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National Competition Policy Review of the Legal Profession Act 1987
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I CURRENT RESTRICTIONS Introduction
3.1 The consequences of the single, uniform licensing scheme applying to all lawyers have been discussed in chapter 2. This chapter canvasses the restrictions on the provision of legal services and the use of titles by non-lawyers, which are an integral component of the licensing system.
3.2 There are two issues associated with monopolies on legal services. The first is whether the use of titles should be restricted and the second is whether the conduct of work should be restricted.
3.3 The Access to Justice Advisory Committee did not support the reservation of legal work to solicitors and barristers. It advocated opening up the legal services market to competition from non-lawyers, but was concerned to ensure the competent delivery of such legal services, and to ensure that consumers were properly informed about the services they could receive. The Committee proposed that a national advisory council should further consider what areas of law should be open to practice by non-lawyers, the extent of accreditation and the means of regulation necessary to protect the public interest in ensuring competence.[1][ ] 3.4 The COAG working party considered restrictions in each State and Territory on the use of titles by non-lawyers and prohibitions on the conduct of some categories of legal work by non-lawyers. Principle 7 of the COAG Working Party Report stated that the determination of the exact boundaries of legal profession work requires far more detailed consideration than has so far been undertaken.
3.5 The COAG Working Party resolved to refer the matter to the National Competition Council (NCC) for further evaluation. The purpose of the inquiry was to elaborate ways to minimise restrictions on competition between legal services providers, including non-lawyers, and to ensure consumers were informed about the nature and expected standard of the service options available. The inquiry was also to examine the establishment of a complaint system which would provide remedies without prohibitive costs to consumers. The Trade Practices Commission made similar recommendations. New South Wales has supported referring this work to the NCC. However, the recommendations are still under consideration by the Commonwealth Government.
Current scheme
3.6 Section 25 of the Legal Profession Act prohibits a legal practitioner from holding himself or herself out to be a barrister or solicitor unless the practitioner holds an appropriate practising certificate.
3.7 Section 48B prevents an unqualified person from acting as a barrister or solicitor unless the person holds a practising certificate. Section 48C prohibits a person from falsely representing himself or herself to be a solicitor or barrister and section 48D makes similar provision for a corporation. Similar provisions exist in other jurisdictions.[1]
3.8 Section 48E of the Legal Profession Act (NSW) reserves the conduct of general legal work, and probate work, when conducted for a fee, to solicitors and barristers, subject to certain exceptions.[2] Under section 48E(1), 'general legal work' includes the drawing or preparing of wills or documents which affect rights between parties, affect real or personal property, or relate to legal proceedings. 'Probate work' is defined as the taking of instructions for a grant of probate or letters of administration, or drawing papers on which to found or oppose a grant of probate or letters of administration.
3.9 Section 48E does not appear to extend to advising work which does not involve the preparation of documents, such as contracts. However, it covers most categories of commercial work, including tasks which might routinely be performed by other service providers.
3.10 The provisions referred to above were carried over to the 1987 Act from the Legal Practitioners Act 1898. The need to reserve both the use of titles and categories of work to solicitors and barristers does not appear to have been questioned.[3]
3.11 All jurisdictions' legislation contain provisions reserving specific kinds of legal work to lawyers, although the definition of what work is reserved varies slightly between jurisdictions.[4]
II EVALUATION
Public benefits of restrictions on titles
3.12 There are some advantages in the reservation of the use of certain titles to legal practitioners who hold practising certificates. Solicitors and barristers are widely recognised as having particular skills, as adhering to strict professional and ethical rules and as being covered by both professional indemnity insurance and a fidelity fund. The inclusion of the provisions in the Act ensures supervision and monitoring by the Law Society and the Bar Association.
3.13 However, the profession has a strong tradition of self-regulation. Almost all practitioners belong to either the Law Society or the Bar Association and the need for statutory support of the reservation of titles used by members of the professional bodies is not clear. Even if titles were not regulated by the Act, it is likely that a person who falsely held himself or herself out as holding a current practising certificate or being a qualified lawyer would be guilty of false, misleading or deceptive conduct under the Trade Practices Act 1974 (Cth).
The reservation of legal work
3.14 Statutory provisions reserving a monopoly on certain categories of work may distort markets by excluding non-lawyers with equivalent expertise in certain areas. The Trade Practices Commission pointed out that many other professions, such as accountancy, do not have the benefit of either the reservation of titles or categories of work, and suggested that different categories of legal work should be independently reviewed to assess whether a monopoly was in the public interest.[5] The removal of such restrictions may be necessary to ensure a competitive market.
3.15 In any case, the continuing relevance of section 48E may be questionable. It is noted that the provision has not been enforced in recent times and a Law Society committee recommended its repeal in 1997. The committee was of the view that while there was a strong case for the reservation of titles to practitioners holding practising certificates, the issue of ensuring consumers recognised the difference between lawyers and other service providers should be addressed by education instead of statutory provisions. The only exception was that of advocacy, where it was recommended that only lawyers holding practising certificates should enjoy a right of appearance.[6]
3.16 However, the removal of section 48E could unfairly impair the competitive position of the legal profession itself. The cost of legal services reflects in part compliance costs with mandatory licensing, insurance and fidelity requirements which protect the public.
3.17 The issue of insurance and fidelity fund cover and whether its cost is justified in the public interest is discussed in chapter 11. If non-lawyers were to be permitted to perform legal tasks the matters set out below would need to be addressed, to ensure that the benefit to the public of obtaining access to services from a wider range of professionals were not outweighed by the risks of inadequate protection.
3.18 A cost-benefit analysis would need to be undertaken of any restrictions imposed on other professionals who entered the legal services market. It is not clear that consumers would receive significant savings if service providers were required to comply with a comprehensive licensing regime. However, the need for licensing to include specific features would need to be considered on the basis of the risks attached to each activity, and other schemes of supervision. For example, the conduct of probate work by non-lawyers might be regarded as carrying fewer risks than the drafting of wills, because executors and trustees are supervised by the Supreme Court, while a mistake in the drafting of a will is usually discovered only after the death of a testator.
Restrictions on delivery of some categories of services
3.19 In chapter 2 the possibility of replacing the scheme for the licensing of all lawyers with rules or licensing requirements governing the conduct of certain categories of work was canvassed.
3.20 This approach is also an alternative to the comprehensive restrictions on the use of titles and the conduct of work which apply to non-lawyers. For example, legal qualifications and a knowledge of technical legal rules might be necessary for advocacy in some courts, which are bound by the rules of evidence and which are making binding determinations. However, legal qualifications may not be a prerequisite to advocacy in industrial tribunals or comparable bodies which are not bound by the rules of evidence. Moreover, non-legal qualifications, or qualifications which include training in some legal rules, may be adequate for some kinds of work within the legal services market, such as advising on planning and building work, taxation services or non-contentious family law matters.
3.21 An approach to regulation of the market based on the attributes of the tasks to be regulated, rather than their categorisation as 'legal' work, would have the advantage of ensuring that any licensing scheme is tailored to the nature of the work, and the need to protect consumers. Such schemes could facilitate the entry of non-lawyers into the market, and ensure that all service providers were subject to the same rules, ensuring a level playing field.
3.22 Conveyancers are now separately licensed in New South Wales under the Conveyancers Licensing Act 1994 and there is little evidence that the interests of consumers have been compromised by their entry into the market. However, conveyancers are subject to strict requirements, including educational prerequisites, and a complaints handling and disciplinary scheme and relatively few conveyancers have obtained licences.[7] This may suggest that when appropriate safeguards are introduced, relatively few participants seek to compete with legal practitioners.
Trade Practices Act 1974 (Cth)
3.23 The restrictions on the entry of non-lawyers into the legal services market set out in section 48E may create an arrangement that has the effect of substantially lessening competition, under section 45(2)(b)(ii) of the Trade Practices Act 1974 (Cth), or offends against other provisions of the Act.
QUESTIONS
A. What effect, if any, would the removal of the statutory reservation of titles have on markets?
B. Given that most practitioners belong to the Law Society or Bar Association, and that the representative roles and standards of those bodies are widely recognised, is there a need for statutory protection of titles?
C. Do the public benefits of restrictions on the use of titles outweigh the barriers they create?
D. Should the Act reserve the use of titles to qualified practitioners who hold practising certificates?
E. Should the general restrictions on the performance of legal work be replaced with schemes applying to different categories of work, based on the nature and complexity of the tasks, rather than its categorisation as 'legal' work?
F. What categories of work would be suitable for such schemes?
G. Should non-lawyers be permitted to perform categories of legal work? What safeguards should apply?
Footnotes
[1] Legal Practitioners Act 1970 (ACT), s 192; Legal Practitioners Act (NT), s 131; Queensland Law Society Act 1952, ss 7(1), 39; Legal Practitioners Act 1981 (SA), s 21(1), Legal Practitioners Act 1959 (Tas), s 74(3), Legal Profession Practice Act 1958 (Vic), s 92, Legal Practitioners Act (WA), s 80.
[2] Note: the prohibition on unqualified persons performing legal work for a fee applies to all jurisdictions except Queensland. In Queensland, the prohibition applies irrespective of whether or not the unqualified person charges a fee: Queensland Law Society Act 1952, ss 7(1) and 39
[3] Second Reading Speech, 29 April 1987, Legislative Assembly, 10759.
[4] see Legal Practitioners Act 1970 (ACT), ss 192-194; Legal Practitioners Act (NT), ss 132-133; Legal Practitioners Act 1981 (SA), ss 21(2); Legal Practitioners Act 1959 (Tas), ss 74-75, Legal Profession Practice Act 1958 (Vic), ss 314-315; Legal Practitioners Act (WA), ss 76-78
[5] Trade Practices Commission Report, 70-74.
[6] Law Society of NSW, Report of Professional Regulation Task Force, May 1997, 28-31.
[7] There are approximately 70 conveyancers holding unrestricted licences and 36 conveyancers with restricted licences. |
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