TYPES OF REGULATION
3.1 As outlined in the previous chapter, the system of complaints management involves, at various stages, the Legal Services Commissioner (LSC), the Bar Council and/or the Law Society Council (the Councils). The LSC and the Councils each have varying roles and responsibilities. The system currently in operation can be described as one of co-regulation and lies somewhere along the spectrum between professional self regulation and full independent regulation.
Self regulation
3.2 Self regulation, which essentially involves a group of people regulating or controlling their own activities,1 is a common attribute of professional groups. Self regulation can be found across a range of activities of various groups and can involve any combination of, for example, control of admission to the group, the setting of professional standards, and the disciplining of members. Some groups will also have some measure of external control alongside their self-regulating aspects.2
3.3 An important characteristic of a self regulatory regime is the primacy it gives to the idea of professional independence free from interference. However, there are also some public interest aspects, for example, the professionalism of the legal profession is seen to have strong public interest aspects, given the importance placed on accessibility to legal representation and due process as well as other legal services. Nevertheless, factors such as public accountability and more specific consumer concerns may not be so easily accommodated in predominantly self regulatory models.
3.4 Originally the legal profession in New South Wales was essentially self regulatory so far as disciplinary procedures went (but with the Supreme Court exercising a supervisory function). Another example of a self regulatory scheme is the Australian Banking Industry Ombudsman scheme established by the Australian Bankers’ Association. This scheme operates with respect to member banks in accordance with terms of reference adopted by the Australian Banking Industry Ombudsman Ltd.3 However, some mechanisms have been included to ensure a certain degree of independence between the Ombudsman and the member banks.4
Co-regulation
3.5 Co-regulatory regimes allow the involvement of organisations other than the professional group. These are usually government and (sometimes) community bodies. This involvement allows other considerations to compete with those of the profession – such as public interest issues (for example, against anti-competitive practices) and (more specific) consumer concerns. There are a range of regimes that can be termed “co-regulatory”. Before the current co-regulatory system was introduced, the Councils used the term “co-regulatory” to describe the then current system even though it involved all but effective control of the complaint handling system by the legal profession.5
3.6 The term “co-regulatory” has been used in contexts outside the legal profession to describe, for example, the Telecommunications Industry Ombudsman (the TIO). The membership, powers and terms of reference of the TIO are guided by legislation,6 but the scheme itself is funded by industry.
Independent regulation
3.7 At the opposite end of the scale from self regulatory regimes lie independent regulatory regimes which involve regulation of a profession being taken completely out of the hands of the professional bodies and placed in the hands of an independent body (often established by the government).7
CO-REGULATION IN NEW SOUTH WALES
3.8 The role of the professional associations in the current system of regulation of lawyers can be divided into two main aspects – regulatory functions and representational functions.8
Regulatory functions
3.9 The regulatory functions can be divided into two parts: setting rules and enforcing them. The setting of rules (which is not the concern of this review) involves the associations in making regulations that govern their respective parts of the profession, subject to disallowance by the Attorney General.9 These regulations will cover such matters as accreditation, practice standards and professional conduct. The enforcement aspect (which is the focus of this review) involves the associations and the LSC in investigating complaints, dealing with consumer issues and disciplining members, with serious matters ultimately being dealt with by the Legal Services Division of the Administrative Decisions Tribunal (the Tribunal). The general community is also involved through lay members on the associations’ conduct committees and lay members on the Tribunal.
Representational functions
3.10 The Law Society and Bar Association represent their respective branches of the legal profession in various ways. As well as the involvement outlined in the previous paragraph, the representative capacity takes the professional associations into other areas closely related to the disciplinary system. For example, the Law Society is involved in determining the funding for the Office of the Legal Services Commissioner (OLSC) from the Public Purpose Fund10 and also owns LawCover which indemnifies negligent lawyers.11 These involvements have caused some concern about the appearance of independence within the disciplinary system.
ISSUES ARISING FROM CO-REGULATION IN THE DISCIPLINARY SYSTEM
3.11 There is strong support for co-regulation among the OLSC and the Councils. For example, the Professional Regulation Task Force of the Law Society of NSW has observed that:
the current situation with joint responsibility for discipline is advantageous for the profession and the public. It continues the professional responsibility of ensuring that members are of a proper standard and behave in a proper manner with the supervisory role given to “a legal ombudsman” resulting in enhanced public confidence that justice is both done and seen to be done.12
However, there is also strong opposition to the co-regulatory regime from outside the professional bodies.13
Involvement of professional bodies
3.12 One major concern for some is the issue of whether it is appropriate for the profession to be involved in the disciplinary system through its elected bodies.14 Some people consider that there is an “inherent conflict of interests between the Society as the advocate for its members’ interest and that of a policeman”.15 Similar concerns were noted by the Law Reform Commission in 1993.16 The issue is essentially about the appearance of independence and there are also some particular concerns so far as the consumer aspects of the system go. It is argued that consumers do not see the system as independent because the Councils and the LSC are seen as agencies for lawyers.17 This, combined with concerns about the professional associations’ representative functions,18 has led to statements like the following:
The system was designed by the legal profession to protect lawyers and is dominated by the lawyers’ trade unions which assist lawyers to defend complaints.19
3.13 However, it can be argued that the involvement of the profession is important because it:
- “preserves independence from control by the Government of the day”;20 and
- makes available the expertise of senior members of the profession through, for example, the Professional Conduct Committees.21
3.14 It can also be said that the current system tempers the involvement of the profession by allowing some (albeit limited) input from members of the community through lay representatives.22
A legal services ombudsman?
3.15 An alternative model might be a more independent regulatory system with respect to disciplining the legal profession.23 Choices include maintaining a form of co-regulation by putting an ombudsman in a supervisory role over the current system24 or moving to a completely independent system by replacing the LSC and Councils with an independent ombudsman25 to handle all matters previously dealt with under Part 10.
CONSUMER PROTECTION
3.16 The current regime deals with a broad spectrum of complaints from consumer disputes to matters relating strictly to professional conduct. Some complaints will involve both aspects. The system before 1994 was thought to be aimed only at ensuring “diligence and competence” of individual practitioners. The Law Reform Commission in 1993 identified some further aims of “setting and maintaining high standards of ethics and practice for the legal profession generally” and providing for the redress of consumer complaints against practitioners (referred to as the “consumer dimension”).26 The “consumer dimension” is now accommodated in the objects of Part 10.27
3.17 The multiple aims of the system continue to sit together somewhat uneasily. Some consider that the aims of ensuring compliance with professional standards are different from those concerned with looking after the needs of law consumers.28 Indeed, a number of US jurisdictions have separated the two systems. Others, however, see the two as interlinked so that the setting of rules relating to consumer issues will ultimately lead to enforcement of consumer-oriented standards as part of the regulatory system. The treatment of consumer issues together with conduct issues also allows the monitoring of all complaints so that reviews can be undertaken and the patterns of consumer complaints observed may point to more serious conduct issues that should be addressed. For example, discourtesy by practitioners, which may not generally be considered misconduct or unsatisfactory professional conduct, could become so if it were identified and then proscribed by the relevant rules of conduct.29
3.18 There is also said to be consumer confusion about the division of responsibilities between the Councils and the LSC.30 This problem was identified by the Law Reform Commission in 1993 when it recorded the American Bar Association’s warning of the confusion that may result from expanding the number of mechanisms available and the “consequent need to ensure that the entire system is efficient, effective and well-co-ordinated, with a single point of entry”.31 A particular problem occurs in cases where a solicitor and barrister are both implicated in the same course of conduct,32 so that facts relating to the same course of conduct may be brought before both the Law Society and Bar Councils.
3.19 Some of the issues concerning consumer confusion have been addressed by s 171MA which was inserted by the Legal Profession Amendment Act 1998 (NSW). It provides:
Each Council and the Commissioner must produce information about the procedure for dealing with complaints under this Act and ensure that such information is made available to members of the public on request.
The Commission welcomes submissions on the effectiveness of this section.
SETTING THE RIGHT BALANCE
3.20 Addressing the interests of the profession, government and stakeholders in the system for dealing with complaints against lawyers involves setting the right balance between “ownership of the profession” and professional standards, developed against community expectations of transparency, accountability and responsiveness to community needs and expectations. The Commission welcomes submissions concerning the extent to which this balance has been achieved and what can be done to improve current arrangements.
FOOTNOTES
1. See W H Hurlburt, The Self-Regulation of the Legal Profession in Canada and in England and Wales (Law Society of Alberta and Alberta Law Reform Institute, 2000) at 1.
2. Hurlburt at 3-4.
3. See Australian Law Reform Commission, Equality Before the Law: Women’s Equality (Report 69 Part 2, 1994) at para 13.32 and 13.43-13.45; and Australian Banking Industry Ombudsman Ltd, Annual Report 1998/9.
4. A council and independent chairperson have been established to stand between the Ombudsman’s office and the member banks. The council consists of an equal number of bank and consumer representatives.
5. Notwithstanding the presence of a statutory tribunal and the Conduct Review Panel: see New South Wales Law Reform Commission, Scrutiny of the Legal Profession – Complaints Against Lawyers (Report 70, 1993) at para 3.15.
6. See Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) Part 6.
7. Some distinction may need to be drawn between the establishment of a body independent of the professional bodies and one that is also independent of members of the profession.
8. This terminology is derived from New South Wales, Attorney General’s Department, National Competition Policy Review of the Legal Profession Act 1987 (Report, 1998) at 41.
9. The LSC has been lobbying for more input into the process of setting practice rules for some time: See, for example, National Competition Policy Review at 42.
10. See Legal Profession Act 1987 (NSW) s 171T and Part 6 Div 2. Some have even questioned whether the complaints system should be funded from the Public Purpose Fund: See, for example, the concerns of the Council of Social Services NSW raised by Cohen MLC in New South Wales, Parliamentary Debates (Hansard) Legislative Council (21 October 1998) at 8699. See also New South Wales, Audit Office, The Law Society Council, the Bar Council and the Legal Services Commissioner: A Review of Activities Funded by the Statutory Interest Account (Performance Audit Report, 1997) which notes that with computers and modern banking practice it is easier to identify interest earned by individual trust accounts.
11. Performance Audit Report 1997 at 9. There is also said to be a problem in that LawCover may become aware of conduct which may be conduct requiring disciplinary action but may not refer that conduct to the Councils/OLSC.
12. Law Society of NSW, “Discipline Function” in Professional Regulation Task Force Report (May 1997) (as at 28 June 2000) «www.lawsocnsw.asn.au/about/papers/regulations/regs18.htm». See also Law Society of NSW, Professional Standards Department, Annual Report 1998/9 at 4 and 5.
13. See V Drakeford (letter to the Editor), “Legal whistling into the wind” Australian Financial Review (17 May 2000) at 24.
14. See, for example, N Carson, “Self-regulation a big issue for profession” Australian Financial Review (17 March 2000) at 32; The Hon Peter Breen MLC, Preliminary Submission at para 1.1, 3.1, 3.2, 3.3; and NSW Legal Reform Group, Preliminary Submission at 1.
15. Professional Regulation Task Force Report.
16. NSWLRC Report 70 at para 3.7-2.23.
17. The Hon Peter Breen MLC, Preliminary Submission at para 1.3.
18. The Hon Peter Breen MLC, Preliminary Submission at para 2.1 and 3.1; For Legally Abused Citizens, Submission to National Competition Policy Review at para 2.18 and 2.21; Performance Audit Report 1997 at 9.
19. V Drakeford (letter to the Editor), “Legal whistling into the wind” Australian Financial Review (17 May 2000) at 24.
20. Law Society of NSW, “About the Law Society of NSW: Maintaining Professional Standards” (as at 28 June 2000) «lawsocnsw.asn.au/about/handbook/handbook-Maintain.html».
21. About the Law Society of NSW: Maintaining Professional Standards.
22. About the Law Society of NSW: Maintaining Professional Standards.
23. See New South Wales, Parliamentary Debates (Hansard) Legislative Assembly (21 October 1998) J Hannaford, Speech on the second reading at 8698; Professional Regulation Task Force Report.
24. There was some support for the title “Legal Services Ombudsman” when the bill inserting Part 10 was debated in Parliament in 1993: see, for example, New South Wales, Parliamentary Debates (Hansard) Legislative Assembly (10 November 1993) Whelan, Debate on the second reading at 5097.
25. With “proper funding, expertise, resources and power to effectively oversee the conduct of the legal profession and the integrity of the legal system”: NSW Legal Reform Group, Preliminary Submission at para 6.1.
26. NSWLRC Report 70 at para 4.2 and also para 3.24-3.31 and 4.8-4.13.
27. Legal Profession Act 1987 (NSW) s 124.
28. The Hon Peter Breen MLC, Preliminary Submission at para 1.
29. See OLSC, Preliminary Submission at 12. See also OLSC, Annual Report 1998/9 at 20-21.
30. Performance Audit Report 1997 at 60; The Hon Peter Breen MLC, Preliminary Submission at para 1.5.
31. NSWLRC Report 70 at para 3.46.
32. The Hon Peter Breen MLC, Preliminary Submission at para 1.4.
