any act done in good faith as part of their disciplinary responsibilities.) ⁷⁸

4.85 The Commission's proposals - which cover respondent lawyers as well as complainants, and upon which this Recommendation is based - met with agreement in whole or in part from the Law Society; the Bar Association; the Commissioner for Consumer Affairs, Mr John Holloway; and the Registrar of the Legal Profession Disciplinary Tribunal, Mr Robert Bennett; and accord with the recommendations of the American Bar Association's Commission on the Evaluation of Disciplinary Enforcement ⁷⁹ and the American Bar Association's Model Rules for Lawyer Disciplinary Enforcement. ⁸⁰

4.86 The Commission's recommendations would require consequential amendments to the Legal Profession Act 1987 (NSW) and the Defamation Act 1974 (NSW) to clarify the situation, and to make reference to the position of the office of the Legal Services Ombudsman. ⁸¹

4.87 It should become the positive obligation of the office of the Legal Services Ombudsman routinely to inform all prospective complainants of the nature and existence of this absolute immunity. The body investigating the complaint - whether the Legal Services Ombudsman or one of the professional Councils - should be under a similar obligation to so inform the respondent lawyer, for it cannot be assumed that all legal practitioners will be aware of all details of the complaints handling system.

4.88 Right to be kept informed. In DP 26, the Commission noted that a "major source of complainant dissatisfaction seems to stem from the absence of regular communication from the professional associations and disciplinary bodies informing the complainant of the progress of the case." ⁸²

4.89 The Commission considered that:

Complainants should be entitled to routine communication about the status of their complaint. In order to ensure that this actually occurs in practice, an officer in the complaints-handling agency should be designated to serve as the point of contact for the complainant in respect of each individual complaint, and the complainant should be so informed. That officer would be responsible for periodically reporting (say, every 60 days) in writing to the complainant about the progress of the matter, and for answering any direct inquiries from the complainant. ⁸³

4.90 The Commission noted ⁸⁴ incidentally that problems occasionally arise where the Law Society appoints an inspector to examine trust accounts or an investigator to scrutinise the affairs of a solicitor of firm of solicitors. ⁸⁵ Under the Legal Profession Act, the fact of such an appointment only may be disclosed to a small number of specified public or professional officials, and the complainant is not among these. ⁸⁶ Thus, it may appear to a complainant that not much is happening in response to serious allegations, whereas in fact a thorough investigation is in train. The Commission proposed that, in such circumstances:

As a matter of policy and good practice, the complainant should be entitled to be kept informed of the progress of the investigation by the complaints-handling agency and informed, at least in general terms, of the reason for any significant delay. ⁸⁷

4.91 The submissions from the Law Society, the Bar Association, the Commissioner for Consumer Affairs, the Australian Consumers' Association and the Community Justice Centres all supported the Commission's proposals on the right of a complainant to be routinely kept informed of the status of his or her complaint. The Law Society also supported the modification of the secrecy provisions of the Act "to allow information to be provided to a complainant with a legitimate interest even in circumstances where an investigation is proceeding under Section 55 of the Act" ⁸⁸ through the appointment of an inspector or investigator.

4.92 Reasonable opportunity to rebut. Where a matter is to be referred to the Legal Services Tribunal for a hearing, under the Commission's recommendations, there naturally will be an opportunity for both the complainant (at least through the prosecuting agency) and the respondent practitioner to put their cases. However, the Commission noted in DP 26 that, currently, while a Council may not dismiss a complaint with a reprimand without the consent of the practitioner involved, "there is no parallel requirement to gain the consent of the complainant to a dismissal, with or without a reprimand, or to give the complainant an opportunity to be heard on the matter". ⁸⁹ As a fundamental matter of procedural fairness, a complainant must be afforded a reasonable opportunity to rebut any statement by the respondent legal practitioner before a complaint is dismissed.

4.93 Proper reasons for dismissal. In DP 26, the Commission noted that the great majority of complaints result in a summary dismissal, and that a complainant had the right to feel dissatisfied if he or she received:

a rather terse letter with the technical reason for the decision (such as, "the complaint did not disclose evidence of unsatisfactory professional conduct or professional misconduct") but without a full explanation in "Plain English". While the technical assessment of the merits of the complaint are no doubt usually correct, the manner of its communication may give rise to doubts about the probity of the process. ⁹⁰

4.94 The Commission proposed that:

Complainants also should be entitled to a clear and full explanation of the reasons for any dismissal. The letter notifying the complainant of a dismissal should include a statement to the effect that "if you do not understand the result or wish to discuss this matter further, please contact [the designated officer]". The same general principles should apply to the determinations of the [formal disciplinary bodies]. ⁹¹

This proposal was supported by the NSW Commissioner for Consumer Affairs, Mr John Holloway, and the Australian Consumers' Association.

4.95 The Commission's survey of Law Society complaints files confirmed that the standard dismissal letter sent to complainants tended to be rather abrupt, with a formal reason for the dismissal but little in the way of genuine explanation and with no personal touch. The Bar Association, by contrast, also usually provided the complainant with the detailed investigator's report upon which the Council relied in coming to its decision, thus giving the complainant a clear insight into the nature and outcome of the investigation and the reasons for the Council's action. ⁹²

4.96 There may be some rare circumstances in which it is appropriate to withhold all or (more likely) part of the investigator's report from the complainant, such as where the report contains material which is the subject of another person's privilege. However, in the general run of cases, the complainant should be entitled to a full explanation, including a copy of the investigator's report into the matter.

4.97 Rights to be present and to appear as a party. Another fundamental aspect of procedural fairness is the right to be given effective notice of any disciplinary proceedings which arise out of the person's complaint, and to be present at the hearing. However, under the present legislation, ⁹³ complainants are not necessarily given notice of hearings (which is routinely provided only to parties), and may not be permitted to be present at the hearings of the Standards Board, which are held in camera. ⁹⁴

4.98 In DP 26, the Commission proposed that the complainant should have a statutory right to be present at any hearing into his or her complaint. ⁹⁵ This was supported in the submissions of the Bar Association, the Law Society, the Commissioner for Consumer Affairs, the Registrar of the Disciplinary Tribunal, the Australian Consumers' Association, and the Kingsford Legal Centre.

4.99 More controversial is the issue of whether the complainant should have the right to appear as a party in any subsequent disciplinary proceeding. Under the existing legislation, the complainant may appear as a party before the Standards Board or the Disciplinary Tribunal only if he or she has requested the making of an order in relation to fees, compensation or waiver of a lien, ⁹⁶ and that entitlement extends only to "those aspects of the hearing that deal with the loss (if any) suffered by the complainant as a consequence of the conduct the subject of the hearing". ⁹⁷ On all other issues, the complainant must give way to the relevant professional Council. In DP 26, the Commission proposed that:

a complainant should always be entitled to appear as a party to the hearing. Where the complainant takes an active role in the proceedings, it may be that such participation should be subject to a risk as to costs. ⁹⁸

4.100 The proposal was supported by the Commissioner for Consumer Affairs, the Registrar of the Disciplinary Tribunal, and the Kingsford Legal Centre, but was strongly opposed by the Law Society, the Bar Association, and the President of the Disciplinary Tribunal, Mr David Hunt.

4.101 The Commission is still of the view that, in theory, a complainant should be entitled to appear as a party subject to the (often powerful) disincentive of a risk as to costs. However, upon reflection, the Commission does recognise that there could be some practical problems in permitting complainants to appear as of right. For example, hearings before the Legal Services Tribunal will often involve an aggregation of complaints (into an "information"), so that an action against a practitioner could involve a large number of individual complainants. If even a proportion of those complainants chose to appear as parties, as well as the Legal Services Ombudsman or the relevant Council, the proceedings could become very unwieldy. At the formal hearing stage, the general public interest in the effective discipline of the legal profession becomes very strong, and this could be interfered with if the prosecution of the matter becomes dispersed, amateurish or ineffective.

4.102 The Commission believes that there is a happy compromise on this issue, and recommends that complainants should still have the right to appear as a party in respect of compensation, and but also should be able to appear as a party in other respects with the leave of the Tribunal, and subject to the risk of costs. The requirement of leave will guard against the sort of problems referred to above, while opening up the opportunity for complainants to appear as a party where the Tribunal is satisfied that this would assist matters.

4.103 Right to external review of any adverse decision. Under the Legal Profession Act, the Conduct Review Panel is required, upon application, to review the decision of one of the professional Councils to dismiss a complaint. ⁹⁹ (A complaint may be deemed to be dismissed if the Council has not finalised its investigation after six months; however, in practice, this procedure is somewhat meaningless as there is rarely a sufficient record to review.) ¹⁰⁰

4.104 In DP 26, the Commission considered that the Panel's jurisdiction is far too limited:

The Panel should be empowered to review every decision made by the professional associations and their Councils, whether this involves a decision to dismiss a complaint, or to issue a reprimand, or to take some other action short of referral to the Standards Board or the Disciplinary Tribunal. A complainant may feel no less aggrieved by a Council decision to issue a reprimand to a legal practitioner than by a decision to dismiss the complaint entirely. The aim of external accountability is not met in such circumstances if there is no recourse by the complainant to the Review Panel, and the complainant may well feel that the lawyer's interests were better looked after than his or her own. ... The Review Panel should have the same powers in New South Wales as the Legal Services Ombudsman has in England ¹⁰¹ - to be able to review every decision in the disciplinary process (or a failure to make a decision), except a decision made by a court or tribunal. ¹⁰²

4.105 The preliminary submission of the Law Society, which argued in favour of the replacement of the Panel by a "Lay Observer", agreed that the jurisdiction of the Panel was too narrow in this respect. ¹⁰³ The submissions of the NSW Commissioner for Consumer Affairs and of the Legal Profession Conduct Review Panel itself supported the Commission's view in this regard.

4.106 In this Report, we recommend that the Panel (to be renamed the Legal Services Conduct Review Panel, to emphasise its independence from the legal profession) be empowered to review, upon application from the complainant, any adverse decision by the Legal Services Ombudsman or one of the professional Councils (short of referral of the matter to the Legal Services Tribunal). Decisions of the Tribunal itself are only reviewable in the Court of Appeal, of course. See Recommendation 44, below.

DISPUTE RESOLUTION

15. If a complaint does not raise issues of unsatisfactory professional conduct or professional misconduct, but is capable of consensual resolution, it should be open to the Legal Services Ombudsman, the Law Society and Bar Councils, and the Conduct Review Panel to refer the matter for conciliation or mediation.

16. If a complaint does involve an issue (or issues) of unsatisfactory professional conduct or professional misconduct, but also involves a consumer dispute which is capable of consensual dispute resolution (such as where an apology or compensation is called for), it should be open to refer the latter aspect for mediation or conciliation, while the disciplinary aspect proceeds through the formal disciplinary system. In such cases, the dispute resolution process should not have to wait for the disciplinary proceedings to conclude.

17. The Law Society and Bar Councils should maintain a list of mediators for this purpose, in consultation with the Legal Services Ombudsman and the Director of the Community Justice Centres.

18. Mediators on the list maintained by the professional Councils should be obliged to undertake a specific training program. The training program, as well as a Code of Conduct for mediation between lawyer and client, should be developed by the professional Councils in consultation with the Director of the Community Justice Centres and the Legal Services Ombudsman.

19. All confidential communications which are part of the mediation or conciliation process should be privileged, except for admissions or communications which reveal irregularities or dishonesty by a legal practitioner in respect of trust accounts or controlled funds.

20. In the event that conciliation or mediation fails to resolve the dispute, the complainant may apply to the Registrar of the Legal Services Tribunal to have the matter resolved by arbitration. In such cases, the Registrar or his or her nominee may award compensation not exceeding $6,000.

Commentary

Disputes suitable for consensual resolution (Recommendations 15-16)

4.107 Perhaps the matter on which there was the most agreement was the Commission's proposal ¹⁰⁴ that there be much more use made of consensual dispute resolution techniques to settle the great bulk of complaints against lawyers which are of a "consumer complaint" type - that is, those disputes which do not raise issues about the character, honesty or competence of the legal practitioner involved. The complaints handling systems in Victoria and in England and Wales certainly boast high "success rates" for mediated settlements. ¹⁰⁵

4.108 Support for this came in the submissions of the Law Society, the Bar Association, the Australian Consumers' Association, ¹⁰⁶ the Commissioner for Consumer Affairs, the Lawyers Reform Association, the Registrar of the Disciplinary Tribunal, the Chairperson of the Conduct Review Panel, and the Community Justice Centres.

4.109 Under Recommendation 15, each of the Legal Services Ombudsman, the professional Councils and the Conduct Review Panel (where a matter has reached that stage) would be empowered to refer a complaint for mediation or conciliation where they are satisfied that the matter "is capable of consensual resolution", ¹⁰⁷ and the body is satisfied that the complaint does not raise issues of unsatisfactory professional conduct or professional misconduct (which are more properly the province of the formal disciplinary system).

4.110 In Recommendation 16, the Commission recognises that some complaints involve an accumulation of allegations, some of which may raise issues of unsatisfactory professional conduct or professional misconduct, and some of which may be categorised as consumer type disputes which are capable of consensual dispute resolution. In such circumstances, it should be open to the above-mentioned authorities to refer (only) the latter aspects of the complaint for mediation or conciliation.

4.111 For example, a complaint may allege that a legal practitioner handling the sale of real property on behalf of the client (complainant) had: communicated poorly with the client; negligently handled the settlement of the sale, costing the client some hundreds of dollars; overcharged for the services provided; and then dealt improperly with the proceeds of the sale held in trust. The first three matters could be sent for mediation, while the trust account issue should be formally investigated through the disciplinary process. In "mixed" consumer/disciplinary cases such as these, the dispute resolution process should proceed without having to wait for the formal investigation and the disciplinary proceedings to conclude, since there is no reason why the complainant should be out-of-pocket for a substantial time while the more serious allegations are being pursued. ¹⁰⁸

4.112 The Commission has cautioned before ¹⁰⁹ that "alternative dispute resolution" (or ADR) should not be regarded as "a panacea for the notional ills of the judicial system but rather a set of further options to be carefully considered in each case". ¹¹⁰ In the context of complaints against lawyers, it is important not to lose sight of the multiple aims of the system, which include public interest concerns about the standards of the legal profession and the compliance of individual practitioners with those standards as well as the satisfaction of consumer-type grievances. ¹¹¹

4.113 Thus, the referring authorities - the Legal Services Ombudsman, the professional Councils and the Conduct Review Panel - must be careful not to divert entirely those disputes which may have public interest ramifications. For example, where substantial negligence or a pattern of poor practice becomes apparent on the part of lawyer or law firm, the lawyer or firm should not be able to "buy" themselves out of trouble regularly by quickly settling such matters through mediation. The authorities should carefully keep track of referrals in order to be able to identify those cases which require consideration by the disciplinary system.

4.114 Similarly, "it may be that the lawyer involved has acted utterly in accordance with standard legal practice, but the practice itself is arguably contrary to the public interest." ¹¹² Disciplinary action against the particular lawyer concerned would be inappropriate in such circumstances, but there should be feedback into the system so that, for example, there are changes in legal education or changes in the codes of ethics and practice, or the issuing of a practice direction, or some other action calculated to remedy the problem. (See Recommendation 63, discussed in Chapter 5, below.)

Appointment and training of mediators (Recommendations 17-18)

4.115 In DP 26, the Commission considered that concerns about the imbalance of knowledge and power between lawyers and clients, and about the perception of impartiality, meant that it may be inappropriate for persons employed by or associated with the professional associations to serve as mediators:

Perhaps the mediators used should not be staff members of the Law Society or Bar Association, and particularly not staff members who are involved in any way in the investigation or prosecution of complaints. ... There is already a danger that the dynamics of the mediation situation will inherently favour the lawyer, who is used to negotiating and operating in such an environment, rather than the lay complainant. While it is not really the role of the mediator to redress the balance of power or sophistication between the parties, an experienced mediator should be able to restrain one of the parties from being overbearing. In order to assure complainants that the system is not weighted against them, independent mediators should be used. Depending upon the nature of the complaint, the mediators need not necessarily be legally trained. For example, disputes about discourtesy or poor communications would not require the mediator to be a lawyer. Where an understanding of the exigencies of legal practice would be a major advantage for the mediator, such as in the case of a dispute arising out of the tactics or strategy employed by a barrister in the course of a trial, then it may be best to seek the services of an academic lawyer, a retired judge, a government lawyer or some other lawyer who is not readily associated with the interests of the professional associations. ¹¹³

4.116 The submissions were split on the issue of whether mediators should be entirely independent of the professional associations. The Bar Association, the Commissioner for Consumer Affairs, the Australian Consumers' Association and the Community Justice Centres (CJC) agreed with the proposition, and the CJC offered itself as the mediation agency, given its demonstrated neutrality, effective use of limited resources, and connection to an established infrastructure for training, quality assurance and continuing development. ¹¹⁴ However, the Law Society and the (lay) Chairperson of the Conduct Review Panel disagreed, emphasising that it was important in some cases for mediation to be handled by senior and experienced lawyers who also have a knowledge of the disciplinary system. It is true that in Victoria and in England and Wales, client-lawyer mediation is handled by officers of the legal professional associations. ¹¹⁵

4.117 In our recent Report on mediation (LRC 67), the Commission was reluctant to be overly prescriptive about training, qualifications and accreditation at this early stage in the development of ADR. ¹¹⁶ Similarly in this report, the Commission has decided to refrain from specifying precisely who may or may not serve as a mediator for the run of client-lawyer disputes. Rather, the Commission has recommended that the professional Councils maintain a list of mediators for this purpose, in consultation with the Legal Services Ombudsman and the Director of the Community Justices Centres. We have no hesitation in recommending, however, that the mediators on the list - including lawyers and non-lawyers ¹¹⁷ - be required to undertake a specific training program for this purpose. As we wrote in LRC 67:

The Commission accepts that training for mediators is necessary for competence as a mediator and to enhance the credibility of mediation. We accept that no one is automatically qualified to perform the role of a mediator simply by virtue of professional or occupational qualifications in another discipline, or because of appropriate personal qualities. The role requires knowledge and skills of a distinct process. Training is the most effective way for a person to acquire expertise. Failure to undergo training in the process increases the risk that a mediator's behaviour will be incompetent and unethical, and of harm to clients. ¹¹⁸

4.118 We also propose, in Recommendation 18, that the training program should be developed by the professional Councils in consultation with the Director of the Community Justice Centres and the Legal Services Ombudsman, and that a Code of Conduct for mediation between lawyer and client be developed in the same manner.

Confidentiality and privilege (Recommendation 19)

4.119 The Commission recognises that privilege ought normally to attach to confidential communications made during an attempt at consensual dispute resolution. Such informal processes only work if the parties are assured that there will be no negative repercussions flowing from candid conversation or the spirit of compromise.¹¹⁹ However, as foreshadowed in DP 26, the Commission also recognises the need for an exception to the proposed general rule about privilege with regard to admissions or communications which reveal dishonesty or irregularities in dealings with trust accounts or controlled funds. ¹²⁰

4.120 Only the submission of the Bar Association addressed this area, with the Bar Association agreeing with the Commission on both the general rule and the exception. ¹²¹ (The exception, of course, would normally only apply to solicitors, as barristers do not hold or control clients' money.) See also Recommendations 65-67, discussed in Chapter 5, below, regarding confidentiality and privilege issues at the investigation and review stages.

Arbitration of disputes as a last resort (Recommendation 20)

4.121 It is to be hoped that most of the disputes which "are capable of consensual dispute resolution" (per Recommendations 15-16) will in fact be settled by that method. However, the Commission believes that there should be a mechanism for determining such disputes where the parties are unable to agree (whether through intransigence or bad faith, or for other reasons) on a satisfactory outcome.

4.122 In Victoria, the Registrar of the Solicitor's Board is empowered to award compensation in such cases after an informal, in camera hearing. ¹²² The (now defunct) Victorian Law Reform Commission has recommended that the Board be replaced by a Barristers and Solicitors Tribunal, and the Judicial Registrar of the Tribunal take over this arbitration function. ¹²³

4.123 This Commission recommends that arbitration powers be vested in the Registrar of the Legal Services Tribunal, with the Registrar able to refer matters to a nominated arbitrator if necessary (for reasons of speed or propriety). The Commission's has expressed the strong view throughout this Report that, in our proposed system, complainants who approach the Legal Services Ombudsman should be entitled to resolve their disputes fully and finally without having to launch additional or ancillary actions. Accordingly, we recommend that the jurisdictional limit of the Registrar should be initially set at $6000, the same as that of the Consumer Claims Tribunal (CCT), to obviate the need for complainants to have to approach the CCT. (It should remain open to clients to approach the CCT if they wish, subject to provisions to protect against "double-dipping".)

THE ROLE OF THE PROFESSIONAL COUNCILS

21. The Councils of the Law Society and the Bar Association should continue to be responsible for: the investigation of complaint matters (those forwarded by the Legal Services Ombudsman, as well as those matters in which a Council acts on its own initiative); diverting consumer complaints for dispute resolution; dismissing appropriate complaints (with or without a reprimand); determining which matters should be sent to the Legal Services Tribunal for hearing; and prosecuting disciplinary offences before the Tribunal.

22. The Councils must ensure that the investigation of complaints is accomplished in a prompt, active, thorough and professional manner. Sufficient resources and training (for members of the Council and its committees as well as for staff) must be provided to make this possible. An obligation on the part of the Councils (and the Legal Services Ombudsman) to investigate and process complaints expeditiously should be inserted into the Legal Profession Act 1987.

23. In the event that a legal practitioner unreasonably fails to reply to the allegations made in the complaint or to respond to requests for information, it should be open to a Council (or the Legal Services Ombudsman) to apply to the Registrar of the Legal Services Tribunal for an administrative penalty of up to $2000 to be assessed against the practitioner. (Nothing in this Recommendation is meant to derogate from the power of a Council to suspend or cancel a practitioner's practising certificate under s 35 of the Legal Profession Act 1987.)

24. The Councils should operate several Professional Conduct Committees (exercising delegated authority) in tandem, to speed up its handling of complaints, reduce the workload of individual Committee members, and increase the intensity of investigations.

25. The powers of a Council should be the same whether the investigation has arisen on the Council's own initiative or following a complaint forwarded by the Legal Services Ombudsman.

26. Following an investigation into any complaint, a Council must refer a matter to the Legal Services Tribunal for a hearing if "it appears to the Council that (a) the legal practitioner may be guilty of unsatisfactory professional conduct or professional misconduct, or (b) the interests of justice so require". (The same standard shall apply in respect of the investigations of the Legal Services Ombudsman.)

27. Following a referral by its Council to the Legal Services Tribunal, or upon the request of the Legal Services Ombudsman or the Legal Services Conduct Review Panel, the Law Society and the Bar Association should be responsible for preparing the information and prosecuting the matter before the Tribunal and the courts.

28. Where a Council has dismissed a complaint following investigation (with or without a finding of unsatisfactory professional conduct), it should nevertheless have the power to award compensation to the complainant with the consent of the legal practitioner, or to refer the matter for mediation (and ultimately arbitration) on the question of compensation, or to make an ex gratia award of compensation from a discretionary fund maintained by the professional Council for this purpose.

29. The Act should be clarified to ensure that the Councils must report on their activities to the Parliament through the Attorney General at least once per year. It should be standard practice for the Councils each to produce a detailed report at least once per year specifically dedicated to the regulation and discipline of the legal profession.

30. The present role of Councils in the setting of standards of professional ethics and conduct should continue.

Commentary

The continuing role of the Councils (Recommendations 21 and 29-30)

4.124 For the reasons already discussed, the Commission has not recommended that the professional Councils be removed from the complaints handling process, but rather that the activities of the Councils in this area be made subject to tighter legislative requirements and placed under much closer external scrutiny by a Legal Services Ombudsman and the Conduct Review Panel. Under our recommendations, the Legal Services Ombudsman would have parallel powers in respect of investigation, but would be in a superior position in so far as the Ombudsman would be entitled to choose which matters to retain and to remove matters from the Councils, at his or her discretion.

4.125 As acknowledged in Recommendation 21, the Councils of the Law Society and the Bar Association would nevertheless retain statutory responsibility for:

• investigating complaints (at least those referred by the Legal Services Ombudsman, as well as those matters in which a Council acts on its own initiative);
• diverting appropriate matters for consensual dispute resolution, as well as generally supervising the mediation process (see Recommendations 15-18);
• summarily dismissing frivolous or vexatious complaints;
• dismissing other complaints, after investigation, with or without a reprimand, in accordance with s 134 of the Legal Profession Act;
• referring to the Legal Services Tribunal for hearing those matters which involve substantial issues of unsatisfactory professional conduct or professional misconduct; and
• prosecuting matters before the Tribunal, where the Council is the referring authority or the Council has been requested to prosecute by the Legal Services Ombudsman or the Conduct Review Panel.

4.126 The Councils, being the peak professional associations, also would continue their current role in the setting of standards of professional ethics and conduct - subject to the Supreme Court's general supervision of the administration of justice in New South Wales. (See Recommendation 30. See also Recommendation 59, discussed in Chapter 5, below, regarding the need for Codes of Conduct and Practice.)

4.127 In DP 26, the Commission looked at upgrading the reporting requirements placed on the professional Councils in respect of complaints handling, both in terms of frequency and quality. ¹²⁴ The Commission suggested that it become standard practice for the professional Councils and other responsible agencies to make annual reports to the Attorney General, for tabling in Parliament, which contain "a full treatment of statistics, empirical and comparative analysis, case studies, satisfaction surveys, recommendations for consequential legislative or administrative change, and so on." ¹²⁵

4.128 The Law Society recently has commenced publishing a six monthly report on trends and statistics in the disciplinary process, ¹²⁶ a welcome development which goes some of the way towards achieving the desired levels of presentation of statistical material, although it is rather shorter on analysis. The Commission also would like to see much more correlation of the statistical material. For example, the Law Society now offers a Table indicating the types of complaints received (failure to carry out instructions, poor communications, failure to account for trust account money, etc), but a better demographic portrait of the complaints handling system also would correlate the particular types of complaints with tabulated information about outcomes - how many complaints of a particular type are dismissed, how many are referred on to the Standards Board or Disciplinary Tribunal, what sanctions are meted out, and so on. An analysis of time taken to deal with complaints (by the presentation of mean and median figures as well as numbers of "more than 6 months" and "more than 12 months" matters) also would be useful. Since many complaints are received in one year but finalised in the next, it also would be helpful if the material was presented in such a way as to permit a particular year's complaints to be traced through to final disposition.

4.129 In Recommendation 29, the Commission proposes that it should be standard practice for the Councils to produce detailed reports (at least annually) which are specifically dedicated to issues of regulation and discipline. It is proposed that the Legal Services Ombudsman also will be placed under a statutory obligation to monitor relevant developments and to report fully (see Recommendation 7), so the information available in this area should be comprehensive and edifying.

Investigation of complaints (Recommendations 22-25)

4.130 The nature and quality of investigations. In the earlier inquiry into the legal profession, over a decade ago, the Commission criticised the inadequacy of the investigation of complaints by the professional associations, condemning, for example, the "perfunctory investigation of many complaints". ¹²⁷ One of the main concerns at that time was that the professional associations relied very heavily on the information provided by the complainant to determine the validity of the complaint, often making a final decision on this basis without further investigation. If the investigation proceeded the next step was to contact the lawyer concerned for a reply. In the not infrequent event that the matter hinged on the word of one party to the dispute against the word of the other, the lawyer was generally given the benefit of the doubt without the matter being referred for a formal hearing. ¹²⁸

4.131 In DP 26, the Commission noted ¹²⁹ that:

Some of the submissions in the current inquiry question whether the investigation of many matters is adequate to define all of the possible issues and to ascertain all of the relevant facts, particularly in relation to the far more numerous complaints against solicitors. The chief technique employed in most cases for compiling the facts and preparing the report and recommendations for Council remains the "paper chase" of acquiring the written complaint, requesting a written response from the legal practitioner involved, and subsequently comparing them. Sometimes one party or the other is asked for further particulars. However, only in a very small proportion of cases is there a fuller examination using trained investigators or auditors, and these cases almost invariably involve allegations of fraud, trust account violations or other financial impropriety. In the circumstances, it is arguable that the bulk of complaints are processed, and not actively, thoroughly, investigated.

In the absence of an inquisitorial procedure focussed on the active pursuit of the relevant facts, the result is often that the report made on the complaint is equivocal, pointing out that the complainant has made certain allegations, the legal practitioner has denied them, and there is no independent evidence to sustain either version of the facts. Given the requirement in the legislation that the professional Councils must be "satisfied" about the allegations before a complaint is referred to the Standards Board or the Disciplinary Tribunal, ¹³⁰ the legal practitioner is effectively given the benefit of any doubt by the dismissal of the complaint, even though this may be due as much to the style of investigation as the actual state of affairs. ¹³¹

It is not hard to see that some complainants may be dissatisfied with this procedure, particularly when a notice of the dismissal follows a long period of silence. It is likewise easy to see that some complainants could draw the conclusion that the system is "fixed" or biased - a case of lawyers simply "protecting their own". However, the Commission believes that any problem lies more in the inadequacy of the system than in any lack of impartiality or integrity. The method of investigation of complaints that is used now is essentially the same one that was examined by the Commission over a decade ago. The new disciplinary scheme established by the 1987 Act has effected many changes in the handling of complaints, but the actual manner of investigation has survived largely intact. This appears to be a matter that is determined more by traditions and received wisdom - that is, by a local "culture" - than by legislation.

4.132 In their submissions to the Commission in response to DP 26, neither the Law Society nor the Bar Association directly addressed the criticism of the adequacy of their investigative processes, although the Law Society asserted that the desired "'culture of independence' already exists." ¹³²

4.133 The Commission's survey of the 1991 complaint files of both the Law Society and the Bar Association was conducted primarily to assess the methodology and effectiveness of the investigation of complaints by the professional associations. The summary of the results of the File Survey are discussed in Chapter 2, above, but the salient points are worth repeating here.

4.134 The File Survey clearly confirmed our view that the approach of the Law Society has been merely to process complaints, rather than to investigate them. The vast bulk of complaints are subjected to a classic "paper chase" approach, with the Law Society acting as a clearinghouse for correspondence between the complainant and the respondent solicitor. Only rarely is anyone (including one of the principals) actually interviewed face-to-face, nor are files or accounting ledgers often examined. Remarkably little initiative is shown in pursuing possible witnesses or other independent evidence which might confirm or deny the allegations which form the basis of the complaint. Often the "paper chase" actually seems to increase the heat in the dispute, as the parties react to the allegations, denials, and personal comments in each other's letters.

4.135 After such a desultory investigation, it is not surprising that most matters boil down to competing versions of the relevant conversations or events. In such cases, the solicitor's version is virtually always accepted, either directly or on the basis that the complainant has not adequately supported or documented his or her version. In effect, not only is the onus of proof placed upon the complainant, but also the responsibility for defining the issues and compiling all of the material evidence. Yet complainants are not made aware of this, nor are most complainants in a position to provide this sort of sophisticated analysis themselves or to retain a legal adviser for this purpose. Clearly, this should be the responsibility of the Law Society.

4.136 Other serious concerns identified by the Commission's file survey include that:

• investigations often fail to pick up related or subsequent allegations of poor practice;
• matters closed with the "consent" of the complainant often indicate a pattern of poor professional practice, such as inordinate delays and poor communications (which ironically seem to be confirmed by the manner in which the solicitor involved responds to the Law Society's inquiries);
• there is still a marked reluctance to treat such failings as negligence, incompetence, delay, discourtesy, poor communications and overcharging, as disciplinary matters; and
• the failure to utilise distinguished practitioners in the same area of practice as the respondent solicitor for an expert opinion about whether the respondent had acted competently and diligently in accordance with proper professional standards.

4.137 It is unlikely that the police or other regulatory agencies would be satisfied with such an approach to the discharge of their responsibilities, and it is clear that complainants have a right to be dissatisfied with the nature and quality of the investigation into their complaints. At least as important is the fact that the current system does not really protect the consumers of legal services from poor practice, nor does the system identify areas in which the profession should seek to lift its standards and practices.

4.138 The Commission was rather more impressed with the investigations conducted by the Bar Association's four Professional Conduct Committees (PCC). Perhaps it is due to the luxury of only having to handle less than 5% of the number of complaints dealt with by the Law Society, but the Commission's survey of the Bar Association's complaints files suggested that each complaint was much more thoroughly and actively investigated by the barrister in charge (one of the members of the respective PCC). Among other things, there was a greater effort made to find independent witnesses and evidence; to compel respondents to answer in a timely fashion; to seek a "second opinion" from an independent expert; to assess whether the respondent was conducting his or her practice in an effective manner, apart from the specific details of the allegation; and to see the general implications of individual complaints, which might for example require a circular from the Bar Association reminding members of certain obligations. Even in a number of matters where it was resolved to dismiss the complaint, it was made clear to the barrister involved that his or her standard of practice could be lifted to prevent complaints in future.

4.139 However, the Commission also identified a number of problems with the Bar Association's investigations. Because the Bar's system relies so heavily on the volunteer, part-time, labour of the barrister members of the PCCs, the progress of each investigation is naturally dependent upon that barrister's workload, unavailability on circuit and so on. Many of the investigations seemed to take longer than necessary to complete. Further, the "substantive law" used by the Bar Association is derived largely from the Association's own rules, which in part are concerned with matters of service delivery to clients but to a much greater extent are concerned with matters of intra-professional seniority, comity, and restrictive trade practices. It is difficult to see how some of the investigations into supposed incidents of advertising, attracting publicity, and acting without the intervention of a solicitor, which follow complaints from other barristers or the Bar Association itself, relate to protecting the public interest.

4.140 In Recommendation 22, the Commission proposes that a positive obligation be placed upon the Councils to ensure a much more active, thorough, and "professional" form of investigation. It is difficult to legislate for effort, imagination and persistence, however, or to mandate legislatively for better training of investigative officers, for more resources devoted to investigation, and so on. Certainly the advent of the Legal Profession Act 1987, which was intended to promote a new approach, was unsuccessful in this regard. Under the new system proposed by the Commission in this Report, if the Law Society and Bar Councils do not themselves begin to expect and demand more from their complaints committees and officers, then the Legal Services Ombudsman will readily identify the shortcomings and act accordingly to publicise and remedy them.

4.141 The problem of delay. One of the common criticisms of the existing system by complainants is the slow processing of complaints. According to the figures supplied by the Law Society, the average "turn around time" for investigation of a complaint against a solicitor (being the average time between receipt of a complaint and its settlement, withdrawal or resolution by the Complaints Committee or Council) was 4.6 months in 1990. ¹³³ According to the figures supplied by the Bar Association, the average turn around time for the investigation of complaints against barristers was 5.4 months in 1990. Further time must be added on for those matters which proceed to a hearing before the Standards Board or Disciplinary Tribunal, and those dismissed matters which are sent to the Conduct Review Panel for review.

4.142 The Commission's File Survey suggests that the "average" figures may not be entirely "typical". Some matters are dismissed, withdrawn or resolved by consent relatively quickly, while many take more than six months to process and some take more than one year. In some cases the delay may be justifiable, but in many cases there is no apparent reason for the delay, or at least no good reason.

4.143 Under the existing law, the Legal Profession Act provides that, for the purposes of seeking external review by the Conduct Review Panel, a complaint may be deemed to have been dismissed by a Council if a decision has not been made within six months after the making of the complaint. ¹³⁴ As we noted in DP 26,

This strongly suggests that it was contemplated by Parliament that the process of investigation and determination by committees and Councils would normally be completed within this time frame. However, the Act does not expressly require the Councils to act within any particular time limit, or even to act expeditiously. ¹³⁵

4.144 The Commission proposes in Recommendation 22 that the Councils - and the Legal Services Ombudsman, when his or her office is conducting an investigation

• be placed under an express statutory obligation to act expeditiously.

4.145 In order to speed up the process, the Councils and the Legal Services Ombudsman must have adequate powers to compel a prompt response from the lawyer complained about. One common cause of delay in the processing of complaints against solicitors is the failure of solicitors who are the subject of complaints to respond in a timely fashion, despite repeated requests (and even threats of suspension of practising rights) from the Law Society. In DP 26, the Commission wrote that we understood that:

it is not uncommon for responses to be late and for some to be very late. The Commission is aware of individual cases in which the investigative process was delayed for lengthy periods - sometimes over a year - due to the failure of the lawyer involved to respond, or respond in a meaningful way, despite numerous letters from the professional association. ¹³⁶

4.146 This understanding was strongly confirmed by the Commission's survey of Law Society and Bar Association complaints files, which disclosed that a significant minority of practitioners fail to respond at all or in a meaningful way despite repeated threats that such failure can result in the suspension or cancellation of a practising certificate. Ironically, many of these complaints actually are about unacceptable delay or poor communications on the part of the legal practitioner concerned.

4.147 Following recent amendments to the Legal Profession Act, ¹³⁷ both Councils now have the statutory power to cancel, suspend, or refuse to issue, a practising certificate to a legal practitioner who has been asked by the Council to "explain specified conduct" and fails, and continues to fail, to give a satisfactory explanation. ¹³⁸ The problem is that the sanction of suspension or cancellation is so serious that it is reluctantly and rarely invoked, ¹³⁹ and delinquent practitioners apparently count on this reticence. While suspension or cancellation of practising rights is the proper ultimate sanction, the initial approach to compelling cooperation should be shorter and sharper.

4.148 In Victoria, as in NSW, a legal practitioner is asked to respond to a complaint within 14 days. ¹⁴⁰ If no response is received in that time, a second letter is sent. Failure to reply to this letter within seven days is itself considered a "standards breach" (which is equivalent to "unsatisfactory professional conduct" in NSW), and often results in a fine for the practitioner as well as the recording of the standards breach. ¹⁴¹ In DP 26, the Commission suggested that:

A similar requirement [to the Victorian system] should be imposed under the legislation in this State. A persistent failure to respond to a complaint, or a pattern of persistent delay in responding to complaints, should result in the suspension of the legal practitioner's practising certificate. ¹⁴² [Emphasis supplied]

Complainants should be entitled to expect that their allegations will be handled promptly, and the investigative agencies should be entitled to expect that licensed legal practitioners - who are held out as being "fit and proper persons" - will answer allegations promptly and with complete candour.

4.149 In Recommendation 23, the Commission does propose that an unreasonable failure to respond to requests for information should result in the imposition of an "administrative penalty" (ie, a civil "fine") of up to $2000. For reasons of natural justice, the Commission believes it would be inappropriate for the investigating body to have punitive powers, so we suggest that the Councils and the Legal Services Ombudsman should be able to refer such matters to the Registrar of the Legal Services Tribunal for summary hearing and determination. (In Recommendation 45, below, the Commission proposes that the Registrar be given the appropriate powers for this purpose.)

4.150 Naturally, in determining the unreasonableness or otherwise of the practitioner's lack of cooperation, the Registrar will have regard to the normal events of life, such as illness, holidays, absence on circuit and so on, as well as the stresses and exigencies of professional practice.

4.151 Whether or not this course of action is pursued, it would be still be a matter for the relevant Council to determine whether the person's practising certificate should be suspended or cancelled for failure to provide an explanation or requested information.

4.152 The operation of complaints committees. Greater efficiencies also could be achieved by some re-organisation of the Law Society Council's internal system for handling complaints, in accordance with Recommendation 24. The Bar Council, which handles only 80 complaints per year, divides the work among four Professional Conduct Committees (PCCs). The Law Society, which fielded 1898 complaints in the 1991-1992 financial year, uses only one PCC (until recently known as the Complaints Committee), comprised of 14 persons, eight of whom double up as members of the Council. [143] In DP 26, the Commission noted that:

it appears that much greater use could be made of non-Council members in order to provide the numbers to operate several Complaints Committees in tandem. ¹⁴⁴

4.153 The Commission believes that complaints handling could be significantly improved if the Law Society set up at least four PCCs with, say, five or six members each. The workload of each PCC would be much more manageable, and complaints would receive greater attention more quickly. Under the Legal Profession Act, committees of Council exercising delegated authority must be chaired by a Council member, but the general membership is not so limited. Since the reports and recommendations of the PCC calling for disciplinary action must go to the Council anyway, greater use could be made of non-Council members (lawyers and non-lawyers) in order to staff the additional committees.

4.154 The Bar Association recently asked the lay members of its PCCs to comment upon their experience and to suggest practical measures for improving the performance of the system. Seven of the eight lay members were able to respond in writing, and the Bar Association kindly supplied this material to the Commission. The suggestions for improvement, which should be taken note of by the Councils and the Legal Services Ombudsman, are quite thoughtful and illuminating, and include:

• the Association taking "a more pro-active role" in assisting with the formulation of complaints;
• the re-allocation of responsibility for investigation and report to avoid lengthy delays where the assigned legal member cannot proceed quickly because of pressures of work or other reasons (or perhaps more, or alternate, barrister members);
• earlier receipt of PCC papers (especially the preliminary report) - at least 3 working days before the meeting, rather than the evening before, as is now common;
• the use of computer technology to order/reduce paperwork;
• the assignment of a responsible lay member for each complaint in addition to the responsible legal member;
• a reduction in the use of legal jargon at meetings and in investigative reports;
• more tolerance by (certain) legal members of the views expressed by lay members at meetings;
• the need for discussion of "general ethical principles beyond Bar Rules" at PCC meetings;
• the specific noting for the benefit of Council (or the preparation of a minority report) where a lay member votes against the majority PCC recommendation to dismiss a complaint - and perhaps automatic review by the Conduct Review Panel in such cases;
• feedback through the Bar Association about areas where there are a "plethora of complaints";
• establishment of a Bar Association database covering all aspects of complaints handling;
• the need for orientation and training programs for lay members - eg regarding the rules about confidentiality; and
• providing the opportunity for the lay members to meet collectively from time to time to discuss common concerns.

4.156 Rationalisation of powers. The preliminary submission of the Bar Association pointed out that there is an anomaly in the provisions of the Legal Profession Act 1987, under which the Councils have different dispositive powers depending upon whether they are investigating complaints made by external complainants or matters which they are pursuing on their own initiative. A Council cannot reprimand ¹⁴⁵ the legal practitioner involved, for example, if the investigation arose on the Council's own motion - it can only refer the matter to the Standards Board or the Disciplinary Tribunal. ¹⁴⁶ In DP 26, the Commission agreed that:

There does not appear to be any good reason for this discrepancy. Identical remedial orders should be available to a Council whether the investigation commenced on the complaint of a client or a court or some other agency, or on the motion of the Council itself. ¹⁴⁷

4.157 In Recommendation 25, the Commission proposes that the powers of the professional Councils should be identical whether the complaint under investigation originates internally or externally.

Referral and prosecution (Recommendations 26-27)

4.158 Another anomaly in the present legislation relates to the standard for referral of a complaint for hearing. The professional Councils only may refer complaints to the Standards Board or the Disciplinary Tribunal if they are "satisfied" that the complaint involves a question of unsatisfactory professional conduct or professional misconduct, respectively. ¹⁴⁸ However, if a Council is acting on its motion rather than on an outside complaint, it may refer the matter to the Board or Tribunal "if it appears to the Council that the legal practitioner may be guilty of unsatisfactory professional conduct or professional misconduct". ¹⁴⁹ In the former case, a Council which is unsure about the probity of the evidence or the "guilt" of the practitioner could not be said to be satisfied, and thus could not refer the matter to the appropriate disciplinary body for a hearing and determination. It seems odd to the Commission that a Council's uncertainty effectively serves to pre-empt the consideration of a complaint by an independent tribunal. No doubt this position also contributes to the unfortunate gap, which the Commission has identified, between the types of conduct which actually are most complained about by former clients and others, and the types of matters which the Councils actually refer for a hearing. ¹⁵⁰

4.159 In DP 26, the Commission wrote that:

the appropriate standard for referral should be that "it appears to the Council that (a) the legal practitioner may be guilty of unsatisfactory professional conduct or professional misconduct, or (b) the interests of justice so require". ¹⁵¹

In Recommendation 26, we formally propose that this become the new statutory standard for referral of matters to the Legal Services Tribunal. Given that we recommend elsewhere (see Recommendation 7) that investigations into complaints be conducted by the office of the Legal Services Ombudsman as well as the professional Councils, the standard should apply in all cases.

4.160 In Recommendation 27 we specify that each professional association should retain the power to prosecute matters ¹⁵² before the Tribunal following referral by its Council. The Law Society or Bar Association also should prosecute where it has been asked to do by the Legal Services Ombudsman (following an investigation and recommendation to this effect by the Legal Services Ombudsman) ¹⁵³ or the Legal Services Conduct Review Panel (following a review in which the Panel has decided to refer the matter directly for hearing). ¹⁵⁴ In the event that the matter goes to the Court of Appeal (or for some reason to another court), the professional associations likewise should have standing and the responsibility for pursuit of the matter. ¹⁵⁵

4.161 The standing of the professional associations and their Councils before the courts was discussed in DP 26, and was the subject of the High Court's decision in Wentworth v NSW Bar Association. ¹⁵⁶ The High Court ruled that, given the express conferral in the Legal Profession Act ¹⁵⁷ on the Bar Council of the right to appear, rather than the Bar Association, the Bar Association should be given leave to appear in relation to the conduct of (or admission of) barristers only in exceptional circumstances, whether or not the Bar Council is also participating. ¹⁵⁸

4.162 In DP 26, the Commission agreed with the preliminary submission of the Bar Association that whatever the outcome of the High Court hearing, the matter should be put beyond doubt by an amendment to the Legal Profession Act 1987 providing that the Bar Association is entitled to call evidence and cross-examine in relation to admission and disciplinary proceedings. ¹⁵⁹ The professional associations, rather than their executive Councils, are in a better position to provide the funding and support for proceedings in the courts. Consequently, we have recommended that it is the professional associations that should run the court actions once their governing Councils have decided to pursue this course, or they are asked to pursue this course by one of the other bodies with referring powers.

Dispositive powers (Recommendation 28)

4.163 Under the present legislation, ¹⁶⁰ the professional Councils have a number of options for dealing with complaints after investigation. A Council must dismiss the complaint, if it is satisfied that the complaint does not involve any question of unsatisfactory professional conduct or professional misconduct. A Council must refer the matter to the Disciplinary Tribunal if it involves a question of professional misconduct. If the complaint involves a question of unsatisfactory professional conduct, however, the Council may refer the matter to the Standards Board, or reprimand the legal practitioner (with his or her consent), or dismiss the complaint. In the latter case, the Council must be satisfied that "the legal practitioner concerned is generally competent and diligent and that no other material complaints have been made against the legal practitioner".

4.164 In DP 26, the Commission noted that the decision by a Council to dismiss a complaint (with or without a reprimand) even though the complaint involved a matter of unsatisfactory professional misconduct could have the effect of robbing a complainant of the possibility of compensation, since only the Standards Board (and the Disciplinary Tribunal) may award compensation. ¹⁶¹

4.165 In keeping with the Commission's various aims of streamlining the system, promoting consensual dispute resolution, ensuring natural justice, and increasing the availability of compensation, the Commission has proposed in Recommendation 28 that the Councils have further options after deciding to dismiss a complaint. Councils should have the power to award compensation to the complainant with the consent of the legal practitioner(s) involved, consent being required in the absence of a hearing for natural justice purposes. Alternatively, the Council may refer the matter for mediation (and then to arbitration if mediation fails) on the question of compensation. Finally, the Council may make an ex gratia payment of compensation to the complainant from a fund maintained for this purpose.

4.166 In Victoria, the Legal Profession Practice Act 1958 (as amended) provides that the Law Institute shall maintain a "Law Institute Discretionary Fund", which is funded out of the Solicitors' Guarantee Fund (equivalent to the Fidelity Fund in NSW) as well as all penalties paid to or recovered by the Institute in respect of Disputes and Complaints. ¹⁶² On the recommendation of the Secretary of the Law Institute Council and the Lay Observer, compensation may be paid from this Fund to a complainant who "has suffered loss as a result of the action or omission of a solicitor and the Council considers it just and equitable that the payment be made". Such a payment does not affect the right of the complainant to pursue other avenues to recover damages for pecuniary loss, although the amount paid in compensation must be taken into account in the calculation of damages in any subsequent court action. ¹⁶³ The Commission believes that similar provisions should be enacted in New South Wales to facilitate the establishment of a discretionary fund. See also Recommendation 64, and supporting commentary, regarding other possible sources of funding for such a scheme.

THE LEGAL SERVICES TRIBUNAL

31. The Legal Profession Standards Board and the Legal Profession Disciplinary Tribunal should be combined to form a Legal Services Tribunal. The Tribunal would hear complaints involving issues of unsatisfactory professional conduct or professional misconduct, or both.

32. The Legal Services Tribunal (the "Tribunal") should consist of: at least one judge, at least two barristers and two solicitors, and at least two lay persons, appointed by the Attorney General. The Attorney General should be able to appoint the barrister and solicitor members of the Tribunal without the need for a nomination from the relevant professional Council. One of the judicial members of the Tribunal should be appointed President of the Tribunal by the Attorney General.

33. The President of the Tribunal or his or her nominee should determine the membership of the Tribunal for the purposes of any particular hearing. The judicial member of the Tribunal should preside at the hearing, or in the absence of a judicial member, one of the barrister or solicitor members designated by the President or his or her nominee. The Tribunal should be comprised of equal numbers of independent members and barrister or solicitor members (depending upon whether the information concerns a barrister, a solicitor, or both), plus the presiding member, with a total of three or five members.

34. Hearings of the Tribunal should be conducted in public. The presiding member of the Tribunal may close, or limit the reporting of, the proceedings in those exceptional cases where the presence of the public would defeat the ends of justice. The determinations of the Tribunal should be put in writing, and should be published. (See Recommendation 67, below, regarding the special position of evidence related to privileged communications between client and lawyer.)

35. Having regard to the "protective" nature of the Tribunal's jurisdiction, the Tribunal should be flexible in its procedures, the rules of evidence do not apply, and it may adopt an inquisitorial style.

36. Notwithstanding Recommendation 35, when conducting a hearing into an information involving a question of professional misconduct, the Tribunal should be bound by the rules of evidence.

37. Prior to the commencement of the proceedings, the legal practitioner involved should be obliged to file a Reply to the information (that is, to "plead"), in order to narrow the issues for hearing.

38. Subject to considerations of natural justice in each case, the Tribunal should have the power to deal with matters of professional conduct which arise in the course of proceedings and should be able to order the joinder of informations against two or more practitioners for hearing.

39. The Tribunal should have the same powers as the Supreme Court to discipline legal practitioners, as well as those powers which are specifically enumerated by statute.

40. The enumerated powers of the Tribunal, in the Legal Profession Act, in respect of a barrister or solicitor, should include the powers to:

• order that a person's name be removed from the Supreme Court's roll of practitioners;
• cancel, or suspend for any period, a person's practising certificate;
• place conditions upon a person's practising certificate, including, but limited to, conditions involving: supervision of the person's work by another practitioner, requiring the person to cease to accept instructions in a specified class (or classes) of legal work, or further education;
• impose a fine of not more than $5,000 for a finding of unsatisfactory professional conduct, or not more than $50,000 for a finding of professional misconduct;
• issue a public reprimand, unless special circumstances require a private reprimand;
• order that the person undertake and successfully complete a specified course of further legal education;
• or to do any combination of those things.

41. The Act should continue to specify that in relation to a solicitor, the Tribunal also should have the powers in relation to the supervision or management of the practice which are enumerated in section 149(2)(c)-(g) of the Legal Profession Act 1987.

42. Where the Tribunal determines that, whatever the shortcomings of the individual solicitor or solicitors involved, the evidence indicates a systemic problem in relation to a firm of solicitors, the Tribunal should have the power to join the law firm as a party to the proceedings and then to make appropriate orders in relation to the internal systems of management and supervision of the firm, aimed at rectifying the problem.

43. The Tribunal should be free to make a compensatory order (of the kind now specified in s 149(3), but without a specified upper limit) against the legal practitioner where the complainant has suffered loss as a result of the practitioner's conduct. Where such an order was not sought at the start of proceedings, the informant or the complainant may seek leave from the Tribunal to amend the information for this purpose. The Tribunal should be free to make a compensatory order without the consent of the legal practitioner involved.

44. The determinations of the Tribunal should be subject to judicial review only by the Court of Appeal. Appeal on matters of law should be as of right, but special leave should be required to appeal on matters of fact.

45. The Registrar of the Tribunal should have the power to arbitrate (or nominate an arbitrator) in relation to lawyer-client disputes which could not be settled by mediation, and to impose an administrative penalty of not more than $2,000 against a legal practitioner who unreasonably fails to provide information requested by one of the professional Councils or the Legal Services Ombudsman for the purposes of investigating a complaint.

Commentary

Merger of the Board and Tribunal (Recommendation 31)

4.167 In DP 26, the Commission canvassed the possibility of merging the Legal Profession Standards Board and the Legal Profession Disciplinary Tribunal. ¹⁶⁴ Under the provisions of the Legal Profession Act 1987, the Standards Board hears complaints about unsatisfactory professional conduct, while the Disciplinary Tribunal hears complaints about professional misconduct. The Act follows recommendations made by this Commission in 1982, in our earlier reference on the Legal Profession. ¹⁶⁵ The logic behind the establishment of a two-tier process was that poor work falling short of professional misconduct (such as cases of delay or negligence) also should be dealt with by the disciplinary system, but that:

it would be unfair and counterproductive if less serious breaches were made subject to the same procedures and sanctions as the serious breaches. The system therefore provided for a formal body, a Tribunal, to deal with serious breaches and a less formal body, a Board, to deal with less serious breaches. ¹⁶⁶

4.168 By splitting the process, the Commission hoped that the less serious complaints would now receive more attention from the professional Councils, reducing the gap between what clients and others actually typically complain about and the much more limited range of matters that the professional Councils are willing to refer to a disciplinary body for hearing.

4.169 However, in practice, the system has not operated as intended. Although the vast proportion of complaints raise issues of unsatisfactory professional conduct (such as negligence, incompetence, delay, poor communications, discourtesy, overcharging) rather than professional misconduct, only a very small number of matters are actually referred to the Standards Board for determination. In DP 26, the Commission analysed the figures provided by the professional Councils for the calendar year 1990. Of the 1245 written complaints against solicitors, over 80% related to (what would amount to) unsatisfactory professional conduct, yet only 12 complaints (or 1%) went to the Standards Board, while 55 complaints were sent to the Disciplinary Tribunal. Out of 79 written complaints received by the Bar Association in 1990, only four were referred to the Standards Board, while nine went to the Disciplinary Tribunal. In the first four years after the new system was put in place, only 50 complaints ¹⁶⁷ were referred to the Standards Board from the two Councils, while 200 complaints ¹⁶⁸ were referred to the Disciplinary Tribunal. ¹⁶⁹

4.170 As the Commission noted in DP 26, there are problems with the two-tier system which go beyond the major failure to provide the Standards Board with any significant caseload:

Dual complaints involving elements of both unsatisfactory professional conduct and professional misconduct, or complaints which tread the fine line between unsatisfactory professional conduct and professional misconduct, place the Bar and Law Society Councils in the difficult position of having to decide whether to send a particular matter to the Board or to the Tribunal, or whether to divide the complaint and refer aspects to each body for hearing. [Further], there are suggestions from the profession that the Standards Board is not operating as the simple, summary, inquisitorial proceeding that was originally intended, but instead has become a more adversarial process not unlike that of the Disciplinary Tribunal. ¹⁷⁰

4.171 The Commission's suggestion that the Standards Board and Disciplinary Tribunal be merged was supported in most of the submissions which addressed the issue, and by most of those in the best position to have observed the current hearings system in operation. The submissions from the New South Wales Bar Association and the President of the Disciplinary Tribunal, Mr David Hunt, ¹⁷¹ both recommend the merger of the Board and Tribunal into a body which may hear and determine both forms of complaint. The Bar's submission states that the "two-tier approach involves additional expense and bureaucracy which is unwarranted. Secondly, the two-tier system creates difficulties and restrictions which are inimical to an efficient and streamlined system of dealing with complaints from the public." ¹⁷² A submission in support of merger also was received from Mr Robert Bennett, the Registrar of the Standards Board, Disciplinary Tribunal and Conduct Review Panel. ¹⁷³ Only the Law Society's submission favoured retention of the current bifurcated system, but little supporting argument was provided. ¹⁷⁴

4.172 The Commission has concluded that merger of the two bodies would result in a more streamlined, rational, and efficient process, and accordingly has recommended merger, with the new body to be known as the "Legal Services Tribunal" - rather than the Legal Profession Tribunal, to emphasise its independence from the profession.

Composition of the Disciplinary Tribunal (Recommendations 32-33)

4.173 Judicial members. The Legal Profession Act 1987 originally provided that the President of the Disciplinary Tribunal was to be the Chief Justice of the Supreme Court of New South Wales, who would appoint two other Supreme Court judges to be members of the Tribunal. ¹⁷⁵ When conducting a hearing, the Tribunal was to have been comprised of a judicial member as well as a legal member and a lay member (or two legal members and two lay members, as the President considered appropriate in the circumstances of the case). ¹⁷⁶ In 1989, the legislation was amended to remove the judicial members of the Tribunal, ¹⁷⁷ based on a policy of utilising judges to reduce delays in the courts and appointing senior lawyers (usually barristers) to quasi-judicial bodies and tribunals instead. ¹⁷⁸ Thus, for the purposes of conducting a hearing into a complaint, the Disciplinary Tribunal currently is constituted by two of its legal members (depending upon whether the complaint concerns a solicitor or barrister) and one of its lay members, as determined by the President of the Tribunal. ¹⁷⁹

4.174 In DP 26, the Commission noted that the American Bar Association placed "the highest priority on promoting, developing, and supporting judicial regulation of the legal profession and professional responsibility", ¹⁸⁰ and queried whether:

there may be a special case for having a judicial presence on (and supervision of) the Legal Profession Disciplinary Tribunal. Such a presence would go some way towards ensuring that complainants and the general public regard the Tribunal as being sufficiently independent of the practising profession. ¹⁸¹

4.175 The Bar Association's submission accepted the idea of judicial involvement in disciplinary hearings in principle, but expressed some concern about whether this would impose a further burden on the court system unless more judges are appointed. ¹⁸² The Registrar of the Disciplinary Tribunal, Mr Robert Bennett, wrote that practical difficulties had arisen in trying to schedule sittings of the Tribunal and the Standards Board because of limited availability of barrister members, especially Queen's Counsel, which sometimes resulted in matters being stood over for considerable periods. Mr Bennett suggested the use of retired judges and magistrates. ¹⁸³

4.176 Whatever the general policy on the allocation of judges to tribunals, the Commission has concluded that there are good reasons for judicial involvement in the legal disciplinary process, and we have so provided in Recommendation 32. The Commission believes that judicial involvement would:

• increase the public perception of the independence of the Tribunal and the disciplinary process generally;
• properly recognise the important rights and interests at issue in disciplinary hearings;
• justify the greater flexibility and range of sanctions which the Commission has recommended for the Tribunal;
• obviate the need for consent arrangements in the award of compensation;
• limit the basis and nature of appeals from the decisions of the Tribunal; and
• eliminate the anomaly whereby the Medical Tribunal is presided over by a judge, ¹⁸⁴ but the legal equivalent is not.

4.178 In the normal course of things, the judicial member (or one of the judicial members if there is more than one) should be appointed the President of the Tribunal.

4.179 Legal members. Under the current provisions of the Legal Profession Act 1987, the solicitor and barrister members of the Standards Board and Disciplinary Tribunal are appointed by the Attorney General on the nomination of the Law Society Council and Bar Council, respectively. ¹⁸⁵ The Commission believes, as a general matter, that it is most inappropriate for the members of a public tribunal exercising judicial or quasi-judicial powers to be nominated by private associations. In the particular case of the legal disciplinary body, it is important for the Legal Services Tribunal to be clearly perceived to be independent of the legal profession. The Attorney General may well wish to consult with the legal professional associations before making appointments to the Tribunal, but the Attorney should not be limited to appointing the nominees of the profession.

4.180 Lay members. As the commission wrote in DP 26,

Although there was very strong opposition to non-lawyer ("lay") involvement in the disciplinary process when the Commission first considered these issues over a decade ago ¹⁸⁶ ... it is now widely accepted that this is an important feature of the system and is essential in providing sufficient external accountability to maintain public confidence in the integrity of the system... .¹⁸⁷

It is obviously critical that the lay members themselves are widely regarded as independent of the legal profession and of sufficient integrity and firmness of mind to participate fully in the deliberations of the Tribunal without being overwhelmed by the judicial or legal members.

4.181 Appointment of lay members to the Tribunal by the Attorney General normally should follow a system of advertising, interviewing and selection on merit, in the manner associated with appointment to important public bodies.

4.182 As discussed in Chapter 3, above, a Public Council on Legal Services, first recommended by the Commission in 1982, could play an important role both in advising the Attorney General regarding appointments (without binding the Attorney) as well as providing training and support services for appointees.

4.183 Composition for individual hearings. The precise composition of the Legal Services Tribunal should be determined by the President or a nominee in each case. While the Commission has recommended that judicial membership of the Tribunal be restored, it is not necessary that every hearing be presided over by a judge, although judicial presence normally should be regarded as desirable. In the absence of a judge, one of the legal members of the Tribunal should be designated as the presiding member.

4.184 In Recommendation 33, the Commission proposes that the Tribunal should be comprised of equal numbers of independent members and legal members, plus the presiding member. The Tribunal normally would be comprised of three members, but the President or a nominee may determine that a particular hearing, because of (say) the importance or complexity of the issues involved, requires a bench of five members. Where the Tribunal has ordered the joinder of informations against two or more practitioners for hearing (see Recommendation 38), and the respondents include both solicitors and barristers, the President also may wish to set a five member bench in order to include legal members from both divisions of the profession.

Hearings before the Tribunal (Recommendations 34-38)

4.185 Hearings to be in public. The American Bar Association's Commission on the Evaluation of Disciplinary Enforcement recently reported that it was:

convinced that secrecy in discipline proceedings continues to be the single greatest source of public distrust of lawyer disciplinary systems. Because it engenders such distrust, secrecy does great harm to the reputation of the profession. The public's expectation of government and especially of judicial proceedings is that they will be open to the public, on the public record, and that the public and the media will be able to freely comment on the proceedings. The public does not accept the profession's claims that lawyers' reputations are so fragile that they must be shielded from false complaints by special secret proceedings. The irony that lawyers are protected by secret proceedings while earning their livelihoods in an open system of justice is not lost on the public. On the contrary, it is a source of great antipathy toward the profession. ... The arguments against open disciplinary systems are based on conjecture and emotion, not experience. ¹⁸⁸

4.186 In DP 26, the Commission agreed that:

As a general matter, the restoration and maintenance of public confidence in the legal profession's disciplinary processes is dependent upon clear evidence that the system is fair, open and accountable. As many elements of the system as possible should be open to the public and on the record, and reasons for decisions should be available. ¹⁸⁹

4.187 Under the present legislative arrangements, the hearings of the Standards Board into allegations of unsatisfactory professional conduct are held "in the absence of the public" (in camera), and the complainant has no statutory right to be present other than the limited right to be appear as a party for the purposes of a compensation claim. ¹⁹⁰ Hearings of the Disciplinary Tribunal into allegations of professional misconduct normally are held in public, but the Tribunal does have the discretion to close the proceedings to all but the parties and their representatives in the interests of justice. ¹⁹¹

4.188 The Australian Consumers' Association agreed that opening up the proceedings would "help restore public confidence in the complaints system". ¹⁹² However, the submissions of the Bar Association and the Law Society disagreed with the Commission that hearings into allegations of unsatisfactory professional conduct should be open to the general public. The Bar Association agreed that the complainant should be allowed to be present, but expressed concern that a publicly-heard allegation of poor performance could result in professional stigma even if dismissed, so that public hearings were not justified in minor matters. ¹⁹³ The Law Society also submitted that allegations of unsatisfactory professional conduct did not "raise questions of fitness to practice affecting the general community. On the contrary they will be personal to the complainant and the solicitor and no public interest is served by opening the proceedings to the general public." ¹⁹⁴ The President of the Disciplinary Tribunal, Mr David Hunt, also expressed concern that opening the hearing to the public would make it difficult to proceed in a relatively informal manner. ¹⁹⁵

4.189 The Commission finds that it cannot accept the assertions of the professional associations. No doubt the hearing of a serious allegation against a lawyer amounting to professional misconduct could result in professional stigma even if dismissed, yet the Bar Association accepts (and it is generally uncontroversial) that such proceedings should almost always be held in public. ¹⁹⁶ And contrary to the view of the Law Society, unsatisfactory professional conduct, by statutory definition, clearly goes beyond the bounds of a purely "personal dispute" between lawyer and client, since it "involves a substantial or consistent failure to reach reasonable standards of competence and diligence". ¹⁹⁷

4.190 The Commission still believes that all hearings in respect of unsatisfactory professional conduct and professional misconduct should be open to the public. (And certainly complainants always must have the right to be present at any formal hearing of their complaint.) In DP 26, we noted that the threat to the reputation of the legal practitioner involved in the former case is no greater than that of the lawyer sued for professional negligence in the District Court or the ordinary citizen charged with a minor criminal offence in the Local Court, both of whom are subjected to "open justice" in the public interest. ¹⁹⁸

4.191 Whatever small discomfort is occasionally caused to practitioners because of the operation of "open justice" principles in the disciplinary system will be heavily outweighed by the increased public confidence in the fairness and propriety of the system, and the greater level of knowledge (by members of the public and by lawyers) of what standards of professional conduct are expected of competent and diligent legal practitioners. As the submission of the Attorney General's Department suggested, "the total secrecy which [currently] surrounds the Board's proceedings seems to be counterproductive". ¹⁹⁹

4.192 In extraordinary cases it may be necessary to close the proceedings, or limit the reporting of proceedings, but we recommend that this discretion should be exercised only "where the presence of the public will defeat the ends of justice", ²⁰⁰ as is the case in the Supreme Court (where closure is rare). A special exception to the general rule should be made in relation to the taking or reporting of evidence of (otherwise) confidential and privileged communications between client and lawyer. This is provided for in Recommendation 67, which is discussed in Chapter 5, below.

4.193 Evidence and procedure. One of the main ideas behind the current bifurcated system of disciplinary hearings is that the Standards Board, which hears the less serious category of complaints about unsatisfactory professional conduct, would conduct itself in a relatively informal manner, while the Disciplinary Tribunal would hold more formal hearings into allegations of professional misconduct. For the reasons discussed above, the Commission has concluded that the bifurcated system has not worked as intended (or well), and we have recommended merger of the two disciplinary bodies into a new Legal Services Tribunal.

4.194 The Commission considered in DP 26 that there is no reason why, when hearing a complaint about unsatisfactory professional conduct, the new Tribunal could not conduct itself in a more inquisitorial and somewhat less formal manner than it otherwise might. ²⁰¹ The submissions of the Bar Association ²⁰² and the Registrar of the Disciplinary Tribunal, Mr Robert Bennett, ²⁰³ both agreed with the Commission on this issue.

4.195 The courts in New South Wales have stated that disciplinary proceedings are neither criminal nor civil, but rather are "protective" (of the public interest). ²⁰⁴ As a general matter, the Commission believes that the new Tribunal should adopt a more flexible and inquisitorial style, subject, of course, to the imperatives of administrative natural justice. We have recommended as well (see Recommendations 35-36) that this flexibility should extend to the rules of evidence, so that the Tribunal may inform itself in any manner it sees fit, except in relation to a charge of professional misconduct. Given the severity of the penalties available (and likely) in the event of a finding of professional misconduct, the rules of evidence should apply in such proceedings.

4.196 The legal practitioner to "plead". Under the present legislative arrangements, there is no formal requirement for the legal practitioner to "plead" with respect to any allegations made against him or her. The preliminary submission of the Bar Association suggested that, as a result, the issues for hearing and determination were not narrowed and that this caused unnecessary expense and delay. ²⁰⁵ In DP 26, the Commission took up this point and suggested that:

The disciplinary process probably would be expedited and facilitated by requiring legal practitioners to respond formally to complaints (to "plead") in a timely fashion and in a manner which serves to narrow the issues for investigation and hearing. The legal practitioner's candour - or lack of candour - in this respect should itself be a matter for consideration by the disciplinary authorities. ²⁰⁶

4.197 The Registrar of the Disciplinary Tribunal, Mr Bennett, informed the Commission that, in practice, he asks the legal practitioner concerned whether he or she intends to contest all of the grounds of the complaint. The answer is incorporated into a statutory declaration. Nevertheless, Mr Bennett agreed with the Commission and the Bar Association that the position should be clarified and formalised in the legislation. ²⁰⁷ In Recommendation 37, the Commission proposes that prior to the commencement of the hearing of disciplinary charges the legal practitioner involved should be obliged to file a Reply to the information (that is, to "plead").

4.198 Joinder of informations, and matters arising. Early in the inquiry, the Bar Association and Law Society both pointed out to the Commission that the existing disciplinary bodies have no power to deal with matters involving unsatisfactory professional conduct or professional misconduct which are revealed in the course of a hearing but which were not the subject of the particular complaint or complaints being heard. The Commission suggested in DP 26 that the disciplinary bodies should have the power to deal with matters arising (subject to considerations of natural justice in each case). ²⁰⁸ The Bar Association ²⁰⁹ and Law Society ²¹⁰ agreed with this, of course, as did Mr Robert Bennett (the Registrar of the Disciplinary Tribunal) ²¹¹ and Mr David Hunt (President of the Disciplinary Tribunal). ²¹²

4.199 Similarly, the Commission mentioned in DP 26 that:

There may be some cases in which it is difficult to determine before hearing whether one or another legal practitioner (or both) is responsible for the conduct or failing complained of. Absent a formal hearing there may be insufficient information for the relevant Council to make the determination, or it may be one practitioner's word against the other. Consideration should be given to permitting the joinder of complaints in these circumstances, to permit the Board or Tribunal, as appropriate, to make the determination after hearing from all of the parties. This may be especially important where the legal practitioners involved are a barrister and a solicitor, in which case neither professional Council would have sufficient jurisdiction to handle the matter properly. ²¹³

The submission of the Bar Association agreed with this suggestion. ²¹⁴

4.200 In Recommendation 38, the Commission proposes that, subject to principles of natural justice, the Legal Services Tribunal be empowered to deal with matters arising and to order the joinder of informations against two or more practitioners.

Powers of the Tribunal (Recommendations 39-43)

4.201 The Tribunal should have the same powers as the Supreme Court. In DP 26, the Commission noted that it was widely accepted that there are:

some anomalies and inconsistencies in the distribution of powers between the disciplinary bodies provided for in the Legal Profession Act 1987, and in the sanctions and orders available in respect of members of the different branches of the legal profession. For example, under the prior legislation, it was generally considered that the Solicitors' Statutory Committee had the same powers to discipline solicitors as the Supreme Court had in relation to solicitors and barristers. However, the Standards Board and the Disciplinary Tribunal have only those powers which are specifically enumerated in ss 149 and 163 of the 1987 Act. In this respect, the previous position is to be preferred. ²¹⁵

4.202 In Recommendation 39 we make clear that the reconstituted Legal Services Tribunal should be given the same powers as the Supreme Court to discipline barristers and solicitors, as well as those powers which are specifically enumerated by statute.

4.203 Another issue raised in DP 26 ²¹⁶ is whether the Disciplinary Tribunal's specified powers to make orders against a legal practitioner found guilty of professional misconduct ²¹⁷ implicitly subsume the (more varied) powers of the Board and Tribunal with respect to practitioners found to have engaged in unsatisfactory professional conduct. ²¹⁸ The Commission believes that this should be the case, but in any event the problem would pass with the merger of the Board and Tribunal, as we have recommended in this Report.

4.204 The Tribunal's enumerated powers. In Recommendation 40, the Commission lists the disciplinary powers of the Legal Services Tribunal which should specifically be enumerated in the Legal Profession Act. There is not much of controversy here, since the Commission largely has replicated the aggregated powers of the existing Board and Tribunal. The Commission does not believe that it is necessary or useful to specify a separate array of powers in respect of unsatisfactory professional conduct and professional misconduct - most of the disciplinary orders will be relevant in either case, and common sense as well as common law would not permit the most severe sanctions (such as striking off) to be imposed for minor transgressions, whatever the categorisation.

4.205 Two aspects of the Recommendation are worth discussing separately, however. First, the Commission suggested in DP 26 that the current maximum fines of $2000 for unsatisfactory professional conduct ²¹⁹ and $25,000 for professional misconduct ²²⁰ seem to be too low, having regard to the maximum penalties now applicable to doctors, company directors, and other professional advisers who conduct themselves in a substandard or improper fashion. ²²¹ The (Medical) Professional Standards Committee, for example, which is the equivalent of the Legal Profession Standards Board, currently may impose a fine not exceeding $5000. ²²² In order to give the Legal Services Tribunal sufficient flexibility to impose a substantially greater fine than is now available where the circumstances warrant such a penalty, the Commission has recommended that the maximum fines be raised to $5000 for unsatisfactory professional conduct and $50,000 for professional misconduct.

4.206 Secondly, the Commission has sought to clarify the position in relation to the administration of a reprimand. Under the existing law, a legal practitioner can be reprimanded by a Council (with the consent of the practitioner) ²²³ or by the Standards Board, for unsatisfactory professional conduct. ²²⁴ The Commission believes that a reprimand by the new Tribunal normally should be a public reprimand, unless special circumstances require a private reprimand. For example, if a lawyer's professional practice fell into disarray because of a personal tragedy or other compelling personal problems, the Tribunal might feel that a private reprimand is preferable.

4.207 The Tribunal's powers over solicitors' firms. In Recommendation 41, the Commission specifies that the Legal Services Tribunal should continue to have the powers over law practices or firms (and associated solicitor corporations), enumerated in s 149(2)(c)-(g) of the Legal Profession Act 1987 (NSW). ²²⁵ These include the powers to order:

• periodic inspection of the practice;
• that the practice seek management advice;
• that the practice cease to employ a specified person or persons;
• that "a person belonging to such class of persons as it may specify in the order" be employed; and
• that the practice cease to accept instructions in relation to a specified class or classes of work.

In a number of matters observed by the Commission or which have been brought to our attention, the complaint and the ensuing investigation indicated that, in addition to (or instead of) personal failings on the part of the legal practitioners concerned, there was evidence of broader, systemic problems in the law firms concerned. It should be possible for the various legal profession disciplinary bodies to make appropriate orders in respect of a firm of solicitors - short of putting in a receiver ²²⁷ - aimed at rectifying any perceived systemic problems. For example, it should be possible to order the establishment of an internal Ethics Committee, or to improve internal systems of management and supervision, with the firm required to approach the disciplinary body after a specified period of time to demonstrate what changes have been made and their effectiveness.

4.209 The Commission's File Survey (of Law Society complaints files) confirmed our earlier impression that the evidence sometimes reveals systemic failure on the part of the law firm involved. Consistent with our general policy of affording the Legal Services Tribunal sufficient flexibility to fashion customised orders and sanctions, the Commission also recommends (Recommendation 42) that in such circumstances, the Tribunal should be able to make appropriate orders in respect of the firm of solicitors to rectify the problem. ²²⁸

4.210 Powers to make compensation orders. The current legislation allows for the award of compensation to complainants in certain circumstances, but imposes a number of unnecessary constraints. The Standards Board and the Disciplinary Tribunal both have the power to make an order that the legal practitioner waive or repay fees, carry out certain legal work free of charge or for a specified fee, waive any lien in respect of documents, or pay a specified amount of compensation, upon a finding of unsatisfactory professional conduct or professional misconduct, respectively. ²²⁹ However, such a compensatory order may be made only where the complainant specifically has requested such a remedy in his or her complaint, with supporting particulars, ²³⁰ and two other qualifications are met.

4.211 First, an order for compensation of up to $2000 may be made without the consent of the legal practitioner involved, but the consent of both the practitioner and the complainant is required for an order above that cash amount, or for any of the other three compensatory orders. ²³¹ This provision creates the anomalous situation that the complainant may be awarded cash compensation of $2000 without the consent of the lawyer involved, but cannot get a fee waiver or specific performance worth, say, $500, without the practitioner's consent. Secondly, the complainant must not have received, nor be "entitled to receive compensation pursuant to an order of a court or compensation from the Fidelity Fund". ²³²

4.212 In DP 26, the Commission was critical of the way in which these conditions:

appear to be weighted too heavily against the complainant. The Board and Tribunal should have the power to make any or all of the orders referred to above if the interests of justice and fairness so require. Complainants will often not be aware of the nature or existence of a solicitor's lien, for example, or understand in advance the sort of compensation they may be entitled to. Where a Board or Tribunal is satisfied on the evidence that a complainant has suffered as a result of a legal practitioner's poor professional work, and such harm may be rectified in whole or in part by an award of compensation or other remedial order, it should be free to make such an order whether or not the complainant has specifically requested such a course of action and whether or not the legal practitioner consents to such an order. The consent requirement is particularly difficult to understand in view of the requirement that the Board or Tribunal may make a remedial order only if it is first satisfied that the legal practitioner is guilty of unsatisfactory professional conduct or professional misconduct and the complainant has suffered loss as a consequence. ²³³

4.213 The Commission also queried the appropriateness of the current upper limit of $2000 for compensation orders, and suggested:

a more realistic sum of $10,000. The point of providing for compensation within the disciplinary process is to avoid the need for the complainant to go to yet another civil court or tribunal (such as the Consumer Claims Tribunal) to seek redress. However, this aim is not achieved where the compensation ceiling is so low that it forces complainants to go elsewhere to get a proper remedy. ²³⁴

4.214 In the submissions received, the Bar Association ²³⁵ disagreed with the Commission's proposal to increase the limits on compensation, but the Law Society, ²³⁶ the Kingsford Legal Centre, ²³⁷ the Australian Consumers' Association, ²³⁸ and the Registrar of the Disciplinary Tribunal, Mr Robert Bennett, agreed with the Commission. Mr Bennett suggested that a limit need not be prescribed, with the amount left open to the disciplinary body to decide, having regard to the particular circumstances of each case. ²³⁹

4.215 In Recommendation 43, the Commission accepts this latter approach, and recommends that the Legal Services Tribunal should be free to make an appropriate compensatory order in each case, without the practitioner's consent and without a specified maximum amount. A complainant should no longer be estopped from receiving compensation because of a failure to request this in the original complaint. As a matter of fairness and good practice the complainant should be required to request compensation by at least the commencement of the hearing, but even here the Commission would allow a complainant or an informant to seek the leave of the Tribunal to amend the information ²⁴⁰ for this purpose. Since the Commission has recommended that the Tribunal normally be presided over by a judge, and Tribunal decisions are reviewable by the Court of Appeal (see below), there seems little point in fettering the ability of the Tribunal to award compensation where it has found that the complainant has suffered loss as a result of the practitioner's conduct.

Review of Tribunal decisions (Recommendation 44)

4.216 For the avoidance of doubt, the Commission has specified that determinations of the proposed Legal Services Tribunal should be subject to judicial review only by the NSW Court of Appeal. Under the Supreme Court Act 1970 (NSW), appeals from or review of the decisions of "specified tribunals" are assigned to the Court of Appeal. ²⁴¹ A tribunal which has "amongst its number a judge" is automatically a "specified tribunal", ²⁴² while the Legal Profession Disciplinary Tribunal (but not the Standards Board) is expressly included in this category. ²⁴³ As the successor to the Disciplinary Tribunal, and as a "a body of persons having amongst its number a judge", the proposed Legal Services Tribunal clearly should be in this category as well.

4.217 The Legal Services Tribunal will be specialist tribunal chaired by a judge, with professional and lay representation. In the circumstances, any appeal from one of its decisions should be by way of a review on the record, rather than by way of a re-hearing. ²⁴⁴ Appeals on matters of law should be as of right, but an applicant should be required to get the leave of the Court to appeal on a matter of fact.

Powers of the Registrar (Recommendation 45)

4.218 Two of the Commission's initiatives in this Report require consequential enhancement and re-definition of the powers of the Registrar of the Legal Services Tribunal. First, the Commission has proposed in Recommendation 20 that in the event that consensual dispute resolution fails to resolve a consumer-type dispute, a complainant may apply to the Registrar of the Tribunal to have the matter resolved by arbitration. ²⁴⁵ The Commission recommends that in such cases the Registrar, or another arbitrator nominated by the Registrar, may award compensation of up to $6000. This amount also is the upper limit of the jurisdiction of the Consumer Claims Tribunal (CCT), and the Commission's intention is to obviate the necessity for a complainant to make a separate claim to the CCT, in keeping with our aim of allowing complainants the opportunity to resolve all issues relating to their complaint within the ambit of the one system.

4.219 The second matter involves empowering the Registrar to impose an "administrative penalty" (a civil "fine", effectively) of up to $2000 against a legal practitioner, upon the application of the Legal Services Ombudsman or one of the professional Councils, where the practitioner unreasonably has failed to provide information requested for the purposes of investigating a complaint. (Recommendation 45 follows from Recommendation 23, which is discussed above.)

EXTERNAL REVIEW

46. The Legal Profession Conduct Review Panel should be renamed the "Legal Services Conduct Review Panel" (the "Panel") and should be empowered to review the handling of any complaint which has not been referred to the Tribunal for a hearing.

47. The composition of the Panel should remain as provided in s 126 and Schedule 4 of the Legal Profession Act 1987, except that the Attorney General should be able to appoint the barrister and solicitor members without the need for nomination by the respective Council. It should continue to be the position that one of the independent members should be appointed Chairperson of the Panel by the Attorney General.

48. The appointment of all members of the Panel should follow a system of advertising, interviewing and selection on merit, in the manner normally associated with appointment to important public authorities.

49. The independent members of the Panel should normally be persons who are not practising lawyers. However, it should be open to the Attorney General to appoint a person who has legal qualifications so long as he or she does not hold a current practising certificate. The legislation should specify that the main requirements for appointment as an independent member of the Panel are that the person: (1) is independent of the legal profession, and (2) has sufficient experience and community standing to promote public confidence in the integrity of the system.

50. The independent members of the Panel should be entitled to receive a reasonable level of remuneration, having regard to the time commitment and complexity of the work involved, in order to attract and retain competent people.

51. The Panel should be allocated sufficient resources to ensure that it can carry out its functions promptly and effectively in the public interest. In particular, the Panel should have a sufficient budget to enable it to:

• establish a small, full-time secretariat, to facilitate the work of the part-time Panel;
• provide the necessary legal and technical advice and research to its members;
• make possible the active investigation or re-investigation of complaints in appropriate cases;
• conduct relatively informal hearings at which the parties may be heard; and
• organise training programs for its members, especially the independent members.

52. The Panel should be able to undertake a review upon an application from the complainant; or upon the request of the Attorney General, the Legal Services Ombudsman or a professional Council; or on the Panel's own motion.

53. The Panel should be entitled to go beyond the file compiled by the professional Council or the Legal Services Ombudsman to conduct a thorough review of the complaint, which may involve further investigation or re-investigation, or asking the parties to appear before it. The Panel also should be able to ask that the Council or the Legal Services Ombudsman conduct further investigations into a complaint instead of or in addition to pursuing its own inquiries.

54. The Panel should be empowered to refer a matter back to a Council or to the Legal Services Ombudsman for further investigation, or to refer a matter directly to the Tribunal for a formal hearing, without the intervention of the Attorney General. Where the Panel refers a matter to the Tribunal for hearing, the Panel should nominate the Legal Services Ombudsman or the appropriate professional Council to prosecute the information.

55. The Panel should be empowered to refer a matter for dispute resolution (see also Recommendations 15 and 28) or to recommend the payment of compensation to a complainant in appropriate cases, from a discretionary fund maintained by the professional Councils for this purpose.

56. If the Panel upholds the decision of the Council or the Legal Services Ombudsman, it should provide the complainant with adequate reasons in writing for the Panel's decision.

57. The Panel should be obliged to report annually to Parliament through the Attorney General, and at least semi-annually to the professional Councils and the Legal Services Ombudsman.

Commentary

External monitoring generally

4.220 At present, the Panel may, following an application by a complainant, review the dismissal of a complaint by a professional Council (or a committee of Council with delegated authority). ²⁴⁶ In each case, the Panel is comprised of two lay persons and one barrister or solicitor, depending upon the nature of the complaint. The Panel may deem that a complaint has been dismissed if it has not been disposed of within six months. ²⁴⁷ The procedure is a purely paper one, with the Panel simply reviewing the file sent by the Law Society or Bar Association. No new information is called for, although on occasion some new material is presented in the complainant's letter requesting review. In the event that the Panel disagrees with the dismissal, it notifies the relevant Council, which has the opportunity to reconsider the file. If the Council stands by the decision to dismiss the complaint, the Panel can recommend to the Attorney General to forward the complaint to either the Standards Board or the Disciplinary Tribunal. The Panel has no power itself to direct a complaint for a formal hearing.

4.221 It was evident from the Commission's research and widely acknowledged in the submissions - including the submission from the Panel itself - that the Panel got off to a slow and uncertain start after its establishment under the Legal Profession Act 1987. ²⁴⁸ Some of the teething problems included: lengthy delays in the review process, caused by a shortage of some categories of members, the serious illness of one member and the lack of alternates; ²⁴⁹ uncertainty about the confidentiality and privilege of material in the files once they came into the possession of the Panel, which led to the refusal of the Bar Association to turn over any complaint files for over three years; ²⁵⁰ some delays in the processing of referred matters by the Attorney General's Department, and some communications problems between the Department and the Panel.

4.222 Happily, these particular problems have now largely abated. The Panel finally has a full complement of members and alternates, and it has been sitting very frequently to clear the heavy backlog of complaints. When the Commission commenced this inquiry, it took eight to ten months to get a matter reviewed by the Panel. According to information supplied recently by the Panel's Registrar, matters are now being cleared within six to eight weeks. ²⁵¹ The Bar Association has come to an agreement with the Panel about confidentiality, and the Panel may now review dismissed complaints about barristers. The Attorney General's Department also has greatly speeded up its handling of referred matters, and there are better lines of communication between the Department and the Panel.

4.223 However, in DP 26 the Commission also identified a number of significant structural problems with the powers and operations of the Panel, which prevent it from providing as effective an oversight of the system as complainants and the public generally are entitled to expect. These problems include:

• the Panel's jurisdiction is limited to dismissed matters, although complainants may feel dissatisfied with a Council's handling of a complaint which has been disposed of in some other way, such as where a practitioner has been reprimanded; ²⁵²
• the Panel's review currently relies upon information obtained derivatively from the files of the professional associations, without any independent investigation of its own; ²⁵³
• the Panel has only recommendatory power, necessitating further review by the Attorney General's departmental officers, with the consequent duplication of efforts and further delays; ²⁵⁴ and
• questions about the membership and resourcing of the Panel. ²⁵⁵

4.224 The Law Society's submission argued strongly for the replacement of the Panel by a "Lay Observer", with wide access to all parts of the disciplinary system. ²⁵⁶ However, the Commission is of the view that the external monitoring function is much better left to a panel, rather than to an individual (as the Law Society has suggested). As we noted in DP 26,

For the purposes of reviewing individual complaints, and bringing a range of viewpoints and expertise to bear, the multi-member Panel - which includes a legal representative, who can offer technical and practical insights - is better placed to get through the work. ²⁵⁷

4.225 The NSW Commissioner for Consumer Affairs, Mr John Holloway, shares the Commission's doubts about "whether the external monitoring function would be most effectively discharged by a single person, no matter how eminent". ²⁵⁸ The submission from the President of the Disciplinary Tribunal, Mr David Hunt, also considered that the Panel "can be made to work effectively provided sufficient resources are allocated to handle the volume of matters". ²⁵⁹ These views are reinforced by the fact that the number of requests for reviews is likely to increase significantly in coming years, in line with the general increase in the number of complaints as well as the expanded jurisdiction of the Panel, which would not be limited to reviewing dismissed matters.

4.226 Under the current legislation, the only qualification for appointment as a lay member of the Panel is that the person is not a legal practitioner. ²⁶⁰ As was noted in DP 26, it is the Commission's view that,

it is important that the person be of sufficient integrity, strength of character, independence, experience and community standing that he or she will be capable of questioning the decisions of a Council of eminent lawyers in a fair but firm manner, and of assuring the general public of the probity of the disciplinary system. These qualifications should be spelled out more fully in the legislation. ... In order to attract the best possible candidates and to assure the public of the independence of the persons appointed to the Panel, such appointments should only take place following a proper advertising and selection process. ²⁶¹

The Conduct Review Panel (Recommendations 46-52)

4.227 The Panel's jurisdiction. The Panel currently is only authorised to review "a Council's decision to dismiss a complaint" ²⁶² (or a "deemed dismissal" where the Council does not make a determination within six months). ²⁶³ The review may only commence upon an application from the complainant, made within two months of the Council's decision (or deemed decision). ²⁶⁴

4.228 The Commission believes that this is unduly restrictive in two respects. First, the Panel should be entitled to review any (adverse) decision by the investigating body (one of the Councils, or the Legal Services Ombudsman, under our recommendations). As mentioned above, a complainant could well feel dissatisfied with a decision to reprimand a legal practitioner, for example. Review should be available in all cases where the investigating body decides not to refer the matter to the Legal Services Tribunal for a hearing.

4.229 Secondly, it will normally only be the complainant who is interested in seeking a review. However, there may be occasions on which the decision to dismiss a complaint is questionable in terms of public policy, but the complainant does not wish to pursue the matter. For example, a complainant may regard the review process as futile or too much trouble; or the complainant already may have prompted some positive action from the lawyer, or may have received some compensation. If such a case comes to public attention it could lead to the loss of public confidence in the integrity and efficacy of the system. Consequently, we recommend (Recommendation 52) that it also should be open to the Legal Services Ombudsman, one of the professional Councils (where the Legal Services Ombudsman conducted the investigation), or the Attorney General to approach the Panel to seek review of the decision, and the Panel also should be able to initiate a review on its own motion. Such cases probably will be rare, but it is nevertheless important that the external monitor be able to resolve doubts about any questionable decision, and not merely those in which the complainant takes the initiative.

4.230 Appointment of members. In keeping with the Commission's view that there be no confusion about the status of the independent bodies involved in the regulation of the legal profession, we have recommended that the Panel be renamed the Legal Services Conduct Review Panel. As with the Legal Services Tribunal (see Recommendation 32, above), the Commission believes that it is inappropriate for legal members of the Panel to be appointed by the Attorney General upon the nomination of the professional Councils. The Panel should have the benefit of legal expertise and perspectives, but the Attorney's discretion to appoint appropriate lawyers for this purpose should not be so fettered, nor should the perception of the legal members' independence and impartiality be compromised by the manner of their nomination. Consequently, we have recommended (Recommendation 47) that the Attorney General may appoint legal members of the Panel without the need for nomination by the professional Councils. The Attorney may wish to consult with the Councils (and others) about such appointments, of course. The Commission also recommends (Recommendation 48) that the appointment of all members of the Panel (legal and lay) should follow merit selection principles and procedures, in keeping with the nature and importance of the office.

4.231 Under the Legal Profession Act 1987, the only qualification for appointment as a lay member of the Panel is that the person is not a legal practitioner. ²⁶⁵ In DP 26, the Commission proposed that the legislation spell out the qualifications required for appointment as a lay member of the Panel, in a more specific and positive fashion, emphasising:

that the person be of sufficient integrity, strength of character, independence, experience and community standing that he or she will be capable of questioning the decisions of a Council of eminent lawyers in a fair but firm manner, and of assuring the general public of the probity of the disciplinary system. ²⁶⁶

4.232 In Recommendation 49, the Commission incorporates these qualifications into the qualifications for appointment. The Commission also gave considerable attention to the question whether a person who has legal training but does not practice law should be eligible for appointment as a lay member of the Panel. It is the Commission's view that the possession of a law degree or an Admission Board diploma should not in itself disqualify the person from appointment, so long as the person does not hold a current practising certificate and meets the other criteria of independence of mind and community standing. The Commission is aware that it is increasingly common for persons with legal training to pursue careers other than as legal practitioners - for example, in accounting, industry and commerce, journalism, public administration, and so on. The Commission also is aware of the comment that, with the popularity of legal studies and the proliferation of university law schools, there may soon be a time when it will be difficult to find an adult in New South Wales without legal qualifications.

4.233 In order to attract and retain good lay members of the Panel, members should be entitled to receive a "reasonable" level of remuneration, having regard to the nature of the work involved. Members of the Panel should receive some recognition of, and recompense for, the time, out-of-pocket expense, and inconvenience of such service. However, people should be motivated to apply for appointment and to serve on the Panel for reasons having to do with the spirit of public service rather than a desire for pecuniary gain, and the stipend need not be unduly large. (See Recommendation 50.)

4.234 The Panel itself must be sufficiently resourced to permit it to carry out its responsibilities effectively and efficiently, in the public interest. ²⁶⁷ In particular, the Commission recommends (Recommendation 51) that sufficient resources be made available to: establish a small, full-time secretariat, to facilitate the work of the part-time Panel; provide the necessary legal and technical advice and research to the lay members of the Panel; make possible the active investigation or re-investigation of complaints in appropriate cases (see below); conduct relatively informal hearings at which the parties may be heard; and run training programs for the members, especially the lay members. ²⁶⁸

The Panel's powers and obligations (Recommendations 53-57)

4.235 The nature of the review. The Legal Profession Act 1987 states that the Review Panel "shall review" decisions to dismiss a complaint, upon application from the complainant. To this end, the Panel is required to consult with the relevant professional Council and is entitled to view the records and documents held by the Council in relation to the investigation of the particular case. ²⁶⁹ As a matter of practice, the Review Panel generally conducts only an administrative "paper review", in camera, based upon the application of the complainant and the existing record. In practice, the Panel sometimes asks the professional associations to produce further information - that is, to present fresh evidence - and complainants sometimes raise new material in their application for review. Having regard to its resources and its own interpretation of the relevant sections of the Act, however, the Panel does not undertake any fresh investigation or re-investigation, solicit submissions from the parties, or examine witnesses. ²⁷⁰

4.236 In DP 26, ²⁷¹ the Commission wrote that the Panel itself had acknowledged that:

this procedure often comes as a disappointment to complainants, who assume that they will be notified of the time of the review, will be entitled to be present and to be heard (in person or through a representative), and will be able to put on and challenge evidence. That is, complainants assume that they will receive the opportunity to "appeal" against the Council's decision. One experienced member of the Panel described this as "an austere, dehumanised procedure which does not satisfy the public". The Chairperson of the Panel, Mr John O'Neill, described the Panel's powers in this regard as "deficient".

4.237 As we noted in DP 26, it is arguable that the Panel actually has greater powers under the Act than it has chosen to exercise, given the judicial interpretation of the term "review" in other similar contexts. ²⁷² Whatever the correct position, it is obvious "that these powers ought to be clarified and significantly increased by legislation in order to permit the Panel to conduct an effective review of the decisions of Councils to its own satisfaction and that of complainants". ²⁷³

4.238 The Legal Services Ombudsman in England and Wales - who is vested with the same review function as the Panel - has more thorough-going powers to review dismissed complaints, including re-investigation where appropriate. The Legal Services Ombudsman may require any person to furnish information or produce documents considered relevant, and has the same powers as the English High Court to compel attendance, examine witnesses, and so on. ²⁷⁴

4.239 In Recommendation 53, we propose that the legislation should make clear that the Panel is entitled to go beyond the record compiled by a Council or the Legal Services Ombudsman to conduct a thorough investigation or re-investigation of a matter. This should involve the ability to ask the parties to appear before it - not for a formal hearing, but rather for an interview to assist the Panel with its investigation. It must be remembered that the Panel is not a judicial or deliberative body, but rather is an administrative body. While the rules of administrative natural justice must be respected, the more elaborate rules which apply to full-blown hearings are not relevant here. Rather than exercise these powers directly, the Panel may wish simply to get a clarification from a Council or from the Legal Services Ombudsman (as it does now with respect to the former) or to request that the Council or the Ombudsman conduct some further investigation. For example, the Commission noticed in its File Survey (see Chapter 2) that the Law Society often failed to interview third parties who might have shed some light on the dispute. Rather than re-investigate the entire matter in such cases, the Panel may prefer to clarify whether the Council tried to interview the third party and, if it has not, recommend that the Council do so promptly.

4.240 It was recognised in DP 26 ²⁷⁵ that the Panel's view of the extent of its own powers is at least partly coloured by practical considerations about the resources which are made available to it, and which currently are not calculated to support a system of full hearings. The issue of resources is discussed more fully, below.

4.241 Power to refer a matter directly for hearing. Under the current legislation, if the Panel disagrees with the decision of a Council to dismiss a complaint, it has no direct powers to refer the matter to the Standards Board or Disciplinary Tribunal for a hearing. Rather, the Panel must first approach the Council and ask it to re-consider its decision; ²⁷⁶ if the Council stands by its original decision to dismiss, then the Panel can only make a recommendation to the Attorney General that the matter be referred to the Standards Board or Disciplinary Tribunal for a hearing. ²⁷⁷

4.242 In DP 26, the Commission wrote that:

It is difficult to see why the recommendation of the Panel should not be given direct effect, rather than triggering yet another review by the Attorney. In recent discussions with the Commission, the Bar Association supported this view. The Attorney General is required to "take into consideration, but is not bound to follow, the recommendation made by the Panel". ²⁷⁸ If the Panel's only power is to refer the matter for hearing, there is little danger in giving this direct effect. The added layer of the Attorney General, who would no doubt act on the advice of departmental officers or the Crown Solicitor, only contributes to delays in the final determination of a complaint, and leads to the view that the system is balanced against the complainant. ²⁷⁹

4.243 As the Panel itself submitted,

Referring matters to the Attorney General if we have not been able to persuade the Law Society to change its views has been a frustrating procedure and in our view unnecessary. Our decision is really "there is a case to answer" not a conclusion as the matter will still be heard by the Board or Tribunal. Even if there was not a year's delay in hearing back from the Attorney we see no merit or benefit in this step. ²⁸⁰

4.244 Although the handling of such matters by the Attorney General's Department is now more prompt and the communications between the Attorney and the Panel are much improved, the Commission still believes that the requirement of the Attorney's intervention is unnecessary and undesirable. We recommend (Recommendation 54) instead that the Panel be empowered to refer a matter back to the investigating body (a Council or the Legal Services Ombudsman) or to refer the matter directly to the Legal Services Tribunal for a hearing.

4.245 In the event that the Panel refers the matter for hearing, the Panel should nominate either the Legal Services Ombudsman or one of the professional Councils, as appropriate, to prosecute the matter before the Legal Services Tribunal. The Commission believes that the prosecutorial role should not be performed by the Panel itself, which is established for rather different purposes (to provide external scrutiny of the process), so that a prosecutor must be found. Where the decision of a Council to dismiss a complaint is not accepted by the Panel, the Panel should normally ask the Legal Services Ombudsman to take the case to the Tribunal; where it is the decision of the Legal Services Ombudsman to dismiss a complaint that is at issue, the Panel normally should request the appropriate Council to pursue the matter before the Tribunal. However, the Commission does not see any reason to specify this in the legislation, and prefers to leave it to the discretion of the Panel to nominate the appropriate body to prosecute. There may be some cases from time to time in which the Panel believes that the investigating body which dismissed the complaint initially is nevertheless the most appropriate prosecutor, having regard to practical or resource concerns, or familiarity with the complexities of the matter. The Legal Services Ombudsman and the Councils should be sufficiently "professional" to prosecute such matters properly notwithstanding their earlier decision to dismiss.

4.246 The submission from the Attorney General's Department discussed the appropriateness of the Attorney General appearing as a party to disciplinary proceedings. ²⁸¹ Apart from the current statutory requirements relating to Attorney's particular role in the review and referral of complaints, the main point of principle in favour of the Attorney appearing as a party emerges "by virtue of his position in relation to the legal profession" (ie, the Attorney's role as chief law officer). However, the submission also highlighted arguments against the involvement of the Attorney in this way, mainly that:

In becoming the de facto complainant the Attorney General will be placed in the position of having to substantiate the complaint by himself obtaining all the evidence necessary. This would place a heavy demand on his Department's resources if it is found that a complainant's evidence is incomplete and the Department is required to carry out further investigations and obtain further evidence. While a body such as the Law Society has inspectors for that purpose, this Department does not. ²⁸²

4.247 Since we have recommended the creation of a Legal Services Ombudsman with investigatory powers and special expertise and responsibilities in this area, the Commission believes that this prosecution role properly should pass from the Attorney to that public official (in the same way that the day-to-day responsibility for criminal prosecutions has largely passed from the Attorney General to the Director of Public Prosecutions).

4.248 The Panel's role in dispute resolution. The Panel may take the view in some cases that the matter would be better handled by consensual dispute resolution rather than (or in addition to) a hearing before the Legal Services Tribunal. Assuming that the matter has not already proceeded down this track before it reached the Panel, the Panel should have the option of referring the matter for mediation or conciliation (see Recommendation 15). The Panel also should have the option of recommending that a Council make an ex gratia award of compensation to the complainant from a discretionary fund maintained for this purpose. ²⁸³ (See Recommendation 28, and the supporting commentary, above.)

4.249 The Panel to provide reasons for its decisions. As discussed in the previous Chapter and elsewhere in this Report, it is a matter of fundamental fairness that a complainant (and a respondent, for that matter) be given adequate and comprehensible reasons in writing for an adverse decision. In DP 26, the Commission proposed that this principle be extended to the situation in which the Panel "upholds" the decision of a Council (or the Legal Services Ombudsman) to dismiss a complaint, ²⁸⁴ and we have a made a recommendation to this effect here (Recommendation 56). There is currently no obligation for the Panel to provide reasons.

4.250 The Bar Association's submission agreed with the Commission on this point. The submission from three of the lay members of the Panel, including the Chairperson, ²⁸⁵ reported that the legal members of the Panel have always been reluctant to provide reasons to the complainant, because the Panel: wished to avoid further correspondence; wished to avoid the possibility of an action for defamation; and regarded such efforts as time consuming and probably repetitive. However, the lay members accepted that with adequate resources (as we have recommended) and protection from liability for defamation (which is already provided for in the Legal Profession Act), ²⁸⁶ such a statutory obligation would be "feasible".

4.251 Reporting requirements. As with all of the other main agencies in the complaints handling system, the Panel must be held to an appropriate standard of accountability. In Recommendation 57, the Commission proposes that the Panel be placed under a statutory obligation to report to Parliament (through the Attorney General) annually, and to report to the professional Councils and the Legal Services Ombudsman at least twice annually. The report to Parliament should be a major review of the past year, with full details of the Panel's budget and staffing details, operations, and observations. The latter requirement is aimed at providing the investigating bodies with sufficient information and analysis of their performance to facilitate improvements in their operations.

FOOTNOTES

1. Eg, the Legal Profession Standards Board, the Legal Profession Disciplinary Tribunal, the Legal Profession Conduct Review Panel.

2. At para 4.37.

3. DP 26, at para 5.29.

4. See DP 26, Ch 3, passim.

5. Report of the Commission on Evaluation of Disciplinary Enforcement to the American Bar Association (May 1991) Recommendation 3.1. (Hereafter, "ABA Report".)

6. DP 26, at paras 3.101-3.126.

7. Courts and Legal Services Act 1990 (UK) s19.

8. There is an Ombudsman, in this sense, in New South Wales as well as for the Commonwealth. See, eg, the Ombudsman Act 1974 (NSW).

9. DP 26, at paras 5.131-5.132.

10. As well as a Building Societies Ombudsman Scheme.

11. Formally "the Australian Banking Industry Ombudsman Ltd". This is a voluntary scheme developed (in the face of calls for legislation) and funded by the Australian Bankers Association. It is modelled, to some extent, on the English Banking Ombudsman. See G Burton, "A Banking Ombudsman for Australia" (1990) 1 Journal of Banking and Finance Law and Practice 29-55, and JG Starke, "Establishment of a non-governmental national banking ombudsman system" (1989) 63 Australian Law Journal 454-456.

12. ACA submission of 23 December 1991, at 1-2.

13. Victoria. Law Reform Commission Access to the law: Accountability of the Legal Profession (Report No 48, 1992) Recommendation 1. (Hereafter, "VLRC 48".)

14. NSW Department of Community Services Improving services by listening and responding: Appeals and Complaints Mechanisms for Community Services in NSW (November 1992) at 5.

15. Law Reform Commission Act 1967 (NSW) s 3B.

16. Ombudsman Act 1974 (NSW) s 6.

17. Independent Commission Against Corruption Act 1988 (NSW) Sch 1, cl[4], limits the term to not more than 5 years, with eligibility for re-appointment.

18. DP 26, at para 5.152.

19. See the discussion of this matter in Chapter 3, above. See also DP 26, at para 5.153.

20. See, eg, the Ombudsman Act 1974 (NSW) s 8; see also s 8A regarding functions and ss 10-10B regarding delegation.

21. Ombudsman Act 1974 (NSW) s 6.

22. Independent Commission Against Corruption Act 1988 (NSW) s 6.

23. DP 26, at para 5.154.

24. Courts and Legal Services Act 1990 (UK) s18(5).

25. DP 26, at paras 5.156-5.158.

26. Legal Profession Act 1987 (NSW) ss 120-121.

27. Legal Profession Act 1987 (NSW) Part 9.

28. Conveyancers Licensing Act 1992 (NSW) Part 6. The Act was assented to on 8 October 1992. At the time of writing, the Act was partly proclaimed, and full proclamation was expected in the near future.

29. DP 26, at para 5.7.

30. DP 26, at para 5.17.

31. ABA Report, at iv.

32. Legal Profession Act 1987 (NSW) s 130.

33. DP 26, at para 5.14.

34. DP 26, at para 5.13.

35. Legal Profession Act 1987 (NSW) s 130(5).

36. DP 26, at para 5.16.

37. ABA Report, Recommendation 16(2), discussed at 16.

38. See R L Abel The Legal Profession in England and Wales (1988) at[255], for a brief account of this matter. See also DP 26, at para 3.112.

39. DP 26, at para 5.149. See also paras 5.11 and 5.148.

40. ACA submission of 23 December 1991, at 1-2.

41. See DP 26, at paras 5.120 and 5.140.

42. See, eg, the Legal Profession Act 1987 (NSW) ss 51, 54, 55, and 63.

43. See, eg, Part 5 of the Medical Practitioners Act 1938 (NSW). Cf the Health Care Complaints Bill 1992 (NSW) cll 56-64, regarding the investigation of complaints.

44. Legal Profession Act 1987 (NSW) s 134.

45. See DP 26, at para 5.110.

46. Law Society preliminary submission, at 3-5. See also DP 26, at paras 5.93 and 5.143.

47. Section 172.

48. DP 26, at para 4.6.

49. DP 26, at para 4.6.

50. See eg E Skordaki and T Dimmock A Survey of Complainant Satisfaction Among Lay Complainants to the Solicitors' Complaints Bureau (February[1990]).

51. Legal Profession Act 1987 (NSW) s 130(1).

52. Eg, of the 1738 complaints against solicitors in 1991, 1365 were from clients/former clients. See the Law Society of New South Wales The legal profession disciplinary process: Trends and statistics (October 1992) Table[2]

53. Clause 20.

54. See Editorial "Flawed patients complaints law" Sydney Morning Herald, 2 November 1992, at 16.

55. Legal Profession Act 1987 (NSW) s 132.

56. See DP 26, at para 4.130.

57. The "became aware of" formula of words suggested by the Bar Association might be appropriate for complaints by clients or former clients. However, it would present problems where another person "became aware of" the conduct in question some years later. The existing law allows "any person" to lodge a complaint about the conduct of a lawyer, and the Commission has recommended that this position continue.

58. NSW Bar Association submission of 31 July 1992, at 20-21.

59. Kingsford Legal Centre submission of 11 August 1992, at 6.

60. American Bar Association Standing Committee on Professional Discipline Model Rules for Lawyer Disciplinary Enforcement (1989) r 32. (Hereafter, "ABA Model Rules".)

61. ABA Model Rules, commentary at 62.

62. See the reference to the emerging case law in this area in DP 26, at para4.131, fn 167.

63. DP 26, at para 4.21.

64. DP 26, at para 4.23.

65. Law Society submission of 31 July 1992, at para 7.6.

66. Law Society submission of 31 July 1992, at paras 7.7-7.8.

67. Bar Association submission of 31 July 1992, at 5-6.

68. See eg Recommendation 12 regarding a limitation period, Recommendation 14 regarding civil immunity from civil suit for communications within the disciplinary process, and Recommendation 67 regarding the limited waiver of client confidentiality in order to respond to complaints.

69. Section 130(5).

70. Submission of the NSW Combined Community Legal Centres, 28 February 1992, at 2-3. (Hereafter, the "Community Legal Centres submission".)

71. DP 26, at para 4.24.

72. DP 26, at para 4.25.

73. DP 26, at para 4.27. See also paras 5.10 and 5.107.

74. Justice Slattery's main recommendations in this area were that: (1) All causes of action for defamation or malicious prosecution for communication or actions referring to the professional conduct of any mental health professional should be abolished; and (2) Those who take part in the decision-making process - professional bodies, boards, Complaints Units and so on - should be granted either absolute privilege subject to claims for intentional malice or recklessness or alternatively should be granted qualified privilege.

75. DP 26, at para 4.8.

76. DP 26, at para 4.9.

77. DP 26, at para 4.16.

78. Sections 172 and 211. Members of conduct committees, acting under delegated authority from the Councils, are also expressly covered by s 172(3).

79. ABA Report, Recommendation 8.

80. ABA Model Rules, r 12.

81. See the discussion on this point in DP 26, at paras 4.11-4.13.

82. DP 26, at para 4.14.

83. DP 26, at para 4.16.

84. DP 26, at para 4.17.

85. Section 55. The instrument making the appointment must be signed by the President or two members of Council.

86. Section 56.

87. DP 26, at para 4.17.

88. Law Society submission of 31 July 1992, at para 7.4.

89. DP 26, at para 4.22.

90. DP 26, at para 4.14.

91. DP 26, at para 4.13.

92. The Bar Association also notified the Commission that this is now its official policy: Submission of the New South Wales Bar Association, 20 February 1992, at 7.

93. Legal Profession Act 1987 (NSW) ss 144-145.

94. See DP 26, at para 4.19.

95. DP 26, at para 4.19.

96. Section 130(3).

97. Under ss 144 and 158.

98. DP 26, at para 4.18.

99. Sections 137 and 139.

100. Section 134(4).

101. Courts and Legal Services Act 1990 (UK) s 19.

102. DP 26, at para 5.75.

103. Discussed in DP 26, at para 5.71.

104. DP 26, at para 4.29.

105. See DP 26, at para 4.35.

106. The preliminary submissions of the Law Society, the Bar Association, and the ACA are discussed in DP 26, at paras 4.31-4.35.

107. See DP 26, at para 3.54, regarding the statutory provision in South Australia: s 74(1)(b) of the Legal Practitioners Act 1981 (SA).

108. This accords with the preliminary submission of the Australian Consumers' Association, referred to in DP 26, at para 4.32.

109. New South Wales Law Reform Commission Alternative Dispute Resolution: Training and Accreditation of Mediators (LRC 67, 1991).

110. DP 26, at para 4.28.

111. DP 26, at para 4.37.

112. DP 26, at para 4.38.

113. DP 26, at para 4.40.

114. Submission of the Community Justice Centres of 16 August 1992, at Attachment "C', per the Director, Ms Wendy Faulkes.

115. See DP 26, at paras 3.13-3.15 and 3.117-3.118, respectively.

116. See generally, LRC 67.

117. See DP 26, at para 4.40.

118. LRC 67, at para 3.6. See DP 26, at para 4.42.

119. DP 26, at paras 4.80-4.81.

120. At para 4.82.

121. Bar Association submission of 31 July 1992, at 12.

122. See DP 26, at para 3.15.

123. VLRC 48, Recommendation 9, discussed at para 42.

124. DP 26, at paras 5.62-5.67. See also paras 5.120 and 5.140.

125. DP 26, at para 5.67.

126. See Law Society Trends and Statistics.

127. New South Wales Law Reform Commission Complaints, Discipline and Professional Standards - Part 1 (DP 2, 1979) para 3.64.

128. DP 2, at paras 3.76-3.83.

129. DP 26, at paras 5.45-5.47.

130. Section 134.

131. In the case of the smaller number of complaints against barristers, the Bar Council has told the Commission that its position is to refer equivocal cases to the Board or Tribunal for determination.

132. Law Society of New South Wales, Submission of 31 July 1992, at para 6.6.

133. Law Society submission, App 2, at 23. The Law Society expressed its figures in days (155, 161 and 140, respectively), which we have converted to months using a factor of 30.4.

134. Section 134(4).

135. DP 26, at para 5.25.

136. DP 26, at para 5.26.

137. The Legal Profession (Practising Certificates) Amendment Act 1992 (NSW). See also DP 26, at para 5.28.

138. Under the Legal Profession Act 1987 (NSW) s 35. See also r 67 of the NSW Bar Association Rules.

139. Between the entry into force of Part 10 of the Legal Profession Act[1987] (January 1988) and the publication of DP 26 (May 1992), the Law Society Council passed 131 resolutions threatening this sanction, with only five practising certificates ultimately cancelled for continued failure to reply. See DP 26, at para 5.28.

140. Solicitors' (Professional Conduct and Practice) Rules (Vic) r6 requires within 14 days "a full and accurate account of the solicitor's conduct in relation to the subject matter of the complaint, unless the solicitor has a sufficient and satisfactory reason for not furnishing an account thereof".

141. See DP 26, at para 5.27.

142. DP 26, at para 5.27.

143. See Law Society Trends and Statistics.

144. DP 26, at para 5.51.

145. Under s 134(1)(b)(ii).

146. Section 135.

147. DP 26, at para 5.54.

148. Section 134.

149. Section 135.

150. DP 26, at para 5.32.

151. DP 26, at para 5.56.

152. Now termed "informations" - see Recommendation 72, discussed in Chapter 5, below.

153. See Recommendation 7, above.

154. See Recommendation 54, discussed in Chapter 5, below.

155. DP 26, at paras 5.68-5.69.

156. Wentworth v NSW Bar Association (1992) 106 ALR 624.

157. Section 51.

158. Per Deane, Dawson, Toohey and Gaudron JJ; Brennan J disagreed on this point, believing that the Court ought to be able to seek and receive assistance from such persons as it sees fit in these matters, including the Bar Association.

159. DP 26, at para 5.69.

160. Legal Profession Act 1987, s 134.

161. DP 26, at para 5.55.

162. See ss 38 ZI and 72A. Part IIIA of the Act deals with Disputes and Complaints.

163. Section 72A(3)-(4).

164. DP 26, at paras 4.43-4.49.

165. New South Wales Law Reform Commission Second Report on the Legal Profession: Complaints, Discipline and Professional Standards (LRC 32,[1982]). (Hereafter, "LRC 32".)

166. LRC 32, at para 3.26.

167. Involving 34 legal practitioners.

168. Involving 69 legal practitioners and 3 clerks.

169. It is interesting to note, by way of contrast, that in the period between[1968]-1978 - that is, in the decade before the Commission's previous inquiry into the legal profession - the Law Society and Bar Association between them referred fewer than ten complaints to the Supreme Court, and the Law Society referred fewer than 60 complaints to the Solicitors' Statutory Committee, the predecessor to the Disciplinary Tribunal. See DP 2, at para 5.19.

170. DP 26, at para 4.47.

171. Submission of 5 February 1992, at 1.

172. The Bar Association reports that this is now its policy: (Preliminary) Submission of the New South Wales Bar Association, 20 February 1992, at 10-11.

173. Submission of the 26 June 1992, at 4.

174. Law Society of New South Wales, Submission of 31 July 1992, at para 7.12.

175. Section 128.

176. Section 151.

177. Legal Profession (Amendment) Act 1989 (NSW).

178. See New South Wales Parliamentary Debates (Hansard), 2 August,[1989], at 9144, per the then Attorney General, Mr Dowd (Legislative Assembly). See DP 26, at para 4.68.

179. Section 156.

180. DP 26, at para 4.69, referring to the ABA Report, Recommendation 2.1, at[6]

181. DP 26, at para 4.69.

182. Bar Association submission of 31 July 1992, at 11.

183. Submission of 26 June 1992, at 5.

184. See the Medical Practitioners Act 1938 (NSW) ss 32M and 32N.

185. Sections 127-128.

186. See DP 2, at paras 5.19-5.24; and LRC 32, at paras 2.15-2.17, 3.19-3.21,4.4, 6.24-6.25, and 6.36-6.37.

187. DP 26, at para 4.70.

188. ABA Report, at 23.

189. DP 26, at para 4.50.

190. Legal Profession Act 1987 (NSW) ss 144-145.

191. Section 159.

192. ACA submission of August 1992, at para 3.6.3.

193. Bar Association submission of 31 July 1992, at 8.

194. Law Society submission of 31 July 1992, at para 7.13.

195. Submission of 5 February 1992, at 2.

196. Bar Association submission of 31 July 1992, at 10.

197. Legal Profession Act 1987 (NSW) s 123.

198. At para 4.51.

199. Letter of 14 August 1992, from the Director General, at 5.

200. See the Supreme Court Act 1970 (NSW) s 80b.

201. DP 26, at para 4.49.

202. Bar Association submission of 31 July 1992, at 8.

203. Submission of 26 June 1992, at 4.

204. See Law Society of New South Wales v Weaver [1977] 1 NSWLR 67, esp at 74-75 per Street CJ, and at 76 per Moffitt P.

205. Bar Association preliminary submission of 20 February 1992, at 14.

206. DP 26, at para 4.134.

207. Submission of 26 June 1992, at 5.

208. See DP 26, at para 4.66.

209. Submission of 20.2.92, at 12.

210. Law Society letter to the Attorney General of 4.8.92, at 11.

211. Submission of 26 June 1992, at 4.

212. Letter of 1.7.92, at 4-5.

213. DP 26, at para 4.67.

214. Bar Association submission of 31 July 1992, at 11.

215. DP 26, at para 4.54.

216. DP 26, at para 4.54.

217. Under the Legal Profession Act 1987 (NSW) s 163.

218. Under the Legal Profession Act 1987 (NSW) s 149.

219. See s 149(1)(c) in relation to barristers; s 149(2)(i) in relation to solicitors.

220. Section 163(1)(d).

221. DP 26, at para 4.60.

222. Under the Medical Practitioners Act 1938 (NSW) s 32I.

223. Legal Profession Act 1987 (NSW) s 134(2).

224. Legal Profession Act 1987 (NSW) s 149(1)(a) and (2)(a).

225. These powers are now vested in the Standards Board and, under s 163(2)(b), in the Disciplinary Tribunal.

226. DP 26, at para 4.59.

227. See the Legal Profession Act 1987 (NSW) ss 91 et seq.

228. There are parallels here with the more innovative sanctions being developed in connection with corporate liability. See Australian Law Reform Commission Sentencing: Penalties ( ALRC DP 30, 1987) paras 283-307, in which the ALRC considers such options as dissolution, disqualification from government contracts, equity fines (dilution of shares), supervisory orders, publicity orders and community service orders. See also B Fisse, "Sentencing Options Against Corporations" (1990) 1 Criminal Law Forum 211-258, regarding court-ordered internal discipline and organisational reform.

229. Sections 149(3) and 163(3).

230. Section 130(3)-(4).

231. Sections 149(4)(b) and 163(4)(b).

232. Sections 149(4) and 163(4).

233. DP 26, at para 4.64.

234. DP 26, at para 4.65.

235. Submission of 31 July 1992, at 11.

236. Submission of 31 July 1992, at para 7.15.

237. Submission of 11 August 1992, at 6.

238. Submission of August 1992, at 13.

239. Submission of 26 June 1992, at 4.

240. See Recommendation 72, discussed in Chapter 5, below, regarding the proposed use of the terms "complaints" and "informations".

241. Section 48(1)(b).

242. The wording of s 48(1)(a)(vii) is somewhat obscure, however, particularly in relation to a situation in which the judge does not necessarily sit on every proceeding.

243. Section 48(1)(a) (viii).

244. See also Victoria. Law Reform Commission Access to the law: Accountability of the Legal Profession (Report No 48, 1992) (hereafter "VLRC 48") Recommendation 8 and commentary at para 41.

245. See also VLRC 48, Recommendation 9.

246. Legal Profession Act 1987, ss 126 and 137-141.

247. Legal Profession Act 1987, s 134(4).

248. See ss 126, 137-141 and Schedule 4.

249. DP 26, at para 5.72.

250. DP 26, at para 5.73.

251. Letter from Mr Robert Bennett, Registrar, 2 November 1992.

252. DP 26, at para 5.75.

253. DP 26, at paras 5.76-5.81.

254. DP 26, at paras 5.82-5.84.

255. DP 26, at paras 5.85-5.86 and 5.87-5.88, respectively.

256. Law Society submission of 31 January 1992, at para 1.7.

257. DP 26, at para 5.94.

258. Submission of 10 August 1992, at 2, quoting from DP 26, at para 5.94.

259. Submission of 5 February 1992, at 3.

260. Legal Profession Act 1987 (NSW) s 126(2)(c).

261. DP 26, at paras 5.85-5.86.

262. Legal Profession Act 1987 (NSW) s 137(1).

263. Legal Profession Act 1987 (NSW) s 134(4).

264. Legal Profession Act 1987 (NSW) s 137(2).

265. Section 126(2)(c). Schedule 4, cl 2(1), originally provided that the person must be under 70 years of age, but this has been repealed.

266. DP 26, at para 5.85.

267. See DP 26, at para 5.88.

268. See DP 26, at paras 5.88 and 5.146.

269. Section 139.

270. See DP 26, at para 5.76.

271. DP 26, at para 5.77.

272. DP 26, at para 5.78. See also para 5.146.

273. DP 26, at para 5.78.

274. Courts and Legal Services Act 1990 (UK), s 19.

275. DP 26, at para 5.81.

276. Legal Profession Act 1987 (NSW) s 139(2).

277. Section 140.

278. Section 141.

279. DP 26, at para 5.84. See also para 5.146.

280. Conduct Review Panel submission of 12 June 1992, from the Chairman, Mr John F O'Neill AM, and Messrs John I Einfeld AM and Peter C Wolfe, at para 16.

281. Submission of 14 August 1992, at 2-3, from the Director General.

282. At 3.

283. See DP 26, at para 5.95.

284. DP 26, at para 5.84.

285. Submission of 12 June 1992, at para 12.

286. See s 172, which protects members of the Panel (as well as members of the Councils, the Standards Board and the Disciplinary Tribunal) from "any action, liability, claim or demand" for any "matter or thing" done in good faith as part of the disciplinary system.