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National Competition Policy Review of the Legal Profession Act 1987
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I. BACKGROUND
9.1 Principle 1 of the COAG Working Party Report provided for member Governments to agree that legislation regulating the legal profession should include a disciplinary and complaints mechanism independently monitored within each State. Principle 6 stated that the COAG Working Party supported the general principles established by the New South Wales Law Reform Commissioner to establish harmonised, fair and efficiently administered complaints systems.
II. OBJECTS OF COMPLAINTS HANDLING AND DISCIPLINE
9.2 Appendix 3 to the COAG Working Party's Report refers to a series of 'best practice' principles of complaints handling which it considered should govern the operation of disciplinary systems for lawyers. These principles were derived from the Law Reform Commission's report, Scrutiny of the Legal Profession: Complaints Against Lawyers (LRC 70), released in 1993. The principles were:
The recommendations of the report were largely implemented by the Legal Profession Reform Act 1993.
9.3 While the underlying goals of the system for handling complaints and discipline, as articulated by the Law Reform Commission, remain appropriate, an examination of the system is warranted to assess whether those objects have been met. In particular, the system must be capable of addressing the issues raised by consumer disputes and protecting the public from incompetent or unscrupulous practitioners.
III. THE CURRENT SCHEME
Investigation of complaints
9.4 The scheme for complaints handling was substantially set out in the 1987 Act, which gave effect to a 1982 report of the Law Reform Commission (LRC 32). The scheme was intended to ensure a balance between self regulation and public accountability.[1] Under the scheme all complaints were received and dealt with by the Law Society Council and the Bar Council.
9.5 The 1993 Act modified the scheme, through the establishment of the Office of the Legal Services Commissioner.[2] The amendments provided for all complaints against lawyers to be received by the Legal Services Commissioner. The object of the amendments was to establish a co-regulatory system of complaints handling and to institutionalise external scrutiny of complaints handling by the professional Councils. The Law Reform Commission was of the view that the existence of a central complaints handling body, separate from the professional Councils, would encourage complainants to come forward.[3]
9.6 Once a complaint is received by the Office of the Legal Services Commissioner, the Office may investigate the complaint itself, or may refer the complaint for investigation by the Law Society Council, in the case of a solicitor and barrister, or the Bar Council in the case of a barrister: section 142. The Councils must investigate complaints referred to them: section 148. The Councils and the Commissioner must refer complaints to the Legal Services Tribunal if satisfied that there is a reasonable likelihood that the practitioner will be found guilt of unsatisfactory professional conduct or professional misconduct: section 155(2). However, in cases where there is a reasonable likelihood of unsatisfactory professional conduct, but not professional misconduct, the Councils or Commissioner may instead reprimand the practitioner, or in certain circumstances, dismiss the complaint.
9.7 In practice, the Commissioner refers most complaints to the Councils for investigation.[4]
Role of the Tribunal
9.8 The Legal Services Tribunal is the main forum for dealing with complaints.[5] The Tribunal consists of two legal members and one lay member: section 163. The Tribunal is bound by the rules of evidence when conducting a hearing into professional misconduct, but not when considering questions of unsatisfactory professional conduct: section 168. The practitioner concerned and the complainant have standing to appear before the Tribunal, as do the Councils, the Commissioner and the Attorney General.
Practice of the Tribunal
9.9 The effect of section 170 is that the Tribunal is required to hold a hearing into a question of unsatisfactory professional conduct in the absence of the public, unless it is of the opinion that the presence of the public is in the public interest or the interests of justice. It is understood that it is the practice of the Tribunal to close all hearings into unsatisfactory conduct.
9.10 The Tribunal may close any other hearing to the public if it is of the opinion that the presence of the public is not in the public interest or the interests of justice: section 170(4). The Tribunal also has a broad power conferred by section 171B to give directions preventing or restricting the publication of evidence given at a hearing or of a matter contained in documents produced at a hearing.
9.11 The Tribunal publishes its decisions following hearings on complaints of professional misconduct. However, it currently does not publish decisions following its hearings on complaints of unsatisfactory professional conduct as the hearings are closed and the identities of the parties are suppressed. However, it is understood that the Tribunal is currently considering publishing its decisions, with the identifying information removed.
Standard of professional misconduct and unsatisfactory professional conduct
9.12 Prior to 1987, professional misconduct was assessed on the basis of the standards set by members of the profession.[6] The 1987 Act defined professional misconduct for the first time and introduced a new standard of 'unsatisfactory professional conduct', to enable sanctions to be imposed on practitioners for 'bad professional work' which fell short of the standard required to establish professional misconduct.[7]
9.13 Section 127(1) provides that professional misconduct includes unsatisfactory professional conduct, where the conduct is such that it involves a substantial or consistent failure to reach reasonable standards of competence or diligence; or conduct occurring outside the practice of law which justifies a finding that the legal practitioners is not of good fame and character or is not a fit and proper person to remain on the roll; or conduct that is declared to be professional misconduct by other provisions of the Act. 9.14 Section 127(2) provides that 'unsatisfactory professional conduct' includes conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner.
Unsatisfactory professional conduct
9.15 There is little case law on the meaning of 'unsatisfactory professional conduct.' The New South Wales Solicitors Manual ('Riley') states that the definition includes negligent conduct but does not cover matters of mere negligence'.[8] The Tribunal has referred to matters such as delay and ignorance of the law as being matters which may constitute unsatisfactory professional conduct, but not miscalculation of an amount payable for stamp duty. Unsatisfactory professional conduct is also likely to include a failure to be candid with a client or demanding money for costs and expenses in advance of work being done.[9]
Dispute resolution and compensation orders
9.16 The Act makes a distinction between consumer disputes regarding costs and conduct complaints. The Act provides for alternative dispute resolution procedures to be adopted for consumer disputes. The Councils and the Commissioner are each able to refer complaints for mediation under section 144. Strict confidentiality provisions protect the mediation process: section 147(1). Mediation is voluntary, but a mediator may recommend that a Council and the Commissioner that a complaint be investigated, if conduct issues arise. If matters cannot be resolved, they are referred to costs assessors for determination. The operation of the costs assessment system is discussed in more detail in chapter 12.
9.17 Since April 1997, the Legal Services Commissioner also has had power to mediate in consumer disputes where the amount in issue is less than $2500, under section 198B, and applications for cost assessment under the Act involving less than this amount are now referred to the OLSC.
9.18 Section 171D provides for the Tribunal to make compensation orders to a complainant in circumstances where compensation will not be received from another source. However, the effect of subsection 171D(2) is that a compensation order in excess of $10,000 can be made only if the complainant and the legal practitioner both consent to the making of the order. Further, subsection 171D(3) prevents the Tribunal from making compensation orders unless a complainant is not able to be compensated by the Fidelity Fund or by order of a court.
Reviews of decisions of the Councils by the Legal Services Commissioner
9.19 In order to ensure independent scrutiny of the decisions of the Councils, the Commissioner has a broad discretion to review decisions made by the Councils in connection with complaints, including decisions to dismiss complaints, to reprimand practitioners or to omit matters that were part of the complaints made to the Council: section 158. Reviews are conducted at the request of complainants, the investigating Council or by the Commissioner's own initiative: sections 158 and 159. The Commissioner may also review decisions relating to licensed conveyancers.
Cost
9.20 The disciplinary system is funded by the interest paid on solicitors' trust accounts. The projected cost in 1996/97 was $5,615,000.00 comprising $1,595,000.00 to be paid to the Legal Services Commissioner, $3,082,000.00 to the Law Society and $ 938,000.00 to the Bar Association.[10] The cost is borne directly by clients of solicitors. These costs exclude the costs incurred by practitioners in responding to complaints. Other legal service providers, such as accountants, are not subject to a complaints handling system having the complexity that which applies to lawyers. Consideration needs to be given to the public benefit of the disciplinary system, in the context of its costs to consumers.
IV OTHER JURISDICTIONS
9.21 Victoria, South Australia and Western Australia have statutory requirements that complaints investigations be carried out or supervised by an independent statutory body.
9.22 In Victoria, the Legal Ombudsman may investigate complaints directly or refer them to a Registered Practice Association or the Legal Practice Board.[11] If the Ombudsman, Registered Practice Associations or Legal Practice Board is satisfied that there is a reasonable likelihood that a practitioner will be found guilty of misconduct, the complaint must be referred to the Legal Profession Tribunal.[12] The Legal Ombudsman must monitor investigations by the Registered Practice Associations and the Legal Practice Board[13] and if the complainant applies, may review their decisions, including a decision not to refer a matter to the Legal Profession Tribunal.[14]
9.23 In South Australia, complaints are received and investigated by the Legal Practitioners Complaints Board. The Board may attempt to conciliate a complaint, admonish the practitioner or lay charges of unprofessional conduct before the Legal Practitioners Disciplinary Tribunal Committee.[15]
9.24 In Western Australia, the Legal Practitioners' Complaints Committee of the Legal Practice Board may receive complaints from the Attorney General, the Legal Practice Board, Law Society, any practitioner or client.[16]
9.25 There is limited provision for supervision of investigations of complaints against solicitors in the other states. In Queensland a lay observer is appointed to the Complaints Investigation Committee of the Queensland Law Society in order to monitor handling of complaints against solicitors. However, the lay member's powers are limited to making recommendations to the Minister.[17] While no independent statutory body may monitor complaints investigations in the Northern Territory or the Australian Capital Territory, ACT investigations of solicitors are subject to appeal to the Supreme Court.
9.26 There are provisions for mediation or conciliation of disputes in Victoria, South Australia, Western Australia, Tasmania and the Australian Capital Territory. Mediation is compulsory in Victoria and Tasmania in some circumstances.[18]
V EVALUATION
Role of the Legal Services Commissioner
9.27 The Legal Services Commissioner conducts relatively few investigations, referring most matters to the Councils. This approach ensures that the Commissioner applies his resources to dealing with consumer disputes, mediation, education and information provision. The Councils have established expertise in investigations and litigation and are well placed to exercise this role.
9.28 However, there may be a community perception that the Councils are sympathetic to the profession and that they will not support the complainant in conduct matters. While the outcome of the reviews conducted by the Legal Services Commissioner suggests that this is not the case,[19] the number of complainants seeking reviews is growing, now representing about a quarter of all investigations.
Ease of making a complaint
9.29 Section 134 enables any person to make a complaint in writing against a practitioner. The Legal Services Commissioner has reported that practitioners have expressed concern that it is too easy for a client to make a complaint. The Commissioner rejects this contention on the basis that his office actively seeks to reduce the number of complaints through education, that experience in other industries suggests that a small proportion of clients affected by poor service complain and that a transparent complaint handling system fosters public confidence in the profession.[20]
9.30 A substantial number of complaints do not raise conduct issues but are classed as consumer disputes.[21] This suggests either that the nature of the disciplinary scheme is widely misunderstood or that consumers do not have adequate redress for disputes through other means. Given the costs to a practitioner of dealing with a complaint, it may be appropriate for alternative means of addressing consumer disputes to be developed. This issue is discussed in greater detail below.
The Tribunal's procedures
9.31 It is noted that the Law Reform Commission recommended in 1993 that all hearings of the Tribunal be conducted in public, except in exceptional cases where the presence of the public would defeat the ends of justice.[22] It was also recommended that the determinations of the Tribunal be put in writing and published.[23] However, the act stipulates that hearings into allegations of unsatisfactory professional misconduct should generally be held in the absence of the public: s 170(3). This is consistent with the earlier recommendations of the Law Reform Commission in its 1982 report.[24] The Commission was of the view that such restrictions would aid full and frank disclosure in matters where the issue was the 'bad work' of a practitioner, rather than the more serious professional misconduct.
9.32 However, the conduct of closed hearings may impede access by the public to information about Tribunal decisions and debate about the proper professional standard to be applied to members of the profession. Given that the standard for establishing unsatisfactory conduct or professional misconduct is that of a reasonable standard of competence and diligence, rather than that of the profession alone, public debate should take place concerning the standard to be applied by the Tribunal.
9.33 Concerns about unfair consequences of revealing the identity of a practitioner could be addressed if decisions were published after the removal of identifying information. This is the established practice of the Family Court and courts exercising jurisdiction over children and people with disabilities.
QUESTIONS
A. Does the disciplinary scheme for addressing complaints about lawyers hinder competition in the profession? Do the costs imposed on the profession and clients by the existence of the complaints and disciplinary system outweigh the benefits to consumers? Does the existence of disciplinary sanctions enhance the standards of practice?
B. Does the composition of the Tribunal remain appropriate? Should the Tribunal apply evidentiary rules in all cases, or is the distinction currently drawn between hearings into unsatisfactory professional conduct, and professional misconduct appropriate?
C. Should the discretion of the Tribunal to conduct closed hearings and to restrict publication of its decisions be circumscribed, so as to ensure that most hearings are conducted in public and decisions are published?
Unsatisfactory professional conduct and professional misconduct
9.34 Riley states that the definition of misconduct in the Act preserves the former common law definition of misconduct; the Allinson test.[25] According to the Allinson test, the standard of conduct required by a professional is determined by the profession, rather than by the reasonable man. However, it does not appear that this was what was intended by the inclusion of a statutory standard in 1987.
9.35 The Second Reading Speech for the 1987 Bill stated that 'The Bill reflects the Government's view that the test for misconduct should include not only the traditional common law definition but also behaviour that falls short of the standard of conduct that a member of the public is entitled to expect of a legal practitioner.'[26] The Government's intention was to incorporate a community expectation standard.
9.36 It may be that the test of professional misconduct set out in section 127 is not sufficiently clear, and that the Act should include further elaboration on the meaning of the test.
9.37 In relation to unsatisfactory professional conduct, the standard remains unclear. The Law Reform Commission intended unsatisfactory professional conduct to address incompetence, delays and failure to meet accepted standards of professional work.[27] It remains unclear that this object has been realised. The meaning of unsatisfactory professional conduct could be clarified if further guidance as to its meaning were included in the Act.
QUESTIONS
A. Is the standard required for a finding of unsatisfactory professional conduct, or professional misconduct, appropriate? Should the standard be based on the standards of conduct expected by the profession, or on that of a 'reasonable person'?
B. Is further codification of the standard for professional misconduct and unsatisfactory professional conduct required?
C. Should examples of conduct which constitutes professional misconduct or unsatisfactory professional conduct be included in the Act, to assist the Tribunal, the investigatory bodies and the public, or are the common law definitions adequate?
Dispute resolution
9.38 There is anecdotal evidence that the principal object of consumers in lodging complaints is to receive redress, and that the institution of disciplinary proceedings is a residual object.[28] As discussed below in chapter 12, the costs assessment scheme provides a means of resolving disputes about costs, and since April 1997, disputes where the amount in issue is less than $2500 have been referred for mediation.
9.39 However, many disputes appear to relate to service delivery, as well as costs alone, and issues such as communication difficulties, or the quality of the service, may not be dealt with by a costs assessor, whose primary role is to decide whether the costs are fair and reasonable. Many consumers therefore approach the Office of the Legal Services Commissioner to make conduct complaints about practitioners where the primary issue is service delivery, and a conduct issue may not arise.
9.40 Consideration needs to be given to whether the scheme should include any additional means of redress for consumers.
Mediation of small matters
9.41 Although the scheme had only been in operation for three months for the most recent reporting period of the OLSC, the Annual Report for 1996/97 states that mediation had been successful for both clients and practitioners.[29] The scheme for the mediation of small claims has the advantage of simplicity and confidentiality. Mediation can satisfy many consumer disputes, but it does not prevent the investigation of consumer disputes which involve conduct issues: section 144(2).
9.42 However, while mediation may be a useful means of resolving costs disputes, it may not be as useful in the case of disputes where clients claim pecuniary loss. Further, the low ceiling on matters which may be mediated means that many disputes are likely to be excluded. Practitioners cannot be compelled to participate in mediation and any decisions made cannot be enforced.
9.43 While the system for mediation of disputes is consistent with the recommendations of the Law Reform Commission, the Commission also recommended that in cases where mediation was unsuccessful, the Registrar of the Tribunal should be empowered to have matters resolved by arbitration, up to a ceiling of $6,000.[30]
Power of the Tribunal to make compensation orders
9.44 The ability of the Tribunal to make a compensation order provides complainants with a relatively simple and inexpensive means of redress against practitioners, and is consistent with recommendation 43 of LRC 70.[31]
9.45 However, the Tribunal's power may be exercised only in the course of a disciplinary hearing. The requirement that there be a 'reasonable likelihood' of a finding that the practitioner is guilty of professional misconduct or unsatisfactory professional conduct, for matters to be referred to the Tribunal, coupled with the requirement that the Tribunal be a 'last resort' for the making of a compensation order, limits the Tribunal's jurisdiction to award compensation. The Legal Services Commissioner has stated that for many complainants, civil action is not an option.[32]
Alternative approach
9.46 A different approach to the resolution of consumer disputes has been taken in Victoria. Part 5 Division 1 of the Legal Practice Act enables clients to initiate dispute resolution by submitting a written request to the practitioner's RPA or, if the practitioner is unregulated, to the Legal Practice Board. The resolution of disputes between clients and practitioners is a separate process to conduct complaints and disciplinary proceedings.[33] A complaint will be classified as a dispute if it is about costs up to a ceiling of $15,000, a claim that the actions of the practitioner have caused pecuniary loss, or any other dispute arising of the provision of legal services: section 122.
9.47 The RPA or Board is required to seek to settle the dispute, but if it cannot be settled, the dispute must be referred to the Legal Profession Tribunal, under section 128. The dispute is then referred to a conciliator for conciliation. If a practitioner fails to attend a conciliation, the Tribunal can make a range of orders against the practitioner under sections 131(1)(b) and section 133.
9.48 If the conciliation is unsuccessful, the conciliator refers the matters to the Tribunal for determination. The Tribunal can make a range of orders, including the payment of compensation or costs, the waiver of liens and the provision for legal services by the practitioner or firm under section 133.
9.49 Although dispute resolution is a separate process under the Act, if the RPA or the Board considers that a dispute raises a conduct issue, the matter can be dealt with as a conduct complaint under the Act: section 129(4).
9.50 The Victorian scheme has the advantage of enabling clients to have disputes with practitioners and professional conduct issues dealt with through parallel processes and for both matters to be heard by the Tribunal. Further, it ensures that complainants identify the issues in contention and avoids the making of inappropriate conduct complaints against practitioners. The resolution of costs disputes by the Tribunal ensures that the technical issues involving practitioners are considered by an expert tribunal, rather than a generalist court.
Evaluation
9.51 In order to facilitate the prompt resolution of consumer disputes, consideration should be given to the implementation of a scheme for compulsory conciliation and adjudication of consumer disputes as an adjunct to disciplinary proceedings.
9.52 Any scheme would be likely to be funded by the interest on clients' trust accounts or by fees paid by the parties themselves. In either case, the costs of such a scheme would be spread among clients of solicitors.
9.53 Given the civil remedies open to complainants and the availability of costs assessment, the costs of establishing any more mechanisms to enable consumer disputes to be dealt with may be outweighed by the compliance costs and additional complexity generated by such a scheme.
QUESTIONS
A. Is the current system of a single stream for resolving disputes and conduct issues adequate? Should consumer disputes be dealt with by a separate scheme for complaints initiation, investigation and resolution, within the disciplinary system, as in Victoria?
B. Is the limited jurisdiction of the Legal Services Tribunal to make compensation orders appropriate?
C. Should the Legal Services Tribunal have jurisdiction to deal with small costs disputes and applications for compensation by clients of legal practitioners? Can the cost of such a scheme be justified?
Review power
9.54 The 1996/97 Annual Report of the Commissioner states that reviews take approximately 5 months.
9.55 One way of assessing the investigations conducted by the Councils is the outcome of reviews. The Legal Services Commissioner reports that many complainants believe their complaints are not being properly investigated or that the Councils are biased. Nevertheless, the vast majority of reviews conducted by the OLSC confirm the decisions of the Councils.[34] Further, it should be noted that the proportion of complainants seeking a review of decisions of the Councils by the Commissioner is low.[35]
QUESTION
A. Is the review power providing appropriate scrutiny of decisions of the Councils?
Footnotes
[1] Honourable TJ Sheahan, Attorney General and Minister Assisting the Premier, Second Reading Speech for the Legal Profession Bill 1987, Legislative Assembly, 10751.
[2] Part 10, Division 2
[3] Law Reform Commission Report 70, 122.
[4] Office of the Legal Services Commissioner, Annual Report for 1996/97, (Sydney, 1997), (OLSC Annual Report), p.19. The Report indicates on page 13 that of all complaints and consumer disputes opened in 1996/7, 39% were investigated by the professional councils.
[5] The inherent jurisdiction of the Supreme Court is not affected by anything in Part 10 or Part 2 (which deals with legal practice): section 171M. On the commencement of the Administrative Decisions Tribunal Act 1997, the Legal Services Tribunal will become a Division of the Administrative Decisions Tribunal. However, its jurisdiction will not be affected.
[6] Allinson v General Council of Medical Education and Registration [1894] 1 QB 750
[7] this reflects the recommendations made by LRC 32. In particular see discussions at paragraphs 3.1-3.31, 4.10 and chapter 5
[8] Riley, New South Wales Solicitors Manual, [3080], discussing the decision of the Tribunal of 29 April 1994 in respect of Spero Pitsikas.
[9] Discussed in Riley, [3090].
[10] Parliament of New South Wales, Performance Audit Report: The Law Society Council, the Bar Council and the Legal Services Commissioner: A Review of Activities Funded by the Statutory Interest Account, Parliamentary Paper No. 496, 1996-97 Second Session, printed June 1997, p. 51. The projected expenditure for 1997-98 is $5,792,000.00 and for 1998-99 is $6,114,000.00.
[11] Legal Practice Act 1996 (Vic), ss 145, 146
[12] ibid. s 151
[13] ibid. s 147
[14] ibid. s 153
[15] Legal Practitioners Act 1981 (SA), s 74(1)
[16] Legal Practitioners Act 1893 (WA), s 25
[17] Queensland Law Society Act 1952, 6S
[18] See Legal Practice Act 1996 (Vic), ss 123, 126, 128; Legal Practitioners Act 1981 (SA), s 74; Legal Practitioners Act 1893 (WA), s 25; Legal Profession Act 1993 (Tas), s 59; Legal Practitioners Act 1970 (ACT), s 43
[19] In 1996-97 the Commissioner confirmed the decisions of the Councils in 74.5% of complaints reviewed: Office of the Legal Services Commissioner, 1996-97 Annual Report, p.25
[20] Ibid. p. 22
[21] OLSC Annual Report, 22.
[22] Law Reform Commission Report 70, recommendation 34 at p. 265
[23] Law Reform Commission Report 70, recommendations 34 and 67, at p. 265 & p. 272.
[24] Law Reform Commission Report 32 paragraphs 7.11-7.14.
[25] Riley, see n7 above, [3105].
[26] Second Reading Speech Speech, cited in n1 above, 10754.
[27] Law Reform Commission Report 32 (1982), 46.
[28] The 1996/97 Annual Report of the OLSC refers to recently instituted procedures for handling consumer disputes, and the high rate of satisfactory achieved by both consumer and practitioners when matters are resolved informally, rather than investigated as disciplinary matters: at 13-15. In 41% of complaints, conduct issues were not raised and these matters were dealt with as consumer disputes: at 22.
[29] OLSC Annual Report 15-16.
[30] Law Reform Commission Report 70, recommendation 20. See also recommendations 15-19.
[31] "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", at 267
[32] OLSC Annual Report, 27.
[33] Section 123 provides for complaints about disputes; section 138 provides for conduct complaints.
[34] OLSC Annual Report, 25-26.
[35] OLSC Annual Report states that 310 requests for review were received in 1996/97at 24. This compares with investigations completed by the Professional Councils during this period. |
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