Lawyers and Conveyancers Bill - Phil Goff Speech
Hon Phil Goff
Minister of Justice
9 July 2003
Lawyers and Conveyancers Bill
Speech to the Wellington District Law Society
Chapman Tripp Sheffield Young
1pm, July 9
I would like to thank John Marshall and other members of the Society for inviting me to speak. Thanks also to former Presidents Ann Wilson and David Collins QC for the work they have done for the Society on the Bill. I am pleased the Bill is now in the public arena so that you all have a chance to study it in detail. After its First Reading I will seek referral of the Bill to the Justice and Electoral Select Committee.
I know that many of you put voluntary time put into the Society's reform and regulatory committees. I appreciate the time lawyers spend in making a personal contribution to law reform and disciplinary work. Having a strong and independent legal profession capable of exercising control and influence over individual members also justifies maintaining the principle of continuing self-regulation.
The Lawyers and Conveyancers Bill
The Bill is large, with eleven parts and seven Schedules.
As a recent Council Brief article states, "The Bill follows to a large extent the model promoted by the New Zealand Law Society". The model contains mechanisms to ensure both greater independence and accountability in the way that the profession is regulated.
The Bill responds to professional concerns over
- the consistent application of practice rules;
- consumers' calls for effective complaints resolution; and
- responsiveness in the face of rapid commercial change.
The Council Brief article also states that the Bill offers "considerable opportunities for lawyers". For example lawyers will be able to incorporate, to sell real estate, and to market their expertise as lawyers and the protections they can offer, including a robust complaints and discipline system.
As a collective of district law societies, the New Zealand Law Society's responsiveness in setting standards and forward planning has been inhibited. It has proven to be an inefficient structure to enforce nationally consistent application of the rules, particularly those relating to the complaints and disciplinary procedures. Moreover, some consumers feel that their complaints are not subject to a sufficient level of independent review.
In addition, the varying interests within the legal profession suit alliances not only along geographical lines but also according to general and specialist areas of work. Alliances based on practice specialty are currently inhibited by the comprehensive structure of district law societies.
There are a number of other new features in the Bill that I'd like to highlight briefly today.
Clause 15(1) protects titles such as lawyer, law practitioner, barrister and solicitor. In order to claim advantages such as the right to use certain titles and do certain kinds of work, lawyers must abide by stringent professional obligations to clients and to the Court. These standards exist in the public interest.
Structure of New Zealand Law Society
The New Zealand Law Society will continue to have a wide range of regulatory responsibilities. It will be required to have a constitution, to split its regulatory and representative functions, and account separately for these. While all lawyers will be regulated by the Society they will no longer be required to be members for the purposes of representative functions.
I have enhanced some government involvement in regulation, in that the Minister of Justice must approve proposed practice rules after consultation. My view is that this strikes an appropriate balance that acknowledges the valuable role of the profession in regulating itself, but also respects the strong public interest in the way lawyers conduct themselves. Greater public accountability for the content of professional rules and application of standards is therefore appropriate.
District Law Societies
Under the Bill it is proposed that District Law Societies will no longer be statutory bodies but may continue to exist and offer representative membership services. This is in line with the New Zealand Law Society model that district law societies have endorsed, and will allow the emergence of specialty societies if practitioners demand them.
Practitioners themselves will determine the on-going viability of district law society services such as the provision of district law library services and local seminars. District societies will also be able to incorporate and retain their assets.
Practitioners will join district law societies if they see benefits from doing so and if they are confident that representative bodies reflect their interests and needs, either regionally or in the speciality areas in which they practise.
On the matter of work reserved to lawyers, people other than lawyers will be able to provide general legal advice and drafting of legal documents.
With some narrow exceptions, however, only lawyers will be able to draft Court documents for reward, appear in Courts or Tribunals, give advice on the conduct of proceedings, or perform statutory functions such as certifying matrimonial property agreements.
The current law provides that it is an offence to "act as a solicitor' or to "act as a barrister or solicitor' yet there is no definition of what this entails. The effect is that no one is clear about the boundaries around legal work, and whether a person has to have a legal qualification and practising certificate to provide such services for reward to the public.
It is desirable to have transparency and certainty around this issue. The approach in the Bill is to be explicit about the work that only lawyers can do. I expect vigorous debate at select committee stage on whether the range of work restricted to lawyers should be widened in the interests of consumer protection, and I retain an open mind on the matter.
Lawyers will be able to form incorporated law firms, as long as all of the directors and partners are other lawyers who are actively involved in the business. Lawyers have pushed for the freedom to determine their own practice structures. This enables them to compete more effectively with other businesses in the market for legal services or in closely related areas.
Advantages of incorporation will include limited liability, a more easily transferable interest and a structure that, for some firms, will allow more efficient management.
However, there will be some limitations in the public interest - directors and shareholders will be liable for any theft committed by the firm, and any lawyer will continue to owe duties of care to his or her client.
Queen's Counsel / Senior Counsel
Eligibility for the new position of Senior Counsel (currently Queen's Counsel) is extended to include litigators practising in firms, rather than just those at the separate bar. This captures all those who might be characterised as leading advocates, which includes barristers and solicitors practising in firms.
Greater transparency in the appointment process received strong support from respondents to the discussion paper on Queen's Counsel. As a consequence the proposed selection panel would simply formalise the current process of consultation with appointment by the Governor-General on the advice of the Attorney General with the concurrence of the Chief Justice.
Existing Queen's Counsel will have the option to retain their existing title if they wish.
Lawyers who practise on their own account (whether as sole practitioners, partners, or directors of incorporated firms) will be required to contribute to a fidelity fund, as they do now.
Conveyancers practising on their own account will also be required to contribute to their own fidelity fund. This will also encourage the respective regulatory bodies to have a robust system of financial inspection or audit in place to detect theft, and minimise any harm done.
The fund will be capped under rules that require Ministerial approval. A limit can be set on the amount any one claimant can receive, or on the total amount that can be paid out to claimants in a given period of time.
The maximum levies that practitioners have to pay will be set in rules made by the relevant regulatory body (NZLS or NZSOC).
If there is not enough money in either fund to meet all the claims on it, then the fund can be "ruled off" and started up again with Ministerial approval. Alternatively, a special levy can be made against practitioners, again with ministerial approval.
The rules of each professional group must specify disclosure requirements for practitioners about the coverage of their fidelity fund.
It is possible that either of the funds will be inadequate to meet all of the claims made on it. This is a particular risk in relation to the conveyancers fund, as a small group of conveyancers cannot realistically be expected to cover any large-scale theft, particularly in the early years of the regime. This may mean that claimants will only get paid out the limit set under rules, or their share (pro rata) of the total amount available if the fund has to be ruled off.
This compromise provides some compensation for victims of theft (in addition to any recovery from the firm or practitioner responsible). The costs of regulation should not be excessively burdensome - in the long run this affects the prices consumers have to pay for the service.
The Bill provides that the New Zealand Law Society may make rules in relation to conditional fee agreements including the type of information that may be required to be provided by lawyers to clients before making such agreements. These fee arrangements will not be permitted in criminal, immigration and family matters.
Conditional fee arrangements will provide consumers and lawyers with greater flexibility in the funding of legal services. The introduction of conditional fee arrangements has the benefit of requiring the lawyer and client to actually discuss the fee arrangement in advance.
It will not be possible for a lawyer to charge a client according to a conditional fee arrangement if there is not an agreement in place that records the basis of the charging.
Such fees must be fair and reasonable, in reflecting the risk to the lawyer that he or she will not get paid, and the work actually done. These arrangements will therefore not permit fees calculated as a percentage of the amount awarded to the litigant.
Complaints and discipline
Under the Bill the New Zealand Law Society will oversee the new complaints and discipline regime. The new regime keeps operational control and assessment of disputes with practitioners, while ending the current rather splintered regional approach to the enforcement of practice rules.
There are three levels to the system:
1. Firstly, Standards Committees (overseen by the appropriate regulatory Society);
2. A new position, the Legal Complaints Review Officer; and
3. The Lawyers and Conveyancers Disciplinary Tribunal.
The New Zealand Law Society will be required to establish standards committees and publicise and distribute details of the complaints service.
Complaints regarding quality and cost can be combined in the new regime.
The proposed system allows the New Zealand Law Society to ensure that standards are applied in a consistent manner, through standards committees in various areas.
There will still be room for regional input as standards committees drawn from practitioners in that region will be responsible for the day to day administration of the complaints and disciplinary regime.
Bodies such as the Wellington District Law Society will be able to provide services to those committees on a contestable basis, so those who wish to maintain or augment disciplinary work may be able to do so. The standards committees will be able to provide remedies in legitimate cases.
Appointed by the Minister of Justice after consultation with the regulatory bodies, the Legal Complaints Review Officer will operate independently without direction from either regulator or the Minister of Justice. The Officer will not be permitted to hold a practising certificate. This will insure against real or perceived conflicts of interest and promote independence in the role.
The Officer will have the same powers as Standards Committees, including the ability to make orders for redress by substituting his or her decision for that of the Standards Committee. He or she will have extended powers in relation to reviewing, referring, overturning or substituting decisions of a Standards Committee, or referring a case to the Tribunal.
Members of the public who are dissatisfied with a Standards Committee ruling will be able to apply to the Officer for review.
The profession will be able to promote the scrutiny afforded by the Officer as an asset and safeguard for your clients and the integrity of your profession.
The New Zealand Lawyers and Conveyancers Disciplinary Tribunal will be reserved for serious cases. Its membership is to be drawn from conveyancers, lawyers and lay people. Conveyancers will not adjudicate over lawyers, as the Tribunal will be able to sit in Divisions.
The Tribunal may overturn any decision by a Standards Committee or the Legal Complaints Review Officer.
The Bill ends lawyers' exclusive right to carry out conveyancing work. The introduction of the new profession of licensed conveyancer stems from my 1997 Conveyancers Bill. I know the view has been expressed that there is already fierce competition in the conveyancing market. If this is the case then lawyers have little reason to be apprehensive about the reform.
The Bill will allow people such as legal executives to gain their own professional qualification that will lead to the ability to practice on their own account. I expect that, over time, there will be growing enthusiasm for this concept. In New South Wales in 1999, for example, it was estimated around 20% of residential conveyancing was carried out by licensed conveyancers, with many working for lawyers. Conveyancers may run their own practices or be employed by lawyers.
There will be much regulatory work required after the legislation passes: I expect rule making and approval and other regulatory matters to take about 18 months to finalise after enactment.
I now look forward to the Select Committee stage. There can be few Bills so likely to receive such intense legal scrutiny!
Thank you again for the opportunity to speak today.