Legal Practitioners (Miscellaneous) Amendment Bill

Second Reading

The Hon. R.I. LUCAS (Treasurer) (16:39): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and the detailed explanation of the clauses inserted in Hansard without my reading them.

Leave granted.

Mr President, the Legal Practitioners (Miscellaneous) Amendment Bill 2019 (the Bill) amends the Legal Practitioners Act 1981 (the Act), makes various amendments that improve the efficiency and operation of the Legal Profession Conduct Commissioner (the Commissioner) as well as amendments to improve and preserve the ongoing viability of the Fidelity Fund.

The Attorney-General receives regular communication from the Commissioner, Mr Greg May, around his work, themes within the profession and issues he is facing. This Bill stems from The Commissioner's work and experiences since 2014 in that role and seeks to streamline the Commissioner's work for the legal community and clients.

The most complex amendments in the Bill are the amendments that deal with the operation of the Commissioner, and the way in which charges are laid by the Commissioner.

The amendments centre on the time limits that apply to the Commissioner laying charges against practitioners for misconduct, and the ability for the Commissioner to apply for an extension of time where necessary.

These amendments were requested by the Commissioner after the Full Court of the Supreme Court, in the 2017 decision of Legal Profession Conduct Commissioner v Fittock [2017] SASCFC 169, held that an extension of time application is not an interlocutory matter and therefore must be heard by a three-member Legal Practitioners Disciplinary Tribunal (the Tribunal), rather than by a single member.

This decision has had a significant impact on the way the Commissioner conducts matters, and, if no legislative amendments were enacted, would greatly increase the expenses involved for every extension of time application. A number of improvements have been made to the provisions dealing with extensions of time, along with transitional provisions that are intended to mitigate the impacts of the decision made in Fittock.

The extension of time amendments will do four things. Firstly, the amendments allow an extension of time application to be heard by a single member of the Tribunal. Secondly, the time for the Commissioner to lay charges has been extended from 3 years to 5 years. Thirdly, the time will now run from when the Commissioner becomes aware of the conduct, as opposed to when the conduct occurred. As a result, it is hoped that fewer extension of time applications will need to be made by the Commissioner. Fourthly, it will be made it clear that an extension of time application can be heard at the same time as the merits of a matter. These amendments will apply to all new complaints received by the Commissioner after the commencement of the Bill.

Mr President, the other amendment contained in the Bill is the change to section 57A, which adjusts the levels of funding allocated from the interest that accrues from the monies in legal practitioners' trust accounts.

Currently, the Legal Services Commission receives 50 per cent, the Fidelity Fund receives 40 per cent, and the remaining 10 per cent goes to 'a person' nominated by the Attorney-General. The only 'person' currently nominated is the Law Foundation of South Australia (the Law Foundation), which therefore receives the entirety of the 10 per cent.

The amendment to s 57A is being undertaken as part of a range of measures to improve the ongoing viability of the Fidelity Fund. The Fidelity Fund is administered by the Law Society with one of its primary purposes being reimbursing people who suffer financial loss arising from an act or omission that involves dishonesty and results in a default of a law practice. The Fidelity Fund is also used to support various other functions under section 57(4) of the Act, such as the Commissioner and the Ethics and Practice Unit of the Law Society.

Revenue into the Fidelity Fund consists mainly of statutory interest allocation (which represents interest accumulated on law practice trust accounts), a proportion of practising certificate fees and investment income. Due to a number of factors, including a decrease in investment income and increases in expenditure for the purposes of regulating the profession, the ongoing viability of the Fidelity Fund is at risk.

The amended provisions reduce the proportion allocated to the Law Foundation from 10 per cent to 5 per cent, and allocates the remaining 5 per cent to the Fidelity Fund.

The amendments to the extension of time provisions will also assist the future viability of the Fidelity Fund by preserving the resources of the Commissioner and increasing his Office's efficiency.

The Bill also contains other minor amendments, including an amendment that clarifies that a law firm may list the details of historical wills on the Law Society's wills register without the client's consent without breaching their confidentiality requirements, so long as a good faith effort has been made to contact the client to seek permission.

Again, the Government thanks Commissioner Greg May for his work in this area and important role he plays in regulating the standards of South Australia's legal profession by investigation complaints any suspected misconduct by lawyers.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Legal Practitioners Act 1981

4—Amendment of section 14AB—Certain matters to be reported by Society

This clause corrects an error in cross-referencing.

5—Amendment of section 57A—Payment of interest accruing on trust accounts

Section 57A requires financial institutions to pay interest that accrues on a trust account maintained by a legal practitioner to the Law Society. The Society is currently required to pay 50 per cent of the money to the Legal Services Commission or a community legal centre, 40 per cent to the Fidelity Fund and 10 per cent to a person nominated by the Attorney-General. Under the section as amended by this clause, the Society will be required to pay 45 per cent, rather than 40 per cent, of the interest to the Fidelity Fund. The remaining 5 per cent will, at the direction of the Attorney-General, be paid either to the Fidelity Fund or to a person or persons nominated by the Attorney-General.

6—Amendment of section 72—Functions

Section 72 currently permits the Legal Profession Conduct Commissioner to fix, and require the payment of, fees. Under the section as amended, the Commissioner will also be able to waive or refund fees.

7—Amendment of section 77N—Investigation of allegation of overcharging

Section 77N(7) provides that if the amount in dispute in an overcharging complaint is $10,000 or less, the Commissioner may make a determination as to whether there has been overcharging. This clause amends the section so that the Commissioner can make a determination as to overcharging if the disputed amount is $50,000 or less. The Commissioner cannot make a determination as to whether there has been overcharging unless there has been an assessment of the costs by a legal practitioner and the parties have been invited to make submissions on the assessment.

8—Amendment of section 80—Constitution and proceedings of Tribunal

Section 80 is amended by this clause to make it clear that—

the Legal Practitioners Disciplinary Tribunal may consist of only one member for the purposes of hearing extension of time applications; and

the Tribunal may hear and determine an application for an extension of time to lay a charge at the same time as it hears and determines proceedings relating to the charge.

9—Amendment of section 82—Inquiries

This clause amends section 82 so that a charge may be laid before the Tribunal within five years of the person laying the charge becoming aware of the conduct to which the charge relates. Currently, a charge must be laid within three years of the relevant conduct.

10—Insertion of section 95E

This clause inserts a new section.

95E—Wills register

Proposed section 95 provides that a legal practitioner does not breach a duty of confidentiality owed by the practitioner to a client for whom the practitioner has prepared a will merely by publishing on a wills register, without the client's consent, the name and date of birth of the client or the date of the will. This principle applies only if—

the will was made before the commencement of the new section; and

the practitioner has been unable to contact the client despite having taken reasonable steps to do so for the purpose of obtaining the client's consent to publication of the information.

11—Amendment of Schedule 1—Incorporated legal practices

The purpose of the amendment made by this clause is to clarify that the term 'approved form' in Schedule 1 means a form approved by the Supreme Court.

Schedule 1—Transitional provisions

1—Transitional provisions

The effect of the transitional provisions is as follows:

the amendment to section 77N of the Act made by clause 7, which broadens the Commissioner's capacity to make determinations in respect of overcharging, applies in relation to a complaint of overcharging received by the Commissioner after the commencement of the amendment irrespective of whether the final bill to which the complaint relates was delivered to the client before or after that commencement;

section 80 of the Act as in force before the commencement of the amendments made by clause 8 continues to apply to an application for an extension of time heard after the amendments commence if the charge or charges in relation to which the application is made arise from a complaint made, a direction from the Attorney-General or Law Society given or an investigation by the Legal Profession Conduct Commissioner commenced on the Commissioner's own initiative before that commencement;

section 82 of the Act as in force before the commencement of the amendment made by clause 9 continues to apply in relation to a charge laid before the Tribunal following the commencement of the amendment if the charge arises from a complaint made, a direction from the Attorney-General or Law Society given or an investigation by the Legal Profession Conduct Commissioner commenced on the Commissioner's own initiative before that commencement.

The Hon. D.G.E. HOOD (16:40): I rise to speak in support of this bill, which amends the Legal Practitioners Act 1981 and introduces changes to improve the efficiency of the Legal Profession Conduct Commissioner's operations. In addition, it seeks to preserve the ongoing viability of the Fidelity Fund. I am aware that the impetus for this bill came from the commissioner himself, with the proposed changes arising from his experiences and observations throughout his time in this position since 2014.

As members would no doubt appreciate, the commissioner's office has the vital mandate of overseeing the conduct of all lawyers throughout South Australia from both the private and public sectors, as well as those from interstate who to choose to practise here on various occasions. It assists in regulating the standards of South Australia's legal profession by dealing fairly and effectively with complaints about lawyers, investigating any suspected misconduct and determining appropriate disciplinary action when and where required. Thankfully, that is not terribly often.

In acknowledgement of the important functions of this role, the Attorney-General has responded to the commissioner's guidance and insight in an effort to streamline his undertakings for the benefit of both the legal community and its extensive client base. Some of the key objectives of this bill are, firstly, to address time limits that apply to the Legal Profession Conduct Commissioner when laying charges against practitioners and the ability of the commissioner to apply for an extension of time. This is a very important initiative, in my view.

Specifically, the amendments pertaining to this matter allow for such applications to be heard by a single member of the tribunal, as opposed to three members. It extends the time for the commissioner to lay charges from three to five years; it alters the point at which time limit commences, now being from when the commissioner becomes aware of the conduct, as opposed to when it actually occurred; and finally, it makes it clear that both an application for an extension and the actual merits of the matter can be heard simultaneously. This should make for a more streamlined, efficient system, in my view.

As a result of these proposed changes, it is expected that the expenses for hearing each application will be greatly reduced and that fewer extension-of-time applications will be made, consequently conserving resources in the Fidelity Fund. Again, this is another good initiative, in my view.

The other fundamental aim of this bill is to adjust the levels of funding allocated from the interest that accrues from moneys in the legal practitioners' accounts to the relevant entities. As it stands, the Legal Services Commission receives some 50 per cent of these finances, the Fidelity Fund collects 40 per cent, and the remaining 10 per cent is directed to—and I say this with quotation marks—'a person' nominated by the Attorney-General, which of course is currently the Law Foundation of South Australia (which is why I used the term 'a person' in quotation marks).

I understand that, due to various factors, including a reduction in the investment income combined with increases in expenditure for the purposes of regulating the profession, the viability of the Fidelity Fund has been deemed to be at some risk. In an effort to sustain this essential resource, the provisions in the bill would decrease the proportion allocated to the Law Foundation from 10 per cent to 5 per cent and distribute the residual 5 per cent of the Fidelity Fund—a straight swap. The Fidelity Fund, which is of course maintained by the Law Society of South Australia, primarily exists to reimburse people, or their personal representatives, who have suffered loss due to a fiduciary or professional default, where there is no reasonable prospect of recovering the full amount. Unfortunately, we do see that from time to time, albeit fairly rarely.

There is no doubt a very necessary claim of last resort for South Australians in this predicament pursuing appropriate redress. However, as asserted by the Attorney-General in the other place, its moneys are also utilised for a vast number of other purposes. For instance, it is available to meet all of the expenses incurred by the Legal Practitioners Education and Admission Council (LPEAC), the Board of Examiners, the Legal Practitioners Disciplinary Tribunal and the Legal Profession Conduct Commissioner.

It can also provide for the proceedings instituted by the commissioner for the adjudication of legal costs, the payment of honoraria to members of the LPEAC and the tribunal, in addition to funding the salaries of the commissioner and his or her staff—his, currently. There are indeed many other worthy causes that rely on this fund which I have not listed, and it is therefore imperative that our parliament initiates reform, where possible, to ensure its longevity.

I note in the committee stage of the bill's debate in the other place that concerns were raised in relation to the impact these amendments will have specifically on the Law Foundation, which does make a valuable contribution to the legal profession through supporting and espousing the advancement of academic research and education in this particular field.

The government certainly appreciates its work and although the amount to the foundation, from the accrued interest and the legal practitioners' trust, will be reduced, the Attorney-General has indicated that it has currently accumulated a considerable reserve of over $7 million. I certainly agree with her assessment in this instance that the Fidelity Fund must be prioritised in these circumstances.

The Marshall Liberal government is committed to preserving the integrity of the justice system through collaborating with those who are equipped with the necessary knowledge and expertise to advise how best practice can be established. Given the previous Labor government was also made aware of some of the inefficiencies we are seeking to address through these amendments but did not take remedial action in response to recommendations, I am pleased that the current government is taking a pragmatic approach to the weaknesses that have been identified within the certain processes that I have outlined, and many that I have yet to touch on.

I am confident that the reforms provided for in these amendments are in the best interests of all South Australians and I expect that they will receive swift passage through this place.

Debate adjourned on motion of Hon. I.K. Hunter.