LEGAL PRACTITIONERS (MISCELLANEOUS) AMENDMENT BILL

Second Reading

Adjourned debate on the question:

That this bill be now read a second time.

which the Hon. J.A. Darley has moved to leave out all words after 'That' and insert 'the bill be withdrawn and referred to the Legislative Review Committee for its report and recommendations.'

(Continued from 5 June 2013.)

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (15:55): I thank the honourable members for their contributions on this amendment bill. The Hon. Ann Bressington asked that the government explain how section 21 works in practice. Section 21 states that a person must not practise the profession of the law or hold him or herself out as being entitled to practise the profession of the law. Section 21 also lists a number of circumstances in which it will be held that a person is practising the profession of the law.

The examples given by the Hon. Ann Bressington—making telephone calls to assist a person or photocopying—would not generally give rise to an offence under the act, I am advised. This, however, depends on circumstances. If a person makes a telephone call to another person and, during that telephone conversation, falsely claims to be a lawyer, then an offence may have been committed.

The Hon. Ann Bressington also asked a number of questions about the impact that the bill may have on business. The government does not expect the compliance changes to have any detrimental effect on business and existing legal practices. The new provisions relating to costs disclosure are those proposed in the 2007 bill and are similar to those in use in other jurisdictions. The new provisions will ensure that clients engaging legal practitioners will be properly informed about the costs of the service to the extent that that is possible at the outset. This is simply good practice and will enhance the provision of services to clients.

Insofar as ILPs are concerned, they have been operating in New South Wales since 2001 and in other jurisdictions for at least five years. The government has no reports of adverse effects. The Law Society supports the introduction of ILPs, I am advised, and has advised the government that it has no knowledge of any reported concerns.

Trust account provisions are also based on the proposed 2007 provisions. They will introduce more detailed provisions for investigations and examinations of trust records and activities and require practitioners to report trust account irregularities to the society. This may be more onerous than current requirements but recent events support this higher level of scrutiny. The government is not aware of any adverse comments regarding the trust account provisions, which are supported by the Law Society.

It must be noted that the government tabled this bill in parliament in March 2012. The consultation process on this bill has been extensive and long. The Law Society—its members (including small practices and sole practitioners)—has made it known to all members that it supports this bill in its entirety, as does the Bar Association.

A number of questions were also taken on notice by the Attorney-General at the committee stage of this bill in the other place. I can now provide answers to those questions. The first question was: what was the total number of claims and total amounts claimed from the Guarantee Fund by Magarey Farlam victims? The Law Society has advised that while many of Magarey Farlam former clients made claims for their losses against the fund, those claims were not accepted because they had not exhausted existing rights as required by the legislation as it then applied.

Those claims then lapsed when their entitlements were met from other sources as part of an overall confidential settlement. In other words, no money has been paid from the fund to former Magarey Farlam clients with respect to the direct losses sustained by them as a result of the defalcation. However, a total of $570,761.79 was paid out of the Guarantee Fund to claimants who had incurred legal fees as a result of the application to the Supreme Court that was brought by the supervisor. Those costs were paid in accordance with orders made by Justice Debelle and were not the subject of individual claims against the fund.

The second question was: did the Magarey Farlam partners claim against the guarantee fund? If so, what amount did they claim and what amounts were paid? The Law Society has advised that claims were made by the Magarey Farlam partners; however, no payment was made from the fund and those claims lapsed with the confidential settlement.

The third question was: were all of the Magarey Farlam clients' assets fully accounted for? The answer from the Law Society to that question is yes. Forensic accountants were engaged by the supervisor and manager who traced all of the Magarey funds and Magarey Farlam clients' assets.

The fourth question was: were all dividends paid to the shareholders, including those who were initially missing or returned to companies as undeliverable? The answer is no. The Law Society has advised that the question is unable to be answered in the context of Magarey Farlam because the clients were not shareholders nor were there any dividends returnable or returned.

Finally, the fifth question was: what are the total itemised cost and expenses of the Magarey Farlam case for all parties, including the Attorney-General, the Attorney-General's agencies and officials, the society and its professional standards branch, the supervisor, the manager, the victims and the former Magarey Farlam auditors, Lawguard Management, law claims, the top-up insurers and any other entity? I am advised that no additional funding was allocated by the Attorney-General's Department or the Attorney-General's Office to the Magarey Farlam matter. Work undertaken in relation to this matter was done as part of normal business operations and cannot be separately identified.

The society has advised that, as the terms of the settlement agreement between the parties require the society to take all responsible steps to preserve confidentiality, the society was prevented from providing us with a response to questions about costs and expenses of the Magarey Farlam case for the victims, the former Magarey Farlam auditors, law claims and the top-up insurers. The costs for the supervisor and manager have been itemised as follows: supervisor client file maintenance, $184,320; supervisor general costs in taxable to 17 October 2008, $141,147.56; disbursements, $35,755.87; accounting, $39,020; forensic accounting, $153,856.50; counsel fees, $272,106.16; making up a total of $826,206.09. Manager fees came to $1,739,340.89; audit fees came in at $55,750; making a total of $1,795,090.89.

The costs to the society itself, other than the Professional Standards Business Unit, were neither itemised nor claimed. They have not been costed or estimated. As to the Professional Standards Business Unit of the society, while they form part of the general funding of the unit, they cannot be separately identified or estimated.

As to the final question—do members of the Legal Practitioners Conduct Board receive an annual payment or are they paid on a per meeting basis?—I am advised that members of the Legal Practitioners Conduct Board are paid an annual fee which is paid monthly. The board meets on a regular schedule every five weeks, plus special meetings as required. The deputy member is paid per meeting if required to attend.

In closing, I note that the Hon. Stephen Wade proposes a number of amendments that seek to insert the South Australian Bar Association into the act. The Attorney-General has advised both the Law Society and the Bar Association that the government is happy to support further work on how the independent bar in South Australia ought to be recognised in the act. This work is substantial and will involve the resolution of a number of interesting policy issues, including how to ensure that South Australia retains a fused profession whilst recognising that a number of practitioners have voluntarily chosen to practise solely as a barrister. The amendments filed by the Hon. Stephen Wade make no attempt to deal with these policy issues. These issues include, amongst others:

the attempt to give statutory recognition to an incorporated association without including any statutory safeguards about the governance of that organisation;

the relieving of a barrister's obligation to comply with the society's professional conduct rules when no work has been done on whether there are aspects of the society's rules that need to be incorporated into the Bar Association's professional conduct rules; and

the fact that no attempt has been made to reconcile the conceptual difficulties with including the Bar Association in the act whilst retaining section 6 of the act in its current form.

These flaws may be rectified with further work, but it is entirely premature for the Hon. Stephen Wade to attempt to include the Bar Association in the act without this work being done.

I am advised that the Bar Association and the Law Society have agreed to join a working group to be chaired by the Attorney-General's Department to do this further work. The Bar Association, the Law Society and the government are agreed that the passage of this bill should not be delayed until this work is completed. Accordingly, the government will be urging the council to oppose the amendments relating to inclusion of the Bar Association in the bill.

Finally, the Hon. Mr Darley has indicated his intention to refer the bill to the Legislative Review Committee. The government does not support a referral. This bill has had an extremely long gestation period and it is time that the South Australian legal profession is brought up to the standards that the rest of Australia is operating under. I commend the bill to members and indicate that should it receive its second reading I will be suggesting that the committee stage be adjourned to the next day of sitting.

Amendment negatived; bill read a second time.