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House of Assembly - Fifty-First Parliament, Second Session (51-2)
2007-10-16 Daily Xml
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LEGAL PROFESSION BILL

Second Reading

Adjourned debate on second reading.

(Continued from 26 September 2007. Page 933.)

The Hon. M.J. Atkinson interjecting:

Mrs REDMOND (Heysen) (17:01): As the Attorney points out, I was quite early in my remarks after the first 4½ hours of debate on this bill. He will be pleased to know that, having reached clause 140 or thereabouts, I should not take so long to go through the remainder of the bill. I indicate that, provided the Attorney does not heckle me during my comments, I am likely to be much quicker than I was in the first part. I want to talk about a few things and I do not want to rush consideration of the bill because a number of issues are still to be addressed and, in particular, the most important part is the issue of the guarantee fund. I got to division 8 of chapter 2 relating to the local registration. A couple of salient points related to clause 172, which allows consideration and investigation of both applicants and locally registered foreign lawyers.

It is a corn on uniform provision, which gives extensive power to the society to investigate people. It is in addition to the consideration of the suitability matters defined in clause 9. Also clause 175 gives power to the society to exempt Australian registered foreign lawyers from compliance with a specific provision of the act or the regulations. There does not appear to be any equivalent provision for the society to grant any sort of exemption for local or interstate lawyers, only for Australian registered foreign lawyers. Therefore, I will be seeking from the Attorney in due course and probably at the committee stage an indication as to what they have in mind in deciding that there should be a power in the society to exempt Australian registered foreign lawyers from any or all of the provisions of the legislation.

Part 7 deals with community legal centres. According to the information that has been supplied to me, it appears to me to be not classified as either core uniform, core non-uniform, non-core, or even reflecting the existing Legal Practitioners Act. I say that by way of observation, but the most important part of that section is that some later provisions allow moneys to be paid for the funding of community legal centres through various mechanisms but, most importantly, clause 179 spells out that an Australian legal practitioner who provides services on behalf of a community legal service or legal centre is not excused from compliance with professional obligations.

There is also a provision to allow the community legal centre to be subrogated to the rights of a person whom they have assisted. If, for instance, someone who comes to a legal centre with a good claim is assisted by a community legal centre to pursue that claim and is in due course awarded costs, then those costs would flow to the community legal centre rather than be a windfall to the person who was assisted.

Chapter 3 deals with the conduct of the legal profession and provides that the society (that is, the Law Society) may make rules for both Australian and foreign legal practitioners, including rules as to standards of conduct; and specifically their rules are not limited to things which are authorised under this act, but they cannot be inconsistent with anything that is in the act. The society is also specifically authorised to make rules for incorporated legal practices and for multidisciplinary partnerships. Failure to comply with those rules is essentially capable of being classified as either unprofessional conduct or professional misconduct which, as I have spelt out previously, is the more serious form of conduct which is considered inappropriate.

We then come to part 2, which deals with trust money and trust accounts. This is where we start to get into the area which I think, at the present time, is the most significant in terms of this legislation. Essentially, much of it reflects what is already in our Legal Practitioners Act 1981, although it does define somewhat more tightly what is included and not included in trust money, in particular to exclude money that might be held by a law practice for or in connection with financial services which would normally come under the Australian financial services licence provisions.

The Law Society has specifically given power to determine what is and what is not trust money. Interestingly, because of the consequence of having incorporated legal practices and practices which are obviously national in their nature, the bill defines trust money to include specifically trust money which is received in this jurisdiction even if the practice does not have an office here, as well as trust money received in another jurisdiction if the law practice has an office here but not in the jurisdiction in which the trust money has been received.

Protocols are set out in the legislation to determine where and when money has been received into trust. It strikes me as a little odd that money received here is trust money here for the purposes of this act even if there is no law office here. However, conversely, money received in another state is trust money here if we have got an office here but not in another state. That is the way I read the legislation. It seems to me that that would have to be then inconsistent with what would happen in another state where they would be saying, 'Well, notwithstanding that your firm has not got an office in Victoria, if the money is received in Victoria we want to claim it as trust money in this state.' The Victorian trust people then say, 'Well, hang on a minute, no, it was received in Victoria. Notwithstanding that you do not have an office in Victoria, it is trust money in Victoria.' I do see a potential problem in that area; and, perhaps, it is something I will want to explore during committee.

That follows through then to clause 203, namely, if a practitioner receives trust money they must have a trust account in this jurisdiction, and that is one of the core uniform provisions of the bill. As I said, basically, a lot of this maintains the regime that already exists—although with somewhat different wording—in relation to the deposit and withdrawal of moneys from the trust account. Clause 215 specifically deals with the situation whereby if a practitioner causes a deficiency in a trust account or fails to pay or deliver money, the maximum penalty has been increased to $50,000.

There is also a provision relating to a practitioner who becomes aware of an irregularity being required to give notice to the society. I was interested in the use of the term 'becomes aware', because it seems to me that you could, perhaps, be a relatively junior practitioner who might become suspicious about something that is going on but not necessarily be aware in the sense of knowing for sure that something is going on which might be untoward in terms of how the trust account of the firm at which you are working is being managed.

I may also ask about that issue of a practitioner becoming aware and exactly at what point one is deemed to become aware and have that obligation imposed to give notice to the society. There is also a provision that a practitioner must not knowingly receive money under a false name; because, of course, there was always potential for the problem of practitioners, who knowingly have clients who may be involved in nefarious activities, needing large amounts of money to be parked somewhere and potentially being parked in a solicitor's trust account. I take it that that is what that particular clause is seeking to address.

I make no complaint about it, I just make the comment that that appears to be what is being sought to be addressed. At clause 220 and subsequent to that we deal then with what are now called investigations and external examinations. At one point they were called internal audit and external audit. What was involved was that people who were known throughout the profession as the Law Society's auditors came out to legal practices on a supposedly random basis to audit the accounts.

In addition to that, whether or not they had that happen regularly, every year each practitioner had to pay an approved auditor to undertake an audit which was then reported back to, I think, the Supreme Court. The process is not unlike what already exists. They did change the name sometime ago so that the internal auditors became known as Law Society inspectors and the external auditors were simply known as auditors. The provisions largely reflect what was in the Legal Practitioners Act, although I must say that I had some considerable concerns about the way in which the internal audit process previously operated.

As members may be aware, I ran my own very small legal practice in Stirling before coming into this place. I ceased practising and did not take out a practising certificate once I was elected. However, during the course of running that practice for several years I was audited on a surprisingly large number of occasions by these internal Law Society auditors. As I said, I already had the annual audit with the auditor I had to pay for, but in addition I did have a large number of examinations by the people who were known as inspectors (and will now be known as investigators) from the Law Society.

Ultimately I formed the view that they were examining my accounts, not because 5¢ was ever missing or unaccounted for—they were very straightforward. I believe that I was being audited so frequently because it gave them the opportunity to do what was obviously going to be a straightforward, uncontentious audit. They could put a tick in a box to say they had completed an audit. They had the benefit of a lovely day in Stirling with a very straightforward set of books. My office was never computerised. It was always only ever me as a practitioner, and there was a great limit on the amount of money that was being held in my trust account because, at any given time, it was usually only from a single conveyancer or estate and, as a result, we were audited far more frequently than we needed to be.

I got to the point before I finished practice where I was notified yet again that the Law Society people were coming to inspect my accounts. I said, 'You can come when you have shown me that you have audited everyone in the state as often as you have come here.' I had formed the firm view that I was being picked on, not because I had done anything wrong or anything was missing but, rather, because I was an easy target and they got to tick an easy box. The process will basically stay the same as it has been until now.

I note that, in addition to the powers set out in terms of both the investigations and the internal examinations in these clauses, additional powers set out in Chapter 6 are quite extensive. Essentially, clauses 221 and 225 entitle investigators from the society or external examiners to carry out what they call a routine investigation on a regular basis to ascertain whether a practice has complied with the provisions of the act and to detect fraud and prevent fraud. Clause 221 provides that 'this subsection does not limit the scope of the investigation or the powers of the investigator'. It then refers to Chapter 6 and the powers under that section being specifically incorporated.

Chapter 6 encompasses clauses 448 to 466. Those clauses apply to trust account investigations (the internal investigations conducted by the Law Society) and examinations (external examinations by paid auditors). In addition to those monetary-type things, it applies to complaint investigations (where someone has complained about the behaviour of a legal practitioner) and incorporated legal practice audits. In essence, the investigator can require access to documents and information relating to the affairs of the practice that he reasonably requires. Failure to comply has a $50,000 penalty and, potentially, one-year imprisonment. It is quite significant.

One will see that the penalties in the bill have been increased significantly, often from $10,000 up to $50,000, but this is the first provision in the bill where there is a penalty of one-year imprisonment for failure to comply with an investigator's request for information and access to documents. Similarly, they can require a practitioner to produce specified documents and provide written information—if necessary on a statutory declaration—and to otherwise assist with and cooperate in the investigation. They are not even excused because there is the possibility of self-incrimination, although anything they say that is incriminating can be used only in proceedings under this act. Failure is potentially a matter of unprofessional conduct and/or professional misconduct.

In addition to all that, these inspectors have powers of entry and search, including the power to operate equipment, take possession of equipment, use and photocopy, take away computers. They can also require persons on the premises to state various things. I am sure the Hon. Graham Gunn (if he were here to comment) would be horrified by what they can require. Clause 456 provides that they can request any person on the premises:

(i) to state his or her full name, date of birth and address;

(ii) to answer (orally or in writing) questions asked by the investigator relevant to the investigation;

(iii) to produce relevant material;

(iv) to operate equipment or facilities on the premises for a purpose relevant to the investigation;

(v) to provide access (free of charge) to photocopying equipment on the premises the investigator reasonably requires to enable the copying of any relevant material;

(vi) to give other assistance the investigator reasonably requires to carry out the investigation;

(k) do anything else reasonably necessary to obtain information or evidence for the purposes of the investigation.

It is a comprehensive set of powers for someone entering the premises. It is 'any person on the premises' so it could be the secretary. It will bind not just the practitioners bound by this bill, but also anyone else. In addition, there are specified powers for the investigation of incorporated legal practices and multidisciplinary practices, as well. As I have indicated already, there are penalties for obstruction, as well as potential findings of unprofessional conduct and/or professional misconduct in relation to those issues. They have ramped up significantly the powers of inspectors to enforce cooperation in any investigation undertaken either by inspectors or auditors.

In relation to the combined trust account, by way of background explanation I indicate that the system is basically the same as it has been for some time. When you are a practitioner you may receive money into trust. That money does not sit in the trust account. It has to be kept in a separate account from the office account. That money is put into the trust account, but every six months you are required to do a calculation. In essence, subject to a formula, two-thirds of the money held in the trust account went downtown to the combined trust account. That pot of money—which was two-thirds of all the money held in all the solicitors' trust accounts around town—went down there.

There were some ifs, buts and maybes about that in the sense that there is a formula to calculate it. If you were going to have a call on the money in the trust account shortly after the deposit was due, you could excuse yourself but, essentially, that money became what is known as the combined trust account. Once the combined trust account is established, interest would be earned on the trust account. That is then put into a separate account which is called the statutory interest account. So you have the trust money from the various practitioners all around the state that comes into the combined trust act. That earns interest, and that money is known as the statutory interest account.

The society then has flexibility about investing that money and it can deduct the costs of investments and so on but, essentially, that statutory interest account is then diverted in two directions—five eighths of it goes to the Legal Services Commission and three-eighths goes to the guarantee fund. I indicate that we have not yet filed an amendment, but we are thinking about and may file in the other house in due course an amendment in relation to what happens in regard to this. There is a big question mark in my mind, for a start, about the whole philosophy behind why that money would go to those two places. I have read all the authorities, and there is quite an extensive list of legal authorities which I do not intend to take the time of the house on at the moment, and there is clear legal authority for the notion that, obviously, that money that a solicitor is holding in trust is in trust: it is notionally money that belongs to the client or whoever has the legal entitlement to it.

Therefore, interest earned on it, notionally, should belong to that person. There are good, practical reasons why it becomes impossible to sort out how to actually pay out that interest to those people, so I make no objection to the idea that, once that money comes into a trust account, it is quite sensible—and, in fact, a protective mechanism, in my view—to have two thirds of the money head downtown into this combined trust account. But, notionally, it strikes me as odd that the money, which essentially as a matter of pure legal theory belongs to the people who have their money in that solicitor's trust account, who are therefore clients of a private solicitor, earns interest and five eighths of it is paid to fund the Legal Services Commission. As I said, we are not planning to try to amend that, and that is the system as it operates, but it does strike me as odd.

I was just having a quick look at the Auditor-General's report at page 623 or thereabouts, and the Legal Services Commission last year had a 47 per cent increase in the amount of money it gets from the Legal Practitioners Act. So, what happens at the moment is that this money comes in from the various trust accounts all around the state and it gets into the combined trust account and the interest on it becomes the statutory interest account, and five eighths of that goes to the Legal Services Commission, which last year meant that it went from $2.946 million in 2006 to $4.336 million in 2007, a 47 per cent increase. So there is a considerable amount of money that is going through to the Legal Services Commission. As I said, the other three-eighths goes to the guarantee fund.

As I said, we have drafted an amendment but we have not decided to file it in this house because we want to think about it and whether there is a better way to do it. Clause 238(6) of the bill puts a cap on the amount that can be held in the guarantee fund. This guarantee fund is exactly the fund that we need to back up against defalcations by anyone who nicks off with trust money, basically. Yet, the act at the moment puts a cap on that, and the cap is this: the maximum amount in the guarantee fund is essentially $7,500 per practitioner in the state. That is exactly what applies at the moment. I have checked the Legal Practitioners Act, or whatever the 1981 act was called, as against clause 238(6) of the current bill, and it is exactly the same in its wording. It states:

If on 30 June in any year the amount of the guarantee fund...exceeds an amount calculated by multiplying $7,500 by the number of local legal practitioners on that date, the society must hold the excess in the statutory interest account, to be paid or applied by the society to the Legal Services Commission, or for any purpose approved by the Attorney-General and the society.

That strikes me as an unnecessary limitation on the amount held in the guarantee fund, particularly when, in light of the other amendments we are proposing to introduce, people are worried that there might be such a run on the guarantee fund that it would run out of funds. So, as I said, there is no apparent reason to me why that fund is capped in the way it is. There is a separate cap that I will talk about later, which is the cap on the payments out, and that is another area we will try to correct, but the cap on what is actually in the guarantee fund strikes me as an unnecessarily restrictive provision and one that we will probably seek to address.

Before I get onto what then happens with the guarantee fund, I will cover in order in the legislation a couple of the other things, that is, the specific requirements for costs disclosure and the adjudication of costs disputes. Essentially, a lot of these things were already provisions which practitioners generally obeyed and which were covered often in professional conduct rules and have now been brought into the legislation. Essentially, unless you are classified as what is called a sophisticated client, any fee that is likely to be over $1,500 for work performed by a solicitor will mean that that solicitor has to, in writing, either before taking the engagement or as soon as practical after taking the engagement, provide a whole series of written statements as to the likely costs and various aspects about costs that are often the subject of disputes. Again, I make no complaint about it: I am just interested that it is now put into the legislation.

One of the other things which I was quite curious about is what is now called uplift fees. A lot of people assume, because they watch a lot of American television, that we have contingency fees in legal practice. That is, we take on a case on the basis of a deal with the plaintiffs that, if we win the case for them, we will get half of the outcome and that we will not charge them anything if we do not win. Indeed, some firms around the place advertise 'no win, no fee' and so on. In fact, it has never been lawful in this state to have a contingency fee agreement in the sense of taking a percentage of the outcome.

There has been what was called a contingency fee agreement—and I think the actual format was in the back of the professional conduct rules—but it was restricted to a situation where you could agree to take on a case on the basis that you would not charge costs unless you were successful and, if you were successful, the person you acted for would pay a fee which could be up to double the Supreme Court rate. I did one of my last cases on a contingency fee basis because I had a lady who had a significant problem, who could not afford to pay me. I took it on and I think I charged her 1½ times the Supreme Court rate. These things were not used very often because so many of the firms downtown were already charging as their regular fee double the Supreme Court rate, so there was no benefit to them in taking on a contingency fee on the basis that they would charge double the Supreme Court rate if they won because that was already their rate of charge anyway.

The interesting thing about the way these uplift fees (as they are now called) are going to work is that, whilst the legislation states that there are no such things as contingency fees, as I read it, uplift fees essentially replace what we used to call a contingency fee in this state but they provide that you can charge additional legal costs on successful completion and those costs can be up to 25 per cent more than what you would otherwise have charged.

For someone like me who charged at the recommended rate—and it was a bit like a scheduled fee or the Medicare rebate fee for a medical practitioner—that would restrict me to charging 1¼ times the rate set by the Supreme Court. However, for a firm, for instance, that already charges four times the rate of the Supreme Court, they could charge five times the rate of the Supreme Court. So, in fact, the uplift fees strike me as being more dangerous for potential claimants who do not have the money to pursue a claim than would have been the case had we stuck to the old system.

Professional indemnity insurance is relatively self-explanatory. As it says, it is an insurance policy. A practitioner cannot practise in this state without holding professional indemnity insurance and it takes up only one clause of the bill. We now move on to the most important part of this bill, which is the Legal Practitioners Guarantee Fund at clauses 299 to 349. There is a mixture in here of core non-uniform and core uniform, and at the very end a few clauses reflect largely the existing 1981 act. But the key area where we think that there is need for reform is this aspect. I do not know how many members of this house are aware of the case of Magarey Farlam, but that was a reasonably prominent law firm in Adelaide with some terrific practitioners but they had a financial controller who, over a period of years, stole some $4.5 million from the funds held in that firm's trust account.

For years now the innocent clients of that firm have been trying to get back their money. I would have understood, as a practitioner, paying my money down to the combined trust account and knowing that a guarantee fund was set up that they would automatically be entitled to their money. There they were, innocent clients; who had money in trust and that money (totalling $4.5 million over a period of years) was taken by someone employed by the firm. That person is obviously being prosecuted but I would have thought that, given the existence of a guarantee fund, they would be paid out. However, they have faced all sorts of problems and significant legal costs over a period of years. I am aware of some people who have expended already over $100,000 in pursuing legal claims to get back their own money that was stolen from a solicitor's trust account.

That, to me, is unjust. I cannot blame the Law Society because the Law Society, which runs the guarantee fund, states that the act provides that it is the fund of last resort, and that is exactly what it does. It basically says, 'To you, poor innocent person who has had your $1 million stolen by someone taking it out of a solicitor's trust account (be that a solicitor or a financial controller or anyone else), we recognise that you have had your money taken, but there are several impediments. The first impediment is that we are not going to be the fund of first resort but the fund of last resort.

So, we are going to require you to sue everyone else in order to then come to us if you are unsuccessful.' Of course, it is a costly, expensive, time-consuming and highly stressful exercise for people who have already often lost a large part of their asset base because of the theft in the first place. When you understand a bit about some of the mechanisms used by the person who is alleged to have taken this money, it is clear that any action like that is going to involve an action against the partners (which they probably would resist), and an action perhaps by them including their auditors thereby joining the auditors, bankers and insurers into the process. Very quickly, as it was bound to, it became a massive quagmire of legal argument.

Indeed, there have even been cases on the issue of what happens to the money that is left in the trust account. Once it is in a solicitor's trust account, is it all intermingled and should everyone who holds money in that trust account get a pro rata share of what is left or should the people whose money was not actually taken or tampered with by this miscreant be allowed to get their money out and go on their merry way while the others seek redress through other channels? There have even been cases that have gone to the Supreme Court and then an argument with the Attorney-General about whether they were entitled to recover their costs. It has gone all the way to the full court and, happily, the full court has said, ' Yes, these people are entitled to recover their costs.'

In my view, this makes it a really untenable position for the innocent people who had every reason to believe that a trust account would be safe—and the name implies that it is being placed on trust with a solicitor who supposedly is subject to all sorts of rules, regulations and controls to ensure that they do the right thing. One would think that it would be the one place in the world that one's money would be safe, yet these people have faced massive costs in trying to get their money back.

So, we propose to address this. In particular, we would say that this guarantee fund—which, as I said, we do not necessarily think should be capped as to how much is in it the way it is currently—should be the fund of first resort. In our view, if you lose money because the solicitor nicked off with the money that was in your trust account, then you should be able to go to the guarantee fund and get it back, and the guarantee fund can chase up whoever it says is liable for it. It is not reasonable to make the people who have innocently had their money stolen to do the chasing. In our view, that is precisely what the guarantee fund is for.

The first change that we will seek to make is to make it the fund of first resort and then subrogate the guarantee fund for the rights of the people whom it has paid out. So, clearly, if it pays out $100,000, it has the right to go and chase whoever it says should be liable for it. We also want to make it absolutely clear that the guarantee fund should pay the reasonable party/party costs of those who have suffered because of the default. I do not want to go into a lengthy dissertation about what is meant by party/party costs but, essentially, what you recover from the other side will generally be based on what the Supreme Court recommended rate would be for what is happening, and that is essentially what would normally be approved as costs in this or in other circumstances.

So, we believe that they should get their costs. Further, we believe that payments from this fund should not be capped at 5 per cent as they are at present. My understanding is that the fund currently has about $20 million to $21 million in it. The provisions in the existing legislation and indeed in the bill which say that it is to be capped at 5 per cent mean that the limit on a claim is going to be $1 million; indeed, it will be the limit on the combined total of all the claims in relation to this whole Magarey Farlam quagmire.

Our view is that everyone should be entitled to get their money back, in particular, the Magarey Farlam people, and we will address that with a special provision in the transition provisions in the schedule to the bill. As a commonsense, reasonable approach they should be entitled to get their money back, to get it straight away from the guarantee fund, to get the costs which should therefore be limited if they get their money straight away, and they should not have their overall entitlement stopped in that way.

Recognising that there is the potential for another Magarey Farlam, theoretically, proper work should be done by the auditors, and the Law Society internal investigators should not waste their time with little practitioners like me who have never had 5¢ missing but actually go after the people who really need to be checked on and looked at fairly closely. If investigators did the job they should have been doing all along—instead of wasting time with little practices like mine—in my view, we would have much less likelihood of Magarey Farlam occurring again. Nevertheless, we recognise that there is potential for that to occur, so we propose that the limit for a claim be put at 30 per cent. That is one of several mechanisms to put the limit of the claims at 30 per cent of the amount held in the guarantee fund. We also need to bear in mind that I had already referred to the issue of how much is in the guarantee fund. It seems to me to have been artificially kept lower than it needs to be, and there is no reason why that guarantee fund should not be quite a bit higher.

That said, there seems to be a big question mark over clause 331. When I looked at clause 331 it did not appear to classify—according to the documents sent to me—as core uniform, core non-uniform, non-core, or coming out of the existing act. Clause 331 provides that, if necessary (if the guarantee fund is running out of money), we can make a call on practitioners. This gives the Attorney-General some discretion as to whether he exempts certain groups of practitioners. Basically, he can make a call on all practitioners. I do not know about anyone else, but that seems to me to be unreasonable. I do not know why it would be the case that an honest, hardworking practitioner who has done nothing wrong should have to pay the penalty for a fellow practitioner who has done something very wrong and taken money from the trust account to which he was not entitled. I think that should be very much a last resort.

It seems to me that we have several other things that we can do. We can stop putting an artificial limit on how much is in the guarantee fund; we can put a 30 per cent cap on the amount of any one claim against the guarantee fund so that there is the ability to retain at any time 70 per cent of the fund; and we could also, of course, readjust the diversion. As I said, at the moment five-eighths of the statutory interest account goes to the Legal Services Commission and three-eighths to the guarantee fund.

Whilst I understand the reasons for not paying the interest to the client—who notionally would be entitled to it—it still seems to me that most of them would be horrified if they thought that the money that they were not getting in interest was not going to legal education or to the guarantee fund to ensure that everyone's money held in a solicitor's trust account was safe but was in fact paying, in part, for the existence of the Legal Services Commission; that is, paying the legal costs of people who do not go to private solicitors. I think that most people in that situation would be horrified. It seems that, philosophically, rather than calling on the practitioners throughout the state, who have not done anything wrong, to make a contribution themselves, it would be smarter to re-divert that money instead of sending it to the Legal Services Commission, and send it to the guarantee fund, if there was going to be some sort of a shortfall. I think that there are some other mechanisms that should be seriously looked at, and we will certainly move to try to address some of these issues.

In terms of the information that I have, we received advice during the briefing that the practitioners in New Zealand were in fact asked to contribute $10,000 each. I know, as a sole practitioner who ran a very small practice and who desperately tried not to overcharge my clients and to practise with the way I thought the profession should be practised, that $10,000 at certain points in my running of that practice would have broken it. I would have ended up going out of business because of a call made on me, which I think would be totally unnecessary. There are other mechanisms that we can use and that we should use in order to deal with this particular issue. I will deal more with that tomorrow when we deal with the proposed amendments. I will quickly finish my comments in relation to the rest of the bill.

There are only a few sections to go, and they deal with complaints and discipline. Essentially, that section appeared to be a combination of the existing Legal Practitioners Act and the provisions of what is called the 'model code'; so there were core uniform and core non-uniform provisions. Essentially, it continues in existence—although it does not use that wording—the Legal Practitioners Conduct Board, and it is empowered to investigate issues where it suspects that there could have been unprofessional conduct, or the more serious professional misconduct.

Those investigations can be initiated by way of a complaint from some person who is disgruntled with a practitioner, or the board can initiate the investigation of its own motion if it suspects that there has been unprofessional conduct or professional misconduct. If the board is satisfied that there has been professional misconduct it is under an obligation to immediately report that to the Attorney-General and to the Law Society. If necessary, if the professional misconduct involves behaviour of the kind which would be a breach of the law, the board should also report it to the relevant law enforcement authorities.

The board has power to reprimand practitioners, to impose conditions on practising certificates, and it can even order a practitioner to make a specified payment. Interestingly, there is a specific provision that requires that complaints of overcharging must be investigated unless they are frivolous or vexatious. I am well aware that complaints about overcharging are the most common basis for complaints. They are by no means the only complaints, but the area of complaints about costs and charges lead by a large majority to the most complaints to the Legal Practitioners Conduct Board.

What interested me about the provision that the board must investigate, unless there is the idea that the complaint is frivolous or vexatious, is that it appears to apply only to the complaints about overcharging, at least in my reading of it. I would like to see it actually apply to all complaints. I had a complaint lodged against me which was completely frivolous and vexatious. The complaint was made by two people who were on the other side of a matter I was dealing with. I was acting for my client, and these two people were on the other side.

One of them made a complaint which distressed me considerably, but I sat down and wrote a very calm and considered response to the complaint. Just as the complaint was dealt with and disposed of, and I got a letter saying, 'We've investigated that complaint, and we've found that there is no basis for it, and we are closing our file,' the very next day I got another letter from the partner of the person whose complaint had just been dealt with.

It was outrageously vexatious and frivolous, to the point where this person alleged that I had, on an occasion two years earlier, deliberately driven my car at this person forcing them to jump off the road and into the bushes and that had they not done so they would have been killed. They knew it was me because they saw me, they recognised my car, they saw me in it; they took the number and they checked with the police and it was mine. The fact was that this all occurred two years earlier—allegedly. Of course, it never occurred at all, but the allegation was that it had occurred two years earlier, and notwithstanding that it was clearly vexatious and frivolous and that it was a huge imposition on a sole practitioner to have to sit down and calmly write a response to what were really quite defamatory allegations.

Notwithstanding all of that the Legal Practitioners Conduct Board must investigate. That strikes me as just being unreasonable, especially given the circumstances where this person was about to go to trial. It was clearly a ploy in relation to trying to disrupt our preparation for the trial, rather than anything of actual substance. There was not any substance to the complaint. I would really like to explore (and will do so tomorrow) the idea that the discretion to investigate should not be limited to simply vexatious or frivolous complaints about overcharging, but perhaps should be limited to circumstances where the board decides that the complaint itself is one that is vexatious or frivolous.

In accordance with what happens now, the bill then deals with the provisions for conciliation of complaints and for proceedings before the Legal Practitioners Disciplinary Tribunal. Interestingly, they have to be within five years. If there is a hearing, it is subject to the rules of evidence, and the outcome is that the tribunal can make such orders as it sees necessary. The proceedings are protected by absolute privilege and costs are payable in relation to the hearing. By that, I assume that, if the board proceeded against a practitioner and the practitioner was then absolved of any responsibility for whatever it was, they would be able to recover the costs of having to engage representation because we all know that only a fool has himself for a lawyer. They have all that and then they have the appeal to the Supreme Court against the decision.

The only new part that I saw in that was two things will now happen concerning disciplinary action. It has always been publicised, in the sense that there was an annual report by the Legal Practitioners Conduct Board, and so you could read through it and see who had done what—and if someone was struck off, it was certainly in there. First, there will now be a register. The disciplinary things will be put on the internet so that anyone can look up any details of outcomes resulting in disciplinary action. There is also provision that, if a practitioner's view is that their behaviour was caused by mental illness, the effects of drugs or whatever, they can, if they wish, ask to have an explanation such as that put on to the internet as well.

Secondly, there are also provisions in this new regime for sharing information between jurisdictions. Obviously that is sensible and necessary if you are to have a national profession in that you cannot have people who are struck off here but go with their law degree to the next state and become registered without the next state ever knowing that they have been struck off for misbehaviour. The only other things in this bill are the external intervention, which essentially deals with the appointment of managers and receivers, if practices fail, which is just like any other small business or other business.

There is reference to the regulatory bodies and funding, which continue the existence of the Law Society—the Council of the Law Society, the litigation assistance fund (which is run under the Law Society), the Legal Practitioners Education and Admission Council, the conduct board (about which I have just been speaking) and the disciplinary tribunal. Finally, chapter 8 deals with public notaries and is all fairly standard stuff. Then there are the miscellaneous provisions. I note a couple of those: first, if a law practice contravenes this act, each principal of the practice is deemed to have contravened it, unless he can prove that the contravention was without his knowledge; and, secondly, the provision which allows the local regulatory authority such as the Law Society to disclose information to another local or interstate regulatory authority.

Apart from the transitional provisions and the repeal of the existing act, that concludes my comments on this second reading. I would normally conclude by saying that I commend this bill to the house. Whilst I expect it to be passed, I repeat that I am very sad to see this bill going through. We are supporting it and I recognise the need for national legal practice, but I do not welcome the new world of Woolworths law and Coles law (sorry for the salad reference again), but it will happen and it will mean that, regardless of my political fortunes, I will probably never return to the practice of the law in this or any other state.

Debate adjourned on motion of Mrs Geraghty.


At 17:58 the house adjourned until Wednesday 17 October 2007 at 11:00.


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