TERMS OF REFERENCE
1.1 On 3 March 2000, the Attorney General, the Hon J W Shaw QC, MLC asked the New South Wales Law Reform Commission:
to review the procedures for dealing with complaints against legal practitioners under Part 10 of Legal Profession Act 1987, taking into account recent case law on the operation of Part 10 and the practical experience of the operation of the statutory provisions.
1.2 In accordance with these terms of reference the Commission’s review has focussed on the procedures for dealing with complaints in Part 10 of the Legal Profession Act 1987 (NSW). This was clearly set out in the Issues Paper1 and the Attorney General agreed to the Commission’s approach. However, several submissions to this review raised concerns about aspects of the co-regulatory model of investigating complaints. These concerns principally related to the categories of misconduct (including negligence), the objectivity and independence of the investigative procedures and the role of the Law Society and Bar Association in them. Details of these issues are set out in Chapter 7.
1.3 The Commission has made no recommendations in relation to these fundamental issues. However, taking account of the submissions received and recent announcements by the Attorney General relating to amendments to the disciplinary system,2 the Commission considers there is merit in a more wide ranging inquiry being undertaken. This Report is therefore being published as an interim report and the Commission will be consulting with the Attorney General on the scope of the additional work that needs to be undertaken for the Commission to respond comprehensively to its terms of reference.
BACKGROUND
The Commission’s previous review
1.4 In 1993, the Law Reform Commission published a Report, Scrutiny of the Legal Profession: Complaints Against Lawyers (Report 70).3 This Report found that the existing complaints handling system was inadequate. It identified a number of problems including delays, inadequate investigations, a perception that the system lacked independence, and a failure to provide consumer redress or to address ethical issues and professional standards.
1.5 The Commission recommended the adoption of a more consumer-oriented complaints system. It recommended the introduction of an independent statutory office of Legal Services Ombudsman, responsible for receiving all complaints and monitoring investigations conducted by the Law Society and Bar Council, and a Legal Services Tribunal, responsible for hearing misconduct complaints.
1.6 The Commission’s recommendations were implemented in 1994, although the government decided to call the new office the Legal Services Commissioner (LSC).
Part 10 of the Legal Profession Act 1987 (NSW)
1.7 The current Part 10 of the Legal Profession Act 1987 (NSW), which implemented the recommendations in Report 70, was inserted in 1993 by the Legal Profession Reform Act 1993 (NSW). The Act commenced on 1 July 1994.
Subsequent amendments and reviews
Reports and reviews
1.8 Performance Audit Report. The Legal Profession Act 1987 (NSW)4 required a “special” audit into the activities of the LSC, the Bar Council and the Law Society Council (the Councils) that were paid for by the then Statutory Interest Account. At the time of the review in 1997, the Statutory Interest Account held interest from money deposited in clients’ trust accounts.5 The Performance Audit Report was published in June 1997.6 It recommended a number of changes relating to the management of the various funds derived from interest on clients’ trust accounts. The Report also identified a number of conflicts of interest arising from the Law Society’s involvement in the system. Some of the recommendations of the Performance Audit Report were addressed by legislation in 1998.7
1.9 National Competition Policy Review. In 1998 the New South Wales Attorney General’s Department conducted a review of the Legal Profession Act 1987 (NSW). The review was undertaken to meet two separate requirements:
- the requirement of the Australian Governments’ Competition Principles Agreement to identify any potentially anti-competitive restrictions in legislation and consider whether they are in the public interest; and
- the statutory requirement that the amendments made by the Legal Profession Reform Act 1993 (NSW), which include the whole of Part 10 of the Act, be reviewed within four years of their commencement.8
1.10 The Department released an issues paper in August 1998 and published its report in November 1998.9 The main conclusion in relation to the complaints and disciplinary system was:
The disciplinary scheme does not have an anti-competitive effect because all members of the profession are subject to the scheme. It is possible that the cost of the scheme affects the ability of legal practitioners to compete with non-lawyer service providers within the legal services market. However, the scheme serves the public interest by assuring independence and impartiality, openness and accountability, and external scrutiny and review of the profession. The review of the conduct of practitioners also serves an educative role.10
1.11 However, some more specific recommendations were made. These are mentioned, where appropriate, in relevant parts of this Report.
Legislative amendments
1.12 There have been numerous amending Acts dealing with Part 10 of the Legal Profession Act 1987 (NSW). In summary, these amendments:
- brought complaints against conveyancers and complaints against notaries under Part 10;11
- allowed fresh evidence to be introduced on appeals from the Legal Services Division of the Administrative Decisions Tribunal (the Tribunal);12
- simplified and strengthened some of the provisions relating to mediation and the bringing of complaints to the Tribunal;13
- subjected holders of National Practising Certificates to Part 10;14
- abolished the Legal Services Tribunal and introduced the Legal Services Division of the Administrative Decisions Tribunal;15
- allowed the Tribunal to make orders for costs;16
- subjected locally registered foreign lawyers to Part 10;17
- implemented changes recommended by the Performance Audit Report including requiring the Councils and the LSC to develop performance criteria;18
- allowed information gathered in the complaints process to be disclosed to the Chief Commissioner of State Revenue;19
- dealt with problems arising from the High Court’s decision in Barwick v Law Society of New South Wales;20 and
- made changes that were necessary for the introduction of incorporated legal practices.21
Legal challenges
1.13 Some recent major cases that have highlighted problems with Part 10 include Barwick v Law Society of New South Wales,22 Murray v Legal Services Commissioner23 and Carson v Legal Services Commissioner.24 In Barwick, the High Court examined the requirement under Part 10 that complaints must be investigated before Tribunal proceedings can be instituted. The Court considered how this procedure applies to new allegations against the practitioner which arise during the course of an investigation or a hearing into other complaints. The Court criticised the drafting of Part 10, finding it difficult to ascertain the legislative intention and resolve ambiguities.
1.14 In Murray, the New South Wales Court of Appeal the obligation to provide the lawyer under investigation with a copy of the complaint and an opportunity to respond to it.
1.15 In Carson v Legal Services Commissioner, the New South Wales Court of Appeal ordered that disciplinary proceedings against a practitioner be permanently stayed because of the LSC’s “gross and inexcusable” delay in conducting an investigation and failure to satisfy the requirements of procedural fairness. The Court of Appeal also found that the proceedings were “untenable” and “foredoomed to fail”.25
Remedial legislation
1.16 The New South Wales Government introduced remedial legislation in response to the High Court’s decision in Barwick v Law Society of New South Wales.26 This legislation, which commenced operation on 14 July 2000, aimed to overcome some of the problems arising from the High Court’s decision and to make some minor changes to improve the operation of Part 10, pending the review by the New South Wales Law Reform Commission.27
THE COURSE OF THIS REFERENCE
Preliminary consultation
1.17 After receiving the terms of reference and completing some preliminary research, the Commission met with the Legal Services Commissioner, Steve Mark, and several of his staff; and the Bar Association’s Executive Director, Philip Selth, and Professional Affairs Director, Helen Barrett. The Commission also had a preliminary discussion with the Chief Executive Officer of the Law Society, Mark Richardson.
1.18 The Commission invited submissions from regulatory agencies that administer Part 10 and groups representing legal consumers. The Commission received a number of useful preliminary submissions, which are listed at Appendix B.
1.19 The Victorian Department of Justice is currently reviewing the Legal Practice Act 1996 (Vic),28 which regulates the legal profession in Victoria, including the complaints handling system. In July 2000, the Executive Director of the Commission, Peter Hennessy, met with Peter Sallmann, Victorian Crown Counsel, and Richard Wright, Associate Director, Victorian Civil Justice Review Project, who are conducting the review. The Executive Director also met with the Victorian Legal Ombudsman and the Executive Director of the Law Institute of Victoria to discuss the regulation of complaints in Victoria.
Issues Paper 18
1.20 Following receipt of preliminary submissions, the Commission published Issues Paper 18 in October 2000. The Issues Paper was circulated to a large number of persons identified as being potentially interested in the subject, including: legal consumer and advocacy groups; regulators and professional associations throughout Australia and overseas; members of the Tribunal; Judges; practitioners; consumers; and legal academics. A poster was also distributed to court houses across the State drawing people’s attention to the existence of the review and inviting submissions. The Commission received a number of submissions which are referred to throughout this paper and are listed at Appendix A.
This Report
1.21 This Report consists of seven chapters.
- Chapter 1 is an introduction which sets out the Commission’s terms of reference for this review, background to the reference, and the course of the review.
- Chapter 2 outlines how the current system for dealing with complaints against lawyers works.
- Chapter 3 deals with definitions of misconduct and the threshold for referring matters to the Tribunal.
- Chapter 4 makes recommendations concerning the procedure for investigating and otherwise dealing with complaints under Part 10.
- Chapter 5 makes recommendations concerning the outcome of investigations into complaints against lawyers.
- Chapter 6 makes recommendations relating to the operation of the Tribunal.
- Chapter 7 considers broad regulatory and consumer issues.
Footnotes
1. New South Wales Law Reform Commission, Complaints Against Lawyers: Review of Part 10 (Issues Paper 18, 2000).
2. NSW, Parliamentary Debates (Hansard) Legislative Assembly, 7 March 2001 at 12359.
3. New South Wales Law Reform Commission, Scrutiny of the Legal Profession: Complaints Against Lawyers (Report 70, 1993).
4. Legal Profession Act 1987 (NSW) s 67. This section was repealed in 1998 and is now covered by Legal Profession Act 1987 (NSW) s 69J.
5. The Statutory Interest Account held interest from some monies deposited in the Statutory Deposit Account, while the Solicitors’ Trust Account Funds held interest from monies deposited with non-Statutory Deposit Account trust accounts. The Statutory Interest Account and the Solicitors’ Trust Account Funds have now been combined in the Public Purpose Fund.
6. 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).
7. Legal Profession Amendment Act 1998 (NSW).
8. Legal Profession Act 1987 (NSW) Sch 8 Pt 1 cl 1B.
9. New South Wales, Attorney General’s Department, National Competition Policy Review of the Legal Profession Act 1987 (Report, 1998).
10. National Competition Policy Review at 56.
11. Conveyancers Licensing Act 1995 (NSW) (commenced 1 February 1996); and Public Notaries Act 1997 (NSW) (commenced 26 June 1998).
12. Courts Legislation Further Amendment Act 1995 (NSW) (commenced 8 March 1996).
13. Legal Profession Amendment Act 1996 (NSW) (commenced 1 April 1997).
14. Legal Profession Amendment (National Practising Certificates) Act 1996 (NSW) (commenced 1 July 1997).
15. Administrative Decisions Legislation Amendment Act 1997 (NSW) (commenced 6 October 1998).
16. Courts Legislation Further Amendment Act 1997 (NSW) (commenced 2 February 1998).
17. Legal Profession Amendment (Practice of Foreign Law) Act 1998 (NSW) (commenced 1 July 1999).
18. Legal Profession Amendment Act 1998 (NSW) (commenced 5 March 1998).
19. State Revenue Legislation (Miscellaneous Amendments) Act 1998 (NSW) (commenced 2 November 1998).
20. (2000) 74 ALJR 419. Legal Profession Amendment (Complaints and Discipline) Act 2000 (NSW) (commenced 14 July 2000).
21. Legal Profession Amendment (Incorporated Legal Practices) Act 2000 (NSW) (not yet commenced).
22. (2000) 74 ALJR 419.
23. (1999) 46 NSWLR 224.
24. [2000] NSWCA 308.
25. Carson v Legal Services Commissioner [2000] NSWCA 308.
26. Legal Profession Amendment (Complaints and Discipline) Act 2000 (NSW).
27. New South Wales, Parliamentary Debates (Hansard) Legislative Assembly, 31 May 2000, Second Reading Speech at 6236.
28. P A Sallmann and R T Wright, Legal Practice Act Review (Victoria, Department of Justice, Issues Paper, 2000); and P A Sallmann and R T Wright, Legal Practice Act Review (Victoria, Department of Justice, Discussion Paper, 2001).
