LEGAL PROFESSION BILL

Second Reading

Adjourned debate on second reading.

(Continued from 13 February 2008. Page 1693.)

The Hon. M. PARNELL (15:35): The Greens will support the second reading of this bill, but not without some misgivings. I still count myself as a member of the legal profession, although I have not renewed my practising certificate because I do not expect, in my role as a member of parliament, that I will have many opportunities to represent clients in court or do any other legal work. Neither do I think it appropriate for members of parliament to be performing outside paid work, whether it be as a lawyer or anything else.

I signed the Supreme Court and High Court rolls in 1984 in Victoria, and the South Australian roll in 1996. However, in the 24 years that I have been admitted as a practitioner I have spent about only four of those in private practice. The bulk of my time as a lawyer has been spent either as an advocate or lobbyist with conservation groups or working for community legal centres. So I bring that perspective to this bill rather than the perspective of a private practitioner. It is important to note that, because this bill covers the whole of the legal profession and not just those working in private practice.

This bill revises the regulatory arrangements for lawyers in this state and seeks to implement a national approach, and I think that is a worthwhile aim. I acknowledge what the Hon. Robert Lawson said, that it is not completely uniform, but it is mostly uniform, and my personal experience in trying to be admitted as a lawyer in South Australia, coming from Victoria, was that it was a hard task. There was no clear, uniform profession and the mutual recognition arrangements were clumsy—in fact, it was easier to get a job as a lawyer in London with Victorian qualifications than it was to get admitted into South Australia.

The bill invites us to go to the threshold question of what is a profession. Most of us tend to think of the professions as areas that require great skill and areas of work where there are things called 'professional standards' that apply. However, the other important indicator of a profession is that it is an area of work, or a calling, where there is an ability to legally limit access to its ranks. That means, obviously, that you cannot call yourself a lawyer or practice as a lawyer unless you have the appropriate qualifications and endorsement from a regulatory body.

Given that lawyers are in this special position of being able to limit the numbers in their ranks, I believe some important principles flow from that. The personal test I apply when we as a parliament are considering laws that relate to a specific profession is that I try to take a constructively sceptical approach and ask myself whether or not the lawyers are just trying to preserve their turf. Are they trying to keep, for example, an area of work that is available to them but not available to anyone else? The other test I apply is in relation to consumer protection: what protection does the public have when things go wrong in their dealings with the profession?

That brings me fair and square to the main topic of debate so far from other honourable members and in the other place, and that is in relation to the Magarey Farlam trust account defalcation. One of the privileges that comes with being a lawyer and being in legal practice is that you are entitled to handle other people's money, you are entitled to hold trust accounts, and there are various rules and regulations that govern how that funding is to be held. In relation to the Magarey Farlam case, it seems quite clear that the $4.5 million stolen from the trust account has resulted in a great deal of pain and inconvenience to the victims of that defalcation.

I think that it is also fair to say that the case was badly handled by the Law Society and also by the government. I think that it is reasonable to say that the victims of Magarey Farlam were treated very unfairly, and I think that it is also fair to say that law reform is needed. So, I will be following very closely the committee stage of this debate in relation to Magarey Farlam. I know that amendments are on file, and I will be keen to try to get the best system we can.

One thing I want to do in my brief contribution today is to reflect on some of the comments of the Hon. Dennis Hood in his contribution yesterday. I think that he did a very fair and reasonable job in summing up the Magarey Farlam situation and the difficulties that arose. He again referred to the comments of Justice Debelle (as other members had), likening it to Bleak House, where the entire subject matter in dispute is eaten up by legal costs so that there is nothing left at the end of the day. It could well be that Magarey Farlam goes down that path if we do not manage this law reform process well.

My reason for responding briefly to the Hon. Dennis Hood's comments is that I disagree with him, and I believe that he slightly overstated the case when talking about the guarantee fund as a Law Society slush fund. I think he certainly makes a good case that the main contributors to the fund are the clients of law firms and the interest earned on their trust accounts. He makes the point well that one has trouble understanding some of these historical funding regimes and trying to work out why it is that this function is funded from that particular source of money.

That is a reasonable call, and it is one I have thought about many times over the years. At one stage, the beach sand replenishment program was funded from petrol taxes. I could not see any particular link as to why petrol taxes should fund it. Another current and ongoing example is the Residential Tenancies Fund. Basically, the interest that is earned on tenants' bond money funds the Residential Tenancies Tribunal. That tribunal is used 90 per cent by landlords, so that the tenants—the families who are renting and who have lodged security deposits or bonds—are funding a service that is used by landlords primarily to evict them or to recover other compensation from them.

We also have a situation I have raised here many times, where the retirement savings of our hardworking employees in the health department are funded by tobacco company shares, which raises the whole issue of ethical investments. So, I accept that it does not appear to make a lot of sense that some of these different legal functions are funded out of the guarantee fund or allied funds.

I would like to put on the record the fact that I believe that some of the recipients of that funding, the Legal Services Commission in particular and the community legal centres, are in fact very worthwhile organisations that deserve to be funded out of general revenue. However, in the absence of that commitment, these moneys, derived from interest on trust accounts, provide a useful source of funding. I think that society would be the poorer, and some of these useful organisations would struggle to survive, if it were not for that money.

I am more familiar with the community legal centres, and I can tell you that lawyers are employed, but they are underpaid and overworked, so I do object to the phrase 'slush fund'. Not all lawyers are earning significant six-figure salaries. There are many hardworking lawyers in the community sector who work for poor disadvantaged people or others for whom the legal profession provides no relief.

I also note that this money funds the Legal Practitioners Conduct Board which, of course, is a free service available to anyone to help resolve disputes they have with their lawyers. I think that it makes sense for the clients' money, as it has been described—the interest on the trust accounts—to fund a service like that.

The other recipient of some of this funding, the Law Foundation, is another important South Australian institution. I was reminded recently that the most recent proposal funded by the Law Foundation is a conference to be held on 13 March this year at the University of South Australia, sponsored by the Environmental Defenders Office, my previous employer. It is called 'Saving the last drop: water scarcity and the law'. There can be no more important topic for us to think about in parliament. That conference probably would not have gone ahead if it was not for a few thousand dollars, which is not much, that the Law Foundation has provided to the Environmental Defenders Office.

To finish my plug for that conference, I note that it is being opened by a former colleague of ours, the Hon. Nick Xenophon. I have made sure that on the program is a session on how people can best contribute to the Legislative Council's Select Committee on SA Water, a committee we chose to set up. I will take the opportunity to encourage the people attending this important water conference to engage with us and help us with law reform.

Overwhelmingly the bill deserves our support. The service to clients will be improved by having a more national profession, but I still have some concerns about whether we are dealing properly with the Magarey Farlam victims and those who inevitably but unfortunately will follow them when funds go missing from solicitors' trust accounts. With those words, I support the second reading of the bill.

The Hon. P. HOLLOWAY (Minister for Police, Minister for Mineral Resources Development, Minister for Urban Development and Planning) (15:47): I thank all speakers for their contribution to the debate. The government acknowledges the concerns over the defalcation at the Magarey Farlam firm. However, the structure and purpose of the funding arrangements have been in place for some time now—since 1969, in fact. The present act has been amended quite a number of times and the parliament has not seen fit to change those arrangements.

The government will move amendments in committee to clarify the circumstances in which a claim may be made. However, they will be consistent with the structure of the model legislation adopted in most other jurisdictions around the country. All other jurisdictions have a lawyers' guarantee fund, but none of them treat it as a fund of first resort. This bill is faithful to the model and the government's amendments will provide extra guidance for the Law Society on how to handle future claims.

I indicate that the government will be moving a handful of technical and other amendments in committee. An amendment will be moved to permit expenditure from the guarantee fund to allow the Law Society to pursue rights subrogated to it upon payment of a claim out of the fund. An amendment will be moved to clarify the circumstances in which a claim on the guarantee fund may be made. An amendment will be moved with regard to the power to levy the profession and also about the scope of the Supreme Court's power to delegate some of the day-to-day matters concerning regulation of the profession to the Law Society. When we return in a week and a half to debate the committee stage of the bill I will be happy to provide more detail on those matters, but for now I thank speakers for their contribution to the debate.

Bill read a second time.