Lawlink NSW: Review of the Legal Profession Act Final Report: Self and Co-Regulation

Review of the Legal Profession Act Final Report: Self and Co-Regulation

CHAPTER 5: CO-REGULATION, SELF REGULATION AND THE ROLE OF PROFESSIONAL BODIES REPRESENTING LAWYERS

I MATTERS RAISED IN THE ISSUES PAPER

The approach to the regulation of the legal profession was traditionally largely based on self regulation, coupled with the supervision of the Supreme Court. This self regulation of the legal profession was regarded as integral to professional practice because it ensured the independence of the profession from Government intervention in its affairs and ensured that members of the profession were judged by their peers. However, self regulation by professional bodies which also act as representative associations may lead to anti-competitive practices and limit the remedies of consumers and other market participants who are adversely affected. The Legal Profession Act has now adopted a co-regulatory model for regulation of the legal profession.

In NSW the Law Society and the Bar Association exercise both regulatory and representational functions. The Law Society Council and the Bar Council may make practice Rules which are binding on the profession, and a breach of the Rules may amount to professional misconduct or unsatisfactory professional conduct by the practitioner. However, the Rules are subject to review by the Legal Profession Advisory Council and may be declared inoperative by the Attorney General if the Council reports that the Rules impose restrictive or anti-competitive practices which are not in the public interest. The Council also has a broad role in reviewing the structure and function of the legal profession, and must report to the Attorney General on any matter referred to it by the Attorney General. The regulatory functions of the Law Society and the Bar Association may also be scrutinised by the Supreme Court.

Practitioners pay a single fee to either the Bar Association or the Law Society, which covers both the licensing and membership activities of the professional bodies, although membership itself is not compulsory.

This system ensures uniformity and consistency within the profession, but may have anti-competitive effects because:

although membership is voluntary, practitioners must contribute to the cost of membership, including the representative functions of either the Law Society or the Bar Association; and
professionals are required to submit to the Rules of the respective Councils even if they choose not to belong to the Law Society or the Bar Association.

While subject to external scrutiny, the Rules continue to include restrictions on the mode of practice of both solicitors and barristers. It might be argued that, given their importance and their status under the Act, the Rules should be made in the same way as subordinate legislation. Conversely, if the Rules represent an aspect of the self regulation of the profession, it could be argued that the Act should not confer on them any additional status.

An alternative system was introduced in Victoria in 1996 which allows the registration of alternative representative bodies. The Victorian scheme establishes one statutory body and allows for any number of independent professional associations. The professional associations may issue practising certificates, make Rules and investigate complaints against their members. The professional associations must be registered by the Legal Practice Board, which also scrutinises their Rules and ensures they have in place proper complaints handling processes. However, no other bodies have sought registration in Victoria to date.

A further issue is whether the Rules are necessary for the protection of the public from incompetent or dishonest lawyers, or whether they constitute a further layer of regulation which is not justified.

II RESPONSES TO THE ISSUES PAPER

There was general support for the current scheme of co-regulation. Neither the Law Society nor the Bar Association made recommendations for change and the LSC was also generally supportive of the current scheme. Its position was that the balance between the Act and regulations, the Rule making powers of the Councils, and the role of the Legal Profession Advisory Council and the Legal Services Commissioner were appropriate and in the public interest. The Bar Association stated that no-one had identified the role of the Bar Association in the regulatory system as having an anti-competitive effect. The suggestion in the paper that the Act accord recognition and confer rule-making functions on alternative professional bodies was rejected by both the Law Society and the Bar Association.

The professional bodies also rejected the proposal for the Solicitors’ Rules and the Barristers’ Rules to be made by subordinate legislation. The Law Society stated that its power to make Rules enabled it to quickly respond to ethical and practice issues. The Bar Association referred to the scrutiny of the Rules by the Legal Profession Advisory Council and the Attorney General.

The ACCC noted that several anti-competitive practices are prohibited by the Trade Practices Act and indicated that the Solicitors’ Rules and Barristers’ Rules may need to be authorised by the ACCC. It indicated that it currently has a number of matters under consideration.

The LSC recommended that the types of matters to be dealt with by the Rules should be set out in the Act, in a similar manner to section 64 of the Legal Practice Act 1996 (Vic). The LSC also noted that the current scheme does not provide for sufficient input from consumers or independent bodies such as the LSC. It recommended that the rule making process be changed to ensure that the rule making process is consistent with the principles which the LSC believes should be set out in the Act, and represent a balance between the interests of consumers and the profession.

The LSC put forward a series of possible models to achieve this balance. They included enabling the Attorney General to veto Rules on the recommendation of the LSC or requiring the approval of the Attorney General for the making of Rules which could be proposed by the Bar Council, the Law Society Council or the LSC.

The LSC also points out that there is currently no rule-making mechanism for licensed conveyancers and recommends that a power be included in the Act to ensure that the Attorney General or the Minister for Fair Trading can make Rules to govern conveyancers, in consultation with bodies representing conveyancers.

An alternative mechanism to enhance the public accountability of the rule making process could be to require the Councils to advertise Rules prior to making them and to report to the Attorney General after Rules had been made. The report would consist of information about any representations made by stakeholders or members of the public.

DISCUSSION

Self regulation is an attribute of any professional group, and it appears appropriate for professional bodies representing solicitors and barristers to be empowered to make binding rules. However, the professional Rules also have implications for the protection of clients and the public interest. The review function of the Legal Profession Advisory Council is a mechanism for scrutiny of the rules, and the requirement in the Act for a review of the Rules to be made public facilitates debate about the Rules and the role of the Law Society Council and the Bar Council.

However, it is suggested that a mechanism for the exposure of Rules before their adoption by the Councils would enhance the accountability of the rule making process and ensure public participation in the formulation of standards to apply to the profession. The Councils could be required to take into account any submissions about the proposed Rules and to report to the Attorney General after they had been made. It is noted that such a scheme would involve some cost.

The ability of the Attorney to declare Rules inoperative if they imposed restrictive or anti-competitive practices would be preserved, together with the power of the Legal Profession Advisory Council to review their effect in practice.

While practitioners are not currently compelled to join either the Law Society or the Bar Association, the payment of a single practising fee to the respective Councils as a condition of practice supports both the licensing activities of the Law Society and the Bar Association, and with their membership activities as representative bodies of the profession. In these circumstances, the Law Society and Bar Association have an assured source of revenue irrespective of membership.

The current arrangements have the effect of requiring practitioners to support the membership activities of the Law Society and the Bar Association because they cannot choose to pay only the cost of licensing by the respective Councils. Membership activities may include, for example, discounts for services for members, practice support services, a library and publications to promote practices to clients or inform clients about the work of solicitors or barristers. These activities may not be regarded as essential by all practitioners. It is suggested that the separation of a licensing fee and a membership fee is warranted to provide practitioners with a choice as to whether they wish to support membership activities.

QUESTIONS

5.1 Is there an appropriate balance between self regulation and Government intervention in the regulatory scheme set out in the Legal Profession Act?

No respondent to the review identified any need for major change in the respective roles of the Councils and the Government in the regulation of the profession. The scrutiny of the Rules by the Legal Profession Advisory Council and the requirement for the reports of the Council on the Rules to be made public ensures that any anti-competitive aspects of the Rules are publicly debated.

However, it is recommended that procedures be introduced to provide for the exposure of professional Rules before they are made to ensure public scrutiny of the making of the Solicitors’ Rules and Barristers’ Rules. The details of such procedures should be settled in consultation with the Councils.

5.2 Is there a need for the Solicitors’ Rules and Barristers’ Rules to be applied to the profession, in addition to the obligations set out in the statutory scheme?

It appears that there is a need for the legislative scheme to be supplemented by professional rules.

5.3 Is it appropriate for the Law Society Council and the Bar Council to have the power to make Rules which bind the profession, and for those powers to be recognised in the Act?

Yes. No evidence was provided to the review that the making of Rules by the Councils has had an anti-competitive effect or has harmed the public interest.

5.4 Does the system where the Law Society and the Bar Association exercise regulatory, as well as representative functions, for solicitors and barristers, restrict choice by practitioners and have an anti-competitive effect?

It would be appropriate for the current single practising fee to be replaced by a system of two separate fees levied by the Law Society Council and the Bar Council. A compulsory fee would represent the cost of licensing and an optional fee would apply for membership of the Law Society or Bar Association. This system would ensure that practitioners can choose whether to support the representative and membership functions of the Law Society and Bar Association. It is suggested that this proposal would need to be phased in for a period of 3 to 5 years to enable the professional bodies to adjust their activities and resources, if necessary.

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The information contained on this page is not legal advice. If you have a legal problem you should talk to a lawyer before making a decision about what to do. The information on this page is written for people resident in , or affected by, the laws of New South Wales, Australia only.

most recently updated 8 April 1999