BACKGROUND TO THE REFERENCE

The terms of reference

1.1 On 12 November 1991, the Commission was given a reference by the Attorney General, the Hon peter E J Collins QC MP, under the s10 of the Law Reform Commission Act 1967 (NSW), to inquire into and report upon the following matters by 28 February 1992:

(i) The Commission should inquire into the means of implementing alternative mechanisms to those presently existing to deal with complaints about the delivery of legal services to the public, such as a complaints unit, a Legal Services Ombudsman, or some other mechanism. In so inquiring the Commission will have regard to the need for accountability external to the legal profession in any such mechanism.

(ii) The Commission should inquire into the means of making the offices of the Director of Public Prosecutions, the Legal Aid Commission, the Crown Solicitor, and other Government Legal Services more open and accountable. In so inquiring, the Commission will have regard for the need for the impartiality and independence of those offices.

(iii) The Commission should consult fully with peak professional bodies of the legal profession in New South Wales together with other relevant community organisations and other interested individuals and take into account any proposal of those bodies to reform and strengthen their mechanisms for investigating and adjudicating complaints.

1.2 The reference to the Commission followed the Memorandum of Understanding signed by the Premier, the Hon N F Greiner MP, on behalf of the Liberal/National Party Government, and the Independent Members Mr John Hatton MP, Ms Clover Moore MP, and Dr Peter Macdonald MP. Part 6 of the Memorandum deals with "Rights of Citizens", and Section C of this Part contains a Statement of Principle that "The Government and the Independent Members agree that a system of external accountability of the legal profession is desirable". It is then agreed that the matter should be "referred to the NSW Law Reform Commission for prompt report". The Timetable for Implementation asks the Commission to report by February 1992, with any resultant legislation to be released in the first half of 1992 for enactment in the 1992 Budget Session. Annexure F of the Memorandum contains the terms of reference set out in the preceding paragraph.

1.3 The Commission had some concerns about the terms of reference, principally that the wording of the first term seemed to presuppose the need for implementing alternative mechanisms, and that the deadline for reporting was unrealistic given the breadth and importance of the issues. Following discussions in early December 1991 with the Attorney General, and with Mr Hatton on behalf of the Independents, it was agreed to alter the terms of reference to meet the Commission's concerns.

1.4 On 29 January 1992, the Attorney General wrote to the Commission again, noting that agreement had been reached to amend the the timetable set out in Annexure F of the Memorandum of Understanding, requesting the Commission now report by 28 May 1992. Further, the Attorney amended the first term of reference to now read:

(i) The Commission should inquire into the necessity for implementing alternative mechanisms to those presently existing to deal with complaints about the delivery of legal services to the public, such as a complaints unit, a Legal Services Ombudsman, or some other mechanism. In so inquiring the Commission will have regard to the need for accountability external to the legal profession in any such mechanism. [altered wording indicated italics]

The Commission's previous work on the legal profession

1.5 Since its inception, the Law Reform Commission has had a major role in the monitoring of the laws regulating legal profession practice. Among the very first references to the Commission in March 1966 was one requesting a review of the Legal Practitioners Act 1898-1960, which resulted in our Report No. 2 in December 1966 and an amendment Act 1967. The Commission received another major reference on the legal profession in September 1976, which led to the production of seven Discussion Papers, five Background Papers, and the following four Reports:

• General Regulation and Structure (LRC 31, April 1982);
• Complaints, Discipline and Professional Standards (LRC 32, April 1982);
• Advertising and Specialisation (LRC 33, July 1982); and
• Solicitors' Trust Accounts (LRC 44, December 1984).

1.6 The recommendations contained in these Reports directly led to a completely new legislative scheme regulating the legal profession in this state, the cornerstone being the Legal Profession Act 1987 ("the Act"). In particular, the recommendations which shaped the new system include: the participation of lay persons in the professional councils and their committees; the involvement of lay persons in the disciplinary system; the expansion of the concerns of the disciplinary system embrace poor professional work (unsatisfactory profession conduct) which does not amount to professional misconduct; the requirement that Council offer complainants reasonable assistance to make written complaints; the establishment of two-tier system of hearings before a Legal Profession Standards Board (for unsatisfactory professional conduct) and the Legal Profession Disciplinary Tribunal (for professional misconduct); and the establishment of a statutory, external review mechanism (now called the Legal Profession Conduct Review Panel), to monitor the handling of complaints by the Council and their committees.

1.7 Although the new legislation only has been in place for four years, and it is not long since the Commission's earlier inquiry, there are good reasons for the Commission to look at this area again. First, the legal profession has changed considerably in the past decade. The number of lawyers and the lawyer-population ratio have increased greatly in a short time, with the average age and experience of the profession declining accordingly¹. The decade also has seen the rise of the "mega-firm" of solicitors, and substantial increase in inter-state and international practice². Small firms are coming under electronic pressure, with the challenges to the traditional solicitors' monopoly over conveyancing work and changes to the system for compensating personal injury victims. Increased emphasis is being placed upon the advertising and marketing of legal services, and law firms of all sizes are enjoined to operate in a more "business-like" fashion, despite the traditional distinction between a service-oriented profession" and other occupations and commercial ventures. Lawyers are now commonly asked to practise outside of the traditional narrow role, serving as tax and commercial advisers, directors, and mediators, among other things.

1.8 Secondly, social expectations have changed considerably in the past decade. There is an increased awareness of the rights of consumers, and an extension of these principles into the public sector, with calls for increased openness, fairness and accountability of public sector institutions and officials. The recent emphasis on "micro-economic reform" has reached the professions, with the attendant concerns about the elimination of restrictive trade practices and the promotion of increased competition within and between markets for professional services.

The organisation of the current inquiry

1.9 While there is no obvious link, the first and second terms of reference in this inquiry are aimed at different systems. The first term, which is the subject of this Discussion Paper, related to the adequacy of the existing means of handling complaints about lawyers. Under the Act, the governing Councils of the peak professional associations - the New South Wales Bar Association and the Law Society of New South Wales - are given statutory powers (which may be delegated to committees) to receive, investigate, assess, and dismiss complaints, reprimand legal practitioners, and refer matters to the Standards Board and the Disciplinary Tribunal for determination. The Councils also have power over the conduct of legal practitioners though their control of the system of issuing (and suspending, cancelling or placing conditions on) practising certificates. While the regulation of the legal profession is thus largely in the hands of the private profession, the disciplinary system also may deal with complaints against lawyers who are employed in the public sector, such as those who work for the Legal Aid Commission or the Director of Public Prosecutions.

1.10 The second term of reference is addressed to the openness and accountability of the major public agencies which provide legal services, such as the Legal Aid Commission, the Office of the Director of Public Prosecutions, and the Crown Solicitor's Office. The issues here do not relate so much to the competence and ethical standards of individuals practitioners employed in these offices as they do to the legislative framework and administrative structures which are necessary to ensure a high level of public accountability while at the same time protecting the independence and integrity of those offices.

1.11 For reasons of policy as well as pragmatism, the Commission has decided to deal with these topics in separate Discussion Papers, and will shortly be releasing the paper on Accountability of Public Legal Services.

1.12 The Commission feels it is important to state at the onset that it has received a high level of cooperation from the Law Society and the Bar Association in the conduct of this inquiry, as well as from a range of other officials involved in different aspects of the disciplinary process. The professional associations have supplied the Commission with all of the requested information, statistical and otherwise. The Law Society permitted members and staff of the Commission to observe its Complaints Committee and Council in deliberation, which provided valuable insights into the system in operation.

1.13 Shortly after receiving this reference from the Attorney General, the Commission advertised the fact and terms of reference and invited submission. Submissions were received from the Law Society and the Bar Association, as well as from the Australian Consumers' Association, the Lawyers Reform Association, the New South Wales Council for Civil Liberties, the New South Wales Combined Community Legal Centres Group, the President of the Legal Profession Disciplinary Tribunal, and a number of other organisations and individuals. A great deal of relevant material was provided to the Commission by the Hon John Hatton MP, and the Commission received valuable assistance from Mr Raymond R Trombadore, the Chair of the American Bar Association's Commission on Evaluation of Disciplinary Enforcement, in acquiring American materials. All of this material was valuable in assisting the Commission in the preparation of this Discussion Paper.

PURPOSE OF THE DISCUSSION PAPER

1.14 The matters considered in this Discussion Paper are of considerable importance to members of the legal profession and to the general public. The purpose of this Paper is to provide sufficient background and structure to the issues in order to promote informed debate about the best mechanism for handling complaints about the profession conduct of lawyers, and to elicit submissions from professional associations, community groups and interested individuals on this subject. Such submission will be of great assistance to the Commission in finalising its Report to the Attorney General containing recommendations for reform. Any views expressed in this Paper are presented for the purpose of discussion and do not represent the final view of the Commission. Because of the time restrictions which have been imposed on the Commission in the conduct of this inquiry, it is essential that all submission reach the Commission by the specified deadline.

OUTLINE OF THE DISCUSSION PAPER

1.15 Chapter 2 outlines the existing systems for handling complaints against solicitors and barristers, which have been in place since the Legal Profession Act 1987 (NSW) came into force in 1988/ We consider the roles of the professional associations, the Supreme Court, the new disciplinary bodies (the Legal Profession Standards Board and the Legal Profession Disciplinary Tribunal), and other relevant bodies, such as the Consumer Claims Tribunal. Chapter 3 provides some comparative perspectives, surveying the complaints-handling processes in respect of lawyers in other jurisdictions (in Australia and overseas) as well as the methods used by other professions. Special attention is paid to the disciplinary systems dealing with lawyers in Victoria and in England and Wales, and to the New South Wales Department of Health's Complaints Units, which handles complaints against most health care professionals (including doctors) in this State.

1.16 Chapter 4 raises issues and proposes a range of possible improvements to the disciplinary system which are broadly applicable, and not contingent upon the acceptance of any particular regulatory model. For example, the Commission considers among other things: the establishment of a "Charter of Rights" for complainants, which makes clear the role and position of the complainant in the system; practical methods of increasing access to the complaints-handling system; the use of consensual dispute resolution techniques, such as mediation, to settle many lawyer-client conflicts; preventive measures to enhance professional standards and increase client satisfaction; and sources of funding for the new system.

1.17 In Chapter 5, we offer three competing options for regulation of the legal profession, with the aim of focusing the debate. Option One involves retention and improvement of the existing disciplinary system, which is organised around the Councils of the Law Society and Bar Association. The submissions of the professional associations themselves pointed out a considerable number of flaws and teething problems in the current system, and it is universally accepted that it is not an option for the Commission simply to recommend the status quo.

1.18 Option Two represents a major departure from the current system, adapting the health care complaints system to the legal services context. Under Option Two, the Law Society and the Bar Association would lose their central roles in the complaints-handling system, to be replaced by an independent, statutory agency known as the Legal Services Complaints Commission. This Complaints Commission would receive and investigate all complaints against lawyers, and determine which complaints should be sent to the Standards Board and the Disciplinary Tribunal.

1.19 Option Three is something of a compromise, vesting the initial responsibility for the reception and investigation of complaints with an independent Legal Services Ombudsman, but leaving the professional Councils with the responsibility for deciding which matters are to be referred to the Standards Board and the Disciplinary Tribunal. Under this scheme, the Legal Services Ombudsman also would play a key role in the external monitoring of the professional Councils.

1. See D Weisbrot, Australian Lawyers (1990) Ch. 3

2. Weisbrot, Ch. 7