Discipline vs Regulation: Lessons
from the Collapse of Tasmania’s Legal Profession Reform Bill
Linda Haller
University of Queensland TC Beirne School of Law
Contents
Background
Serious
impediments to the national practice of law in Australia have existed
for some time. Lawyers who practised outside their home
jurisdiction
were subject to the cost of fresh admission, certification, indemnity
insurance and fidelity contributions in each new
jurisdiction, as well
as inconsistent rules of practice. In August 200[3]
stakeholders agreed to work towards
the implementation of national standards, through the National Practice
Model Laws Project.[1] Legislation is now being amended in
all States of Australia to adopt the National Legal Profession Model
Laws agreed to by the Standing
Committee of Attorneys-General in May 200[4]
The Model Laws govern such matters
as admission to practise, practising certificates, trust accounts,
costs disclosure and review,
fidelity funds, complaints, discipline,
receivership, incorporated legal practice and multi-disciplinary
partnerships. Queensland
was the first of the States to implement the
Model Laws.[2]
But
in Tasmania the reform process has been derailed. The power to issue
practising certificates, in Tasmania as in most Australian
jurisdictions, was in the hands of the professional body, the Law
Society of Tasmania.3 The Law Society was also responsible for
handling
complaints and discipline. But the Legal Profession Amendment Bill 2004
(Tas) included a proposal that, not only complaints
and discipline but
also practising certificates, be taken out of the hands of the Law
Society. The Government proposed that both
these regulatory functions
be handled by a Legal Practice Board, comprising two lay persons
nominated by the Attorney-General and
four lawyers elected by all
lawyers practising in Tasmania.4 However the Upper House was hostile to
the Bill and passed an amendment
to ensure that the Law Society
retained control of practising certificates. This was enough for the
Attorney-General, Judy Jackson,
to adjourn debate on the Bill
indefinitely. She claimed that if the Law Society retained the power to
issue practising certificates
this would deprive the new disciplinary
board of revenue and that, without the power over practising
certificates, the Board would
be unable to discipline through the
imposition of restrictions on practice.[5]
The Law Society of Tasmania was
quick to respond, noting that it had already agreed to hand over income
raised from practising certificate
fees to the Government. The
Attorney-General's second point also lacked substance. Powers to issue
a practising certificate are always
subject to disciplinary tribunal
rulings, and tribunals have regularly imposed conditions on practising
certificates - even in the
absence of an express power to do so, and
even in jurisdictions where the power to receive complaints and
discipline is separated
from the power to issue practising certificates.[6]
In any event, legislation can give
disciplinary tribunals an express power to impose conditions on
practising certificates. Such
a power was already contained in the
Tasmanian legislation[7]
and Jackson's own Bill required the
Board to 'cancel, suspend or endorse' any practising certificate so as
to 'accord with or give
effect to' any order of the disciplinary
tribunal.[8]
So the two reasons given by Jackson
for withdrawing the Bill do not ring true. What other reasons could
there be for removing both
discipline and certification powers from the
Law Society? Perhaps Jackson got it right and other legislatures missed
the point in
allowing
professional
bodies to retain powers in relation
to practising certificates. Lawyers are regulated in many ways,
including
through the imposition of conditions on practising
certificates, the suspension and cancellation of certificates, and
discipline.
In a number of other Australian jurisdictions, the receipt
of complaints and the prosecution of discipline have been taken out of
the hands of professional bodies, but the professional bodies have
retained extensive responsibility for day to day decisions about
who
will be allowed to practise law, in what areas of law, and under what
conditions. This being the case, it could be asked whether
Parliaments
in those States were really serious in saying that Caesar would no
longer be allowed to judge Caesar. Queensland provides
a typical
example of this strengthening of power over practising certificates.
Cumulative amendments since 1930 gave the Queensland
Law Society the
power to cancel a certificate where a solicitor was an undischarged
bankrupt, in prison, in breach of trust account
obligations, in default
of an order of a disciplinary tribunal, suffering a mental or physical
infirmity, convicted of fraud, or
taking advantage of bankruptcy laws.
Meanwhile, the Queensland Law Society retained its statutory
responsibility for the investigation
of complaints and the prosecution
of discipline. Then in 2004 the Legal Profession Act 2004 (Qld) removed
the Law Society's disciplinary
powers while, paradoxically, further
enhancing the Society's power to regulate solicitors through practising
certificates.[9]
The
Blurring of Discipline vs 'Regulation'
In
New South Wales Bar Association v Murphy,[10]
Spigelman CJ examined the
legislative history of the New South Wales provisions for practising
certificates and discipline. As his
Honour notes, powers in relation to
practising certificates were initially granted to enforce lawyers'
obligations to co-operate
with investigations and provide information
to investigators.[11]
Subsequent amendments in Victoria
and Queensland as well as New South Wales then gave much greater
discretion to professional bodies,
allowing them to cancel or suspend a
person's practising certificate if they considered the person no longer
fit to practise.[12]
The extent of these amendments
suggests that State Parliaments intended controls over practising
certificates to play a much greater
role in ensuring the competence and
integrity of members of the legal profession. In New South Wales, the
distinction between discipline
and practising certificates has become
particularly blurred. The powers of the Law Society of New South Wales
and the New South Wales
Bar Association were substantially extended by
an Act that elevated a disciplinary focus in its very title: the Legal
Profession Amendment (Disciplinary Provisions) Act 2001 (NSW). In
addition to strengthening practising certificate powers, that amendment
required legal practitioners to notify professional
bodies of various
convictions and acts of bankruptcy, which in turn led to a number of
cases reaching the court as a challenge to
the withdrawal of a
practising certificate rather than as a disciplinary matter.[13]
While Spigelman CJ considered the
administrative cancellation of a practising certificate to be an
inappropriate way of dealing with
permanent unfitness to practise,[14]
this view is not necessarily
shared by Parliament or the Legal Services Commissioner. Strengthened
powers in relation to practising
certificates may reduce the practical
imperative to take disciplinary action and it is likely to be cheaper
and quicker to remove
a person's right to practise by the
administrative act of cancelling a practising certificate than by
instituting disciplinary proceedings.
The New South Wales legislation
allows a complaint to be dismissed if the Commissioner believes it is
in the public interest to do
so[15]
and until very recently the
legislation suggested it may be in the public interest to dismiss a
complaint if a lawyer was already
prevented from practising law.[16]
This suggests that Parliament
considered that an administrative suspension of the right to practise
could sometimes render disciplinary
action unnecessary and superfluous.
Much of the debate in the
Tasmanian Parliament concerned itself with drawing a distinction
between discipline and regulation but,
as the experience in New South
Wales shows, this is perhaps becoming a distinction without a
difference. In jurisdictions such as
New South Wales where practising
certificates are highly regulated, it could be that discipline will
become of less practical significance
than practising certificates.
That being the case, surely the Tasmanian public was entitled to be
given strong reasons why discipline,
but not practising certificates,
should be taken from the Tasmanian profession. The reasons given are
not convincing. The
Tasmanian Experience
The Law Society of
Tasmania lost the confidence of the public in 2001 because of its
failure to avert the dramatic collapse of a number
of solicitor
mortgage schemes, which led to huge losses of client money, criminal
proceedings against some lawyers and a Senate inquiry.[17]
Since then, the Law Society had
asked to be relieved of its disciplinary role, but wanted to retain its
powers in relation to practising
certificates. Parliament initially
responded to the mortgage crisis by increasing, not reducing, the
powers of the Law Society.[18]
But clearly this was not Jackson's
approach when she became Attorney-General. Her detractors claim she is
blinded by her experience
as Minister for Community and Health Services
when she saw the Nursing Board of Tasmania closely regulating
practising certificates
for nurses. Lawyers are different to nurses the
detractors say, and the Law Society must be allowed to retain control
over practising
certificates. Arguments
for Law Society Control
The main
arguments in favour of professional control over practising
certificates are:
* Need for national uniformity
*
Independence of the legal profession
* Lower administrative
costs and cheaper insurance
National
Uniformity
Much of the debate in Tasmania
pointed to the need for uniformity throughout Australia, but there are
a number of problems with that
argument. First, the Tasmanian debate
seemed to assume that the granting of control over practising
certificates by other than a
Law Society or Bar Association would be a
novel idea in Australia. This is not correct. In Western Australia an
independent Legal
Practice Board, consisting of the Attorney-General,
Solicitor-General, all senior counsel and 12 elected legal
practitioners, has
been responsible for the issuing of practice
certificates since 1992, [19]
and when the Legal Practice Act
2003 came into force in early 2004, Parliament decided that the Legal
Practice Board should continue to be responsible for the issuing
of
practice certificates.[20]
And in Victoria, the amendments
passed in December 2004 mean the new independent Legal Services Board
will be taking over the Law
Institute's power to issue practicing
certificates,[21]
so paradoxically, the passing of
the Tasmanian Bill would have led to increased uniformity between
Tasmania and Victoria, the second
largest jurisdiction in Australia.[22]
Mortensen reports[23]
that the Queensland government
considered placing the control of practising certificates in the hands
of an independent regulator
when it first raised the issue of legal
profession reform in the late 1990s, but the professional bodies
successfully argued against
the proposal. Second,
even if the passing of these amendments had made Tasmania the only
State in which practising certificates were managed by
an independent
regulator, that would not necessarily cause problems between the
States, as demonstrated by the independent regulation
operating
successfully in Western Australia since 1992. Third
and finally, the Model Laws do not require a similar body in each State
to issue certificates. The uniformity sought by the
Model Laws is in
relation to standards, definitions and procedures rather than
structures, and the explanatory notes to the Model
Laws anticipate that
local jurisdictions will decide whether one or any number of
'appropriate authorities' will handle specific
functions. Independence
of the Legal Profession
An argument often
put by the legal profession when seeking to retain a measure of
self-regulation is that removal of self-regulation
will threaten the
rule of law, by subjecting lawyers to government control. This seems to
be a disproportionate claim as there is
no evidence that the voices of
lawyers have been muffled in Western Australia, where practising
certificates have been issued by
an independent body since 1992. In any
event, such an argument seems overly emotive given that the Tasmanian
model allowed for the
Tasmanian legal profession to have practical
control of the Legal Practice Board, through the election of four of
its six members.
In addition, Tasmanian practitioners were to retain
their right of appeal to the Supreme Court against cancellation or
suspension
of practising certificates[24]
and against conditions imposed on
their certificate.[25]
In this way, the Supreme Court of
Tasmania, as the apex of the legal profession, would continue to
determine appropriate standards
of practice. Lower
Administrative Costs and Cheaper Insurance
Jackson
apparently conceded that it would be more expensive if the regulation
of practising certificates was handled by a statutory
board rather than
by the Law Society, the assumption being that lawyers will no longer
provide their services voluntarily. In recent
times in Tasmania it
seems that statutory regulation of lawyers has been self-funded through
practising certificate fees, and neither
government funds nor client
money, through interest earned on solicitors' trust accounts, used.[26]
This is in strong contrast to
other, albeit much larger, States such as New South Wales, where over
$7 million of interest earned
on client money in solicitors' trust
accounts was used to fund the complaints and disciplinary system in
2002-2003.[27]
However, the debate should not be
simply about minimising cost, but about how much we are prepared to
pay, and who should pay, for
the level of regulation the public wants.
It was also claimed that the cost of professional indemnity insurance
would rise if the
Law Society lost its role in relation to practising
certificates and thereby its leverage in negotiating insurance coverage
on behalf
of its members. That would set a cost that would inevitably
be passed on to consumers of legal services. But will the cost of
professional
indemnity insurance necessarily rise? Surely potential
insurers will also consider the track record of practising lawyers and
may
have lost confidence in the Law Society already. In Western
Australia, the Law Society has no role in relation to practising
certificates,
but continues to play a major role in negotiating
indemnity insurance.[28]
While the Legal Profession Act
2004 (Vic) has shifted responsibility for the issuing of practising
certificates from the professional
bodies to the new Legal Services
Board,[29]
the Victorian Bar Council
continues to play an important role in negotiating indemnity insurance
on behalf of barristers.[30]
It
was also suggested in the Tasmanian Parliament that the Law Society
could not play any role in negotiating capped liability for
members
under foreshadowed professional standards legislation unless it could
impose conditions on practising certificates. This
is perhaps
overstating the position, given that other professions, such as
accountants, anticipate taking advantage of the legislation
without
statutory power over members. It also ignores Jackson's late concession
that the board's power to make rules of practice
would be delegated to
the Law Society. This would have given the Law Society practical input
into standards of conduct and competence.
Conclusion
The
Australian legal profession is in the midst of a process of fundamental
reform. Until now, reforms have focused on the need to
increase the
level of independence and accountability in the discipline of lawyers
and have largely overlooked the powerful regulatory
control exercised
through practising certificates. Rather than engaging in semantic
debates about the difference between regulation
and discipline, as
occurred in Tasmania, future debates must consider the substantive
merit of proposed regulatory controls and remain
well-informed as to
developments in other Australian jurisdictions. The implementation of
the Model Laws is too important a project
to be so easily derailed.
Notes
[1] Law Council of Australia, 'National
Practice - The Model Laws Project', http://www.lawcouncil.asn.au/natpractice/modellawproject.html
at 12 January 2005.
[2] Legislation was passed in December
2004 in New South Wales and Victoria to implement the Model Laws in
those States: Legal Profession Amendment Act 2004 (NSW); Legal
Profession Act 2004 (Vic).
[3] Legal Profession Act 199
[3] (Tas) s 51. There, as is generally
the case elsewhere in Australia, the right to practise law depends on
the lawyer holding a current practising
certificate, Queensland
barristers being the only exception until 1 July 2004.
[4] The Government had initially
proposed that the four lawyer members of the Board be nominated by the
Attorney-General rather than
elected by fellow lawyers, but, in a last
minute attempt to win support for the Bill, agreed that the lawyer
members would be elected.
[5] Judy Jackson, Attorney-General,
'Legal Profession Bill' (Press Release, 3 September 2004).
[6] For instance, conditions that a
lawyer undergo regular drug tests, as in Prothonotary of the Supreme
Court of New South Wales v P
[2003] NSWCA 320, or undertake a Practice
Management Course, as in Council of the Queensland Law Society Inc v
Lowes [2003] QCA 201.
[7] Legal Profession Act 1993 (Tas) s
76(1)(p).
[8] Legal Profession Amendment Bill 2004
(Tas) s 93H(12).
[9] Linda Haller, 'Imperfect Practice
under the Legal Profession Act 2004 (Qld)[2004] UQLawJl 30; , (2004) 23 University of
Queensland Law Journal 411, 415.
[10] New South Wales Bar Association v
Murphy [2002] NSWCA 138; (2002) 55 NSWLR 23, 25-30.
[11] Ibid 30.
[12] Legal Profession Act 2004 (Vic) s
2.4.20(a); Legal Profession Act 2004 (Qld) s 46(2); Legal Profession
Act 2004 (NSW) s 60(a).
[13] New South Wales Bar Association v
Murphy [2002] NSWCA 138; (2002) 55 NSWLR 23; Cameron v Bar Association of NSW [2002]
NSWSC 191; Wardell v New South Wales Bar Association [2002] NSWSC 548;
New South Wales Bar Association v Stevens [2003] NSWCA 95 (24 April
2003); Doherty v Law Society of New South Wales [2003] NSWSC 105; Law
Society of New South Wales v B [2000] NSWSC 405.
[14] New South Wales Bar Association v
Murphy [2002] NSWCA 138; (2002) 55 NSWLR 23, 30.
[15] Legal Profession Act 2004 (NSW) s
539(b).
[16] Legal Profession Act 1987 (NSW) s
155A(2)(repealed). The Legal Profession Act 2004 (NSW) s 539(b) is less
specific, simply allowing the Commissioner to dismiss a complaint if
satisfied it is in the public interest to do so.
[17] Senate Select Committee on
Superannuation and Financial Services, Case Study of Solicitors'
Mortgage Schemes in Tasmania (Press release,
15 May 2001). http://www.aph.gov.au/senate/committee/superfinan_ctte/media/articles/15may01.pdf
at 10 October 2004.
[18] Legal Profession Act 1993 (Tas) s
7A, inserted by Legal Profession Act Amendment Act 2001 (Tas).
[19] Legal Practitioners Act 1893 (WA)
s 6(1)(h), as amended by Legal Practitioners Amendment (Disciplinary
and Miscellaneous Provisions) Act 1992 (WA).
[20] Legal Practice Act 2003 (WA) s 7.
[21] Legal Profession Act 2004 (Vic) s
2.4.21(3), although it remains to be seen if the Board will delegate
this function to a professional
body, under s 6.2.19.
[22] Legal Profession Act 2004 (Vic) s
2.4.21(3), although s 6.2.19 of the Act does allow the Board to
delegate some of its functions.
[23] Reid Mortensen, 'Becoming a
Lawyer: From Admission to Practice under the Legal Profession Act 2004
(Qld)' (2004)
[23] University of Queensland Law
Journal 319, 337.
[24] Legal Profession Act 1993 (Tas) s
51A.
[25] Legal Profession Act 1993 (Tas) s
51(4).
[26] Law Society of Tasmania, Annual
Report 2003-2004, 11: http://www.taslawsociety.asn.au/news/Complete%20Annual%20Report%202003-2004.pdf
at 14 October 2004.
[27] Law Society of New South Wales,
Annual Report 2003, 105, http://www.lawsociety.com.au/uploads/filelibrary/1077839945921_0.2519604228153179.pdf
at 11 October 2004.
[28] Through its division, Law Mutual
(WA): http://www.lawsocietywa.asn.au/lawmutual.html
at 10 October 2004.
[29] Section 2.4.21(3), although the
Board may delegate this function under s 6.2.19.
[30] Section 3.5.2(7); The Victorian
Bar, 'Professional Indemnity Insurance Update', 31 January 2005, http://www.vicbar.com.au/2_10_4.html
at 31 January 2005. The Legal Practitioners' Liability Committee
continues to be responsible for insuring all solicitors.
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/journals/MurdochUeJlLaw/2005/15.html
