Review of the Legal Profession Act Final Report


Complaints and Discipline



CHAPTER 9: REGULATORY CONTROLS - COMPLAINTS AND DISCIPLINE


I. THE CURRENT SCHEME

Investigation of complaints

Complaints against lawyers are received by the Legal Services Commissioner. The LSC may then refer complaints for investigation to the Law Society Council, in the case of solicitors, or the Bar Council, in the case of barristers, or investigate complaints himself or herself. The LSC has a limited power to mediate in the case of small complaints, if the practitioner and client agree and if the amount in issue is less than $2,500. The Councils and the LSC are also empowered to refer matters for mediation if conduct issues arise.

Following an investigation, the LSC or the relevant Council may refer a complaint to the Tribunal if they have formed the view that there is a reasonable likelihood of a finding being made by the Legal Services Tribunal of unsatisfactory professional conduct or professional misconduct.

On 1 October 1998 the Legal Services Tribunal became the Legal Services Division of the Administrative Decisions Tribunal (ADT), established under the Administrative Decisions Tribunal Act 1997. While the substantive powers of the Tribunal are generally unchanged, the integration of the Legal Services Tribunal into the Administrative Decisions Tribunal has altered its procedural powers. These changes are referred to below. This report continues to refer to the Legal Services Tribunal because submissions were made before the establishment of the ADT.

Reviews of decisions of the Councils by the Legal Services Commissioner

In order to ensure independent scrutiny of the decisions of the Councils, the LSC has a broad discretion to review their decisions made in connection with complaints investigations, including decisions to dismiss complaints, to reprimand practitioners or to omit matters that were part of the complaints made to the Council. Reviews are conducted at the request of complainants, the investigating Council or by the LSC’s own initiative. The LSC may also review decisions relating to licensed conveyancers. The LSC has altered the decisions of the Councils in a very small number of matters.

The Law Society Council may also monitor investigations and give directions and assistance to Councils in connection with the investigation of complaints, under section 131 of the Act. The Legal Profession Amendment Act 1998, which is not yet in force, inserted new sections 171MA and 171MB into the Act, to require the LSC and the Councils to produce information about complaints procedures and develop performance criteria relating to the handling of complaints. The Councils and the LSC are also required to include the criteria in their annual reports, together with an assessment of their performance against the criteria. However, the LSC does not have a general power to examine the complaints handling processes of the Councils or to direct them generally in the exercise of their regulatory functions, or to include comments about their processes in his annual report.

Role of the Tribunal

The Legal Services Tribunal is the main forum for dealing with complaints. However, the Tribunal can only deal with consumer disputes when it is hearing a conduct complaint, and many complaints do not concern a case of professional misconduct or unsatisfactory professional conduct, but instead arise from consumer disputes about fees or communication.

Following recent changes, a separate specialist stream for handling consumer disputes between clients and lawyers has been established in Victoria.

Practice of the Tribunal

The Tribunal is required to hold hearings regarding 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 the practice of the Tribunal to close all hearings into unsatisfactory professional conduct. 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.

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.

The Tribunal also has a broad power 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.

The procedural powers of the Tribunal have not been affected by its integration into the Administrative Decisions Tribunal.

Standard of professional misconduct and unsatisfactory professional conduct

Prior to 1987, professional misconduct was assessed on the basis of the standards set by members of the profession. 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.

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 practitioner 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.

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.

There is little case law on the meaning of ‘unsatisfactory professional conduct’, although the decisions of the Legal Services Tribunal provide guidance.

Dispute resolution and compensation orders

The Act provides for alternative dispute resolution procedures to be adopted for consumer disputes. The Councils and the LSC are each able to refer complaints for mediation. Mediation is voluntary, but a mediator may recommend that a Council and/or the LSC investigate a complaint if conduct issues arise. If matters involving costs cannot be resolved, they may be referred to costs assessors for determination. If a conduct issue is raised, the matter is referred for investigation.

As noted above, the LSC has power to mediate consumer disputes where the amount in issue is less than $2500. Applications for cost assessment under the Act involving less than $2500 are now referred to the LSC.

The Tribunal may make compensation orders to a complainant in some circumstances. However, 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, the Tribunal may not make a compensation order unless a complainant is not able to be compensated by the Fidelity Fund or by order of a court.

Cost of the disciplinary system

The disciplinary system is funded by the interest paid on solicitors’ trust accounts. 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.

Alternative approaches

A different approach to the resolution of consumer disputes has been taken in Victoria. The resolution of disputes between clients and practitioners is a separate process to conduct complaints and disciplinary proceedings. 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.

The Victorian scheme enables consumer disputes and professional conduct issues to be dealt with through parallel processes and for both matters to be heard by the Tribunal.

The Legal Profession Tribunal refers consumer disputes for conciliation. 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. If a dispute raises a conduct issue, the matter can be dealt with as a conduct complaint under the Act.


II RESPONSES

The operation of the disciplinary system was addressed by most respondents, including the Law Society, Bar Association, the LSC, Mr Frank Riley, formerly the President of the Legal Services Tribunal, the ACCC, the Friends of Legally Abused Citizens (FLAC) and individual consumers.

There was general support for the current disciplinary scheme although several respondents recommended changes to complaints handling, the process of resolution of consumer complaints and amendments to specific provisions in the Act.

Procedures of the Tribunal

There was some disagreement about the procedures of the Tribunal. The Law Society’s position was that the Tribunal should not be subject to the rules of evidence in any matter and should have an unfettered discretion to close hearings and to decline to publish decisions (the latter power to be exercised only on public interest grounds).

The LSC agreed with the Law Society that evidentiary rules should not apply to Tribunal hearings, and pointed out that it was undesirable for the question of the application of the rules of evidence to depend what category of conduct was identified by the body referring the matter to the Tribunal. The LSC stated that in practice it pleads in the alternative wherever possible, and that in any case the distinction between the categories of conduct is not clear. The LSC also commented that all hearings should be open to the public unless there were specific reasons to order otherwise. The LSC’s position was based on its view that public confidence in the justice system depends on openness and accountability. Public access to the Tribunal’s decisions would also assist in the development of an informed legal services market.

The Bar Association however believed that the current scheme for the application of evidentiary rules should be retained, except that even if the evidentiary rules applied, the Tribunal should be given the power to direct disclosure which would otherwise contravene legal professional privilege or confidentiality, when the circumstances of the case or the public interest require it. The Bar Association also took the view that the Tribunal should retain its discretion whether or not to order that a hearing be closed. The Bar Association advocated this for several reasons, including that the damage done to a barrister’s reputation by adverse publicity could not be reversed, even by a favourable decision by the Tribunal.

Mr Riley indicated that it would be possible for some simplification to occur at all stages of the system, including in some matters before the Tribunal. However, Tribunal members had generally had the view that the rules of evidence should apply to any matter in which professional misconduct was alleged because of the implications of a finding. Mr Riley also noted that the Tribunal had begun to publish reports of matters of unsatisfactory conduct and that the provisions of the Administrative Decisions Tribunal Act 1997 now applied to matters before the Tribunal. Mr Riley indicated that the public interest issues which might justify public proceedings could be re-examined and weighed against other matters requiring consideration.

Unsatisfactory professional conduct and professional misconduct

The LSC supported the codification of the standard for professional misconduct and unsatisfactory professional conduct in order to address practical difficulties in applying the standard and to promote the application of the standard from the perspective of a reasonable person, rather than the profession. It recommended that such a definition include a lack of adequate knowledge, skill, or care; a contravention of a provision of the Act, regulations or professional Rules; a contravention of conditions on a practising certificate; and any other improper or unethical conduct relating to the practice of law.

However, both Mr Riley and the Law Society stated that the existing standard was appropriate and that the standard, while related to the reasonable expectations of consumers of legal services, should be based on peer review, because only another legal practitioner could judge the merits of the actions of a solicitor or barrister. For this reason the Law Society also rejected any codification of the standard, and believed that publication of the decisions of the Tribunal was sufficient. However, the Law Society indicated that it would support changes to remove the distinction between the two categories of conduct and replace them with a single definition of ‘unacceptable professional conduct’ covering both categories, and including conduct of a solicitor outside legal practice which would justify a finding that the solicitor was not of good fame and character. Mr Riley indicated that it was not necessary to codify the standard but that the definition of unsatisfactory professional conduct could be revised to express the intention of the provisions more clearly.

The Bar Association recognised that the relevant standard is that of a member of the public. The Bar Association did not believe that there was a need for amendment to the standard, or for its codification in the Act.

Dispute resolution, the mediation of small matters and the power of the tribunal to make compensation orders

The Law Society, Bar Association and LSC differed in their approach to consumer disputes, and the role of the LSC and the Tribunal.

The Law Society was generally of the view that the existing scheme was appropriate, with the LSC resolving consumer disputes in an efficient and timely way. It pointed out that a disciplinary issue might be hidden within a consumer dispute and was more likely to be noted within a single system. The Law Society recommended no changes to the jurisdiction of the Tribunal, pointing out that complainants have several other avenues of civil remedy.

The Bar Association recommended that consumer disputes be separated from other disputes and dealt with by the LSC. Conduct issues should be referred to the relevant Council. The LSC should be able to deal with consumer and costs disputes up to a limit of $10,000 using both mediation and a new power of compulsory conciliation, advocated by the Bar. The Tribunal's jurisdiction to make compensation orders should remain unchanged but should be increased to $50,000. The Bar Association also stated that the LSC should undertake a public education campaign and should screen and dismiss unmeritorious complaints. It should be noted that the implementation of a conciliation power would increase the cost of the scheme for the Statutory Interest Account and its benefits would need to be assessed against the potential cost.

The LSC agreed with the Law Society that consumer and other disputes should continue to be dealt with in a single stream. However, it recommended an amendment to clarify the ambit of mediation, increase the limit to $10,000 and to allow the LSC to extract enforceable undertakings to ensure the performance of agreements reached after mediation. The undertakings would be enforceable by the Tribunal. The power would apply to consumer disputes and conditional reprimands and dismissals. This power would be exercised in conjunction with a compulsory conciliation power, similar to that proposed by the Bar Association. It should be noted that the reforms proposed by the LSC would also have a cost impact on the Statutory Interest Account.

The LSC suggested reforms to enable consumers to obtain compensation more easily, including giving the Tribunal or the LSC the power to order compensation without the need for disciplinary proceedings to be commenced. This approach was supported by the ACCC, whose view was that a complaints system must provide effective redress for consumers as an alternative to civil action. While it is noted that the Consumer Claims Tribunal already has jurisdiction to order compensation to clients following disputes with legal practitioners, it is likely that members of the new Legal Services Division of the Administrative Appeals Tribunal will have considerable expertise in assessing the costs of legal services. Alternatively, given that the Tribunal is a forum having generalist jurisdiction, jurisdiction to deal with disputes about legal services could be conferred on the General Division of the Tribunal.

Mr Riley rejected the suggestion that costs disputes be dealt with by the Tribunal and any change in the Tribunal’s jurisdiction to deal with costs disputes. He was of the view that the Tribunal lacked the expertise to deal with damages claims.

Review power

The LSC stated that most complainants appeared to be generally happy with the review process. In order to improve the process, it proposed that additional powers be given to the LSC, including offering reprimands, ordering the transfer of documents, requiring practitioners to provide information when undertaking a review, and requiring the relevant Council to be consulted when the LSC does not intend to confirm the decision of the Council.

The Law Society supported the review process but emphasised the need for fast decision making. Consistent with its view that disciplinary matters should be dealt with by the Councils and that the LSC should direct its resources to consumer disputes, the Law Society suggested that the LSC be given power to direct a Council to refer a matter to the Tribunal if the LSC had completed a review.

The Bar Association recommended two changes to enhance the efficiency of the review process. The first was to give the LSC the power to dismiss an application for review which was frivolous or vexatious and the second was to impose a time limit of 6 months for reviews.

Other matters

The LSC also sought amendments to the Act not canvassed by the issues paper. It referred to the difficulty of referring novel matters to the Tribunal because of the requirement that the referring body form the view that there was a reasonable likelihood of a finding of misconduct or unsatisfactory professional conduct, and indicated that its position was that the test should be the ‘case to answer’ test applied by other prosecutorial bodies.

It is also noted that while it is clear that the LSC can review the handling of individual matters by the Councils, it does not appear to have the power to review their complaint handling policies and processes more generally or to report to the Attorney General or to report on the results of his review in his annual report. However, such a role is consistent with the LSC’s review functions which are set out in the Act and is a corollary of recent amendments to the Act, which required the Councils and the LSC to develop and report on performance criteria relating to the handling of complaints. The exercise of such a function by the LSC is likely to ensure that resources are applied efficiently by the Councils in the handling of complaints.

In order to monitor the efficiency of complaints handling by the Councils, it would be appropriate for the LSC to be expressly empowered to review the procedures of the Councils, having regard to the resources available to the Councils and the LSC and the public interest for complaints to be investigated and resolved efficiently. The LSC would be empowered to issue guidelines to the Councils in the performance of their functions, following the conduct of a review.

In addition, it was recommended that the Tribunal have a power to make declaratory orders about whether conduct may be in breach of the standard set out in the Act. A list of other proposed amendments which have been referred to the Attorney General’s Department was attached to the LSC’s submission.


QUESTIONS

9.1 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?

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 costs 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.

The composition of the Tribunal appears to be appropriate. Consideration should be given to removing the distinction in the application of evidentiary rules between categories of hearings into unsatisfactory professional conduct and professional misconduct.

Yes. It appears to be appropriate for professional disciplinary proceedings to be dealt with in public where an issue of conduct arises, unless there are compelling reasons to close the hearing. However, any hearings into the [mental or physical] capacity of a practitioner to practise should be conducted in camera.

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’?

The standard should be based on the standard expected of a reasonable person. However, a relevant factor in establishing the standard is the standard of diligence that a reasonable person would expect of a competent practitioner.

Codification does not appear to be required.

It is noted that the Law Society Council and Bar Council publish reports of decisions of the [former] Legal Services Tribunal. There does not appear to be a need for further publication of the standards which apply or of the decisions of the Tribunal.

Complaints resolution for consumer disputes and conduct issues should continue to be dealt with in a single stream. However, consideration should be given to enhancing the power of the LSC to deal with consumer disputes through:

Consideration will need to be given to the cost of the implementation of the proposed reforms, in the context of their benefits for consumers of legal services.

The existing jurisdiction of the Tribunal to make compensation orders should be increased to $50,000. The upper limit of the jurisdiction of the Tribunal to make orders by consent, currently $50,000, should also be reviewed.

Consideration should be given to giving a broader power to the General Division of the Administrative Appeals Tribunal to deal with complaints which are about costs and service, independently of conduct matters. The costs of such matters should be borne by the parties.

Is the review power providing appropriate scrutiny of decisions of the Councils?

Yes. However, amendments to the Act should be considered to enable the LSC to require a practitioner to comply with a request made in the course of a review and for the LSC to direct a Council to refer a matter to the Tribunal following a review.

Further consultation should be undertaken concerning the conferral on the LSC of an express power to monitor and review the complaints investigation and handling policies and processes of the Councils, and to report on the results of any review directly to the Attorney General or in the LSC annual report.