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LEGAL PROFESSION AMENDMENT BILL 2007

 Legal Profession Amendment Bill 2007

                          Introduction Print

               EXPLANATORY MEMORANDUM


                                   General
This Bill seeks to amend the Legal Profession Act 2004.
The Legal Profession Act 2004 commenced operation on 12 December
2005.
This Bill seeks to amend the Legal Profession Act 2004 to reflect
amendments to the national model provisions that form part of the Act, and
generally to improve the operation of the Act.
The national model provisions were developed through the Standing
Committee of Attorneys-General and provide the basis for consistent
regulation of the legal profession across Australia. Victoria has agreed to
use its best endeavours to introduce legislation to give effect to core national
model provisions, as well as to any amendments to those provisions.
Core provisions are those that have been identified as requiring consistency
across all jurisdictions.
Since the national model provisions were released in April 2004, a number of
amendments have been made to the national model provisions. The Bill
therefore provides for the adoption of amended "core" national model
provisions and any "non-core" national model provisions that Victoria has
already adopted.
The amendments to the Act based on the national model provisions will
improve national consistency in legal profession regulation across Australia
and facilitate national practice by reducing compliance costs for national law
firms. The remaining amendments to the Act will clarify the interaction
between the national model and local provisions, and facilitate the operation
of the new regulatory system established by the Act.

                                Clause notes
Clause 1    sets out the purpose of the Act. The purpose of the Act is to
            amend the Legal Profession Act 2004 to improve its operation
            and to reflect amendments to the national model provisions that
            form part of it.

561025                                 1      BILL LA INTRODUCTION 27/2/2007

 


 

Clause 2 provides for the commencement of the amendments contained in the Act. With the exception of four provisions, the Act will commence the day after receiving Royal Assent. The exceptions to this are-- · the amendment to section 2.2.2(2)(e) of the Legal Profession Act 2004 as a result of the amendments to the Workplace Relations Act 1996 of the Commonwealth. This amendment will be deemed to have commenced on the day that the Commonwealth amendments commenced, which was 27 March 2006; · the amendment that is a consequential amendment arising from the Conveyancers Act 2006. This will commence at the same time as the Conveyancers Act is proclaimed. If that Act is not proclaimed, both it and this amendment will commence on 1 July 2008; · clause 48 which deals with disclosure requirements to third party payers. As the rights of third party payers to costs agreements, costs disclosure and costs review is new to the Act, there will be a 6 month transition period for the legal profession to adapt to these additional requirements; · clause 49 deals with the interest that can be charged on unpaid legal costs. The interest rate is to be set by regulations. A 6 month delay in the commencement of this section is necessary to allow the regulations to be made. Clause 3 clarifies that in the Act, the Legal Profession Act 2004 is referred to as the Principal Act. Clause 4 sets out amendments to section 1.2.1 of the Principal Act, which contains definitions of terms used in the Principal Act. The amendments to section 1.2.1-- · move the definition of client from section 3.4.2 to section 1.2.1, as the term is used generally in the Principal Act, and amend the definition to be consistent with the national model definition; · move the definition of affairs from section 3.3.2 of the Principal Act to section 1.2.1, as this is a term used in Parts of the Principal Act in addition to Part 3.3; 2

 


 

· consolidate the definition of disqualified person so that there is only one definition of disqualified person used throughout the Principal Act; · insert definitions of domestic partner, family member and spouse consistent with other Victorian legislation; · amend the definition of amend for consistency with the drafting used in Part 2.4; · substitute the definition of community legal centre in order to better reflect the objectives of community legal centres and to be consistent with other jurisdictions' definitions; · replace the current definition of insolvent under administration with the definition in the national model provisions in order to improve national consistency; · make a minor amendment to the definition of legal costs in accordance with the amendment to the national model provisions; · substitute the definition of show cause event in accordance with amendments to the national model provisions; · make a minor amendment to the definition of trust property in accordance with the amendment to the national model provisions; · insert a standard provision relating to the definition of domestic partner and how to assess this relationship in accordance with the Property Law Act 1958; · amend the terms relating to associates and principals of law practices to provide that an associate includes an Australian legal practitioner who is a consultant and a person who is not a legal practitioner who is a partner in a multi-disciplinary partnership. 3

 


 

Clause 5 amends the outline of Chapter 2 of the Principal Act in order to-- · reflect the terminology used throughout Chapter 2 by referring to "admission to the legal profession" rather than "admission to legal practice"; · clarify that Part 2.6 provides a scheme for notification of, and response to, action taken by courts and other authorities in Victoria and in other jurisdictions, including interstate and overseas, regarding admission to the legal profession and the right to engage in legal practice. Clause 6 amends section 2.2.2(2)(e) of the Principal Act so that it refers generally to workplace agreements, rather than specifically to AWAs and certified agreements, in order to be consistent with Commonwealth amendments to the Workplace Relations Act 1996. It is noted that under section 2 of the Act, this amendment is deemed to have commenced at the time the Workplace Relations Act 1996 amendments commenced. The clause also further amends section 2.2.2(2) by exempting conveyancers licensed pursuant to the Conveyancers Act 2006 who perform legal work in relation to a conveyance from the prohibition against engaging in legal practice. Clause 7 amends section 2.2.4 of the Principal Act in accordance with amendments to the national model provisions. The amendment lists names and titles the use of which creates a presumption that a person is entitled to engage in legal practice. Regulations may be made to specify the kind of persons who are entitled, and the circumstances in which they are entitled, to take or use that name or title. Clause 8 repeals the definition of disqualified person in section 2.2.5 of the Principal Act. This definition is moved to section 1.2.1. The clause also inserts a new definition in section 2.2.5 of lay associate of a law practice, in accordance with amendments to the national model provisions. Clause 9 inserts a new section 2.3.9(3) in the Principal Act in accordance with amendments to the national model provisions so that a person ceases to be an officer of the Supreme Court if the person's name is removed from the local roll of persons admitted to the legal profession kept by the Supreme Court. 4

 


 

Clause 10 makes the following amendments to provisions in the Principal Act dealing with practising certificates-- · minor and technical amendments are made to sections 2.4.1(b) and 2.4.3(4)(b) to provide consistency in the terminology used in the Part; · a new section 2.4.3(8) is inserted to provide, in accordance with amendments to the national model provisions, that a legal practitioner can only hold one practising certificate that is in force at a time; · section 2.4.4 is amended in accordance with amendments to the national model provisions, to-- · clarify that the section has effect for the purpose of any provision where there is a question of whether or not a person is a fit and proper person to hold a practising certificate; · allow the Legal Services Board to consider whether a person has contravened the Principal Act or a corresponding law, or regulations or legal profession rules made under the Principal Act or a corresponding law; · substitute section 2.4.4.(1)(e)(ii) so that the Legal Services Board may consider whether a person has contravened a requirement imposed by the Board or the Legal Practitioners Liability Committee about professional indemnity insurance; · substitute section 2.4.8(2) and insert new section 2.4.8(3A) to make minor and technical amendments regarding how to determine whether an Australian lawyer is eligible for a local practising certificate; · substitute section 2.4.8(5), (6) and (7) and repeal section 2.4.8(8) in accordance with amendments to the national model provisions to require an interstate Australian legal practitioner to apply for a local practising certificate once their interstate practising certificate expires. The section is also amended to allow an Australian lawyer who works overseas to apply for a local practising certificate; 5

 


 

· amend section 2.4.13 to clarify that it is a general provision providing for the imposition of conditions on local practising certificates upon grant or renewal, and explaining that a local practising certificate may also subject to any further conditions imposed or varied by the Legal Services Board during its currency under sections 2.4.21, 2.4.24 or 2.4.28. Clause 11 substitutes section 2.4.14 of the Principal Act to-- · clarify that the section applies to conditions imposed on a local practising certificate when it is granted or renewed but not to conditions imposed on a practising certificate during its currency; · provide that the Legal Services Board must give the applicant for or holder of a practising certificate an information notice about the conditions. Clause 12 repeals section 2.4.15 of the Principal Act as it is no longer necessary as a consequence of the changes made to sections 2.4.13 and 2.4.14. Clause 13 makes a number of minor amendments to sections 2.4.20 and 2.4.21 of the Principal Act in accordance with amendments to the national model provisions regarding the amendment, suspension and cancellation of practising certificates. Clause 14 restructures section 2.4.24 of the Principal Act in accordance with amendments to the national model provisions and amends the section to provide that the Legal Services Board must cancel a local practising certificate if the holder's name has been removed from the local roll of the Supreme Court or the holder ceases to be an Australian lawyer. Clause 15 makes a minor amendment to section 2.4.25 of the Principal Act in accordance with amendments to the national model provisions. Clause 16 amends sections 2.4.26 and 2.4.27 of the Principal Act to-- · delete the requirement that a written statement by an applicant for a local practising certificate about a show cause event must be in accordance with the regulations; 6

 


 

· provide, in accordance with amendments to the national model provisions, that a person does not have to provide a statement about a show cause event to the Legal Services Board if he or she has previously provided a statement explaining the show cause event; · clarify that "approved form" means a form approved by the Legal Services Board. The clause also inserts new section 2.4.33(5) in the Principal Act to require interstate legal practitioners to comply with conditions imposed by the Board. Clause 17 substitutes section 2.4.34 of the Principal Act to improve national consistency in the notification requirements for interstate legal practitioners who engage in legal practice in Victoria. Consistent with the approach taken in other Australian jurisdictions, there will be no requirement for an interstate legal practitioner to provide formal notice to the Legal Services Board if they travel to Victoria to practise, unless the practitioner becomes authorised to withdraw trust money in Victoria. The form and content of the notice will be determined by the Legal Services Board. Clause 18 amends section 2.4.37 of the Principal Act to clarify that a decision to impose a condition on a local practising certificate under section 2.4.14 is reviewable. Clause 19 inserts a new provision in the Principal Act in accordance with amendments to the national model provisions to provide that government lawyers from other Australian jurisdictions, who are entitled to practise in their home jurisdiction without a practising certificate, can practise in Victoria to the same extent that they can practise in their home jurisdiction. Clause 20 inserts a new definition of foreign regulatory action in Part 2.6 of the Principal Act in accordance with amendments to the national model provisions. It is defined as action taken in an overseas jurisdiction such as removal from a foreign roll or cancellation of a person's right to engage in legal practice. Clause 21 makes a number of minor amendments to section 2.6.4 of the Principal Act in accordance with amendments to the national model provisions. Clause 22 inserts a new provision in the Principal Act in accordance with amendments to the national model provisions to require notification to local regulatory authorities of regulatory action taken in another Australian jurisdiction. The new provision 7

 


 

requires a person to notify the Supreme Court about any order made in another Australian jurisdiction recommending that their name be removed from the local roll of lawyers. The new provision also requires a person to notify the Legal Services Board of any order made in another Australian jurisdiction that their practising certificate be suspended or cancelled, not be granted for a period or be subject to conditions. Clause 23 substitutes section 2.6.7 and 2.6.8 of the Principal Act in accordance with amendments to the national model provisions to broaden the type of regulatory action taken in an overseas jurisdiction about which a person is required to give notice to the Supreme Court and the Legal Services Board. Clause 24 makes a minor amendment to section 2.6.10 of the Principal Act in accordance with changes to the national model provisions. Clause 25 inserts new provisions in the Principal Act based on amendments to the national model provisions. The new provisions allow the Legal Services Board to-- · apply to the Supreme Court for a local lawyer's name to be removed from the local roll where-- · regulatory action has been taken in relation to the lawyer in an overseas jurisdiction; and · the Supreme Court has not previously ordered that the lawyer's name not be removed from the roll; and · the Legal Services Board has followed a "show cause" procedure about the intended removal; and · cancel a local practising certificate where regulatory action has been taken in relation to a local legal practitioner where the Supreme Court has not previously ordered that the certificate not be cancelled, and the Legal Services Board has followed a "show cause" procedure about the intended cancellation. A decision by the Legal Services Board to cancel a practising certificate under this provision is reviewable by the Victorian Civil and Administrative Tribunal ("VCAT"). 8

 


 

Clause 26 amends section 2.6.11 of the Principal Act, in accordance with amendments to the national model provisions, to allow a lawyer who reasonably expects that their name will be removed from an interstate roll, or that foreign regulatory action will be taken against them, to apply to the Supreme Court for an order that their name not be removed from the local roll or that their local practising certificate not be cancelled. Clause 26 also repeals section 2.6.12 of the Principal Act as these provisions, as amended in accordance with the national model provisions, now appear as section 2.6.10A (see clause 25 above). Clause 27 makes a number of minor and technical amendments to Part 2.7 of the Principal Act, which deals with incorporated legal practices and multi-disciplinary partnerships, in accordance with amendments to the national model provisions. The amendments include-- · the definition of disqualified person is repealed from section 2.7.2 as it is moved to section 1.2.1; · section 2.7.11 is amended to clarify the liability of a legal practitioner director of an incorporated legal practice in relation to misconduct by practitioner employees and directors of that practice. The amended provision clarifies that a legal practitioner director is not guilty of unsatisfactory professional conduct or professional misconduct if the director establishes that they took all reasonable steps to ensure that-- · practitioner employees did not engage in professional misconduct or unsatisfactory professional conduct; and · non-practitioner directors did not engage in conduct that adversely affects the provision of legal services by the practice; and · unsuitable non-practitioner directors were not appointed or holding office in the practice; and · section 2.7.22 is amended to provide that the Legal Services Board may appoint a suitably qualified person to conduct an audit of an incorporated legal practice. 9

 


 

Clause 28 makes a number of amendments to Part 2.8 of the Principal Act, which deals with legal practice by foreign lawyers, in accordance with amendments to the national model provisions. The amendments include-- · the term commercial legal presence is deleted from the definitions as it is no longer used in the Part; · section 2.8.4 is amended to clarify the registration requirements for foreign lawyers so that a foreign lawyer is permitted to practise foreign law in an Australian jurisdiction without registering so long as the foreign lawyer-- · does not practise for one or more periods that in aggregate exceed 90 days in any 12-month period or their ability to work in Australia is otherwise subject to a restriction under the Migration Act 1958 of the Commonwealth; and · does not maintain an office in the jurisdiction or does not become a partner or director of a law practice; · section 2.8.20 is amended to provide that an application for the grant or renewal of registration as a foreign lawyer must include information about whether or not the lawyer has been found guilty of a criminal offence in Australia or a foreign country or is subject to any conditions related to engaging in legal practice; · section 2.8.21 is amended to allow the Legal Services Board to impose conditions on a foreign lawyer's registration; · section 2.8.23 is amended to allow the Legal Services Board to refuse to grant or renew the registration of a foreign lawyer if their foreign legal practice is in receivership. Clause 29 substitutes section 2.8.25 of the Principal Act in accordance with amendments to the national model provisions to clarify the events that trigger the amendment, suspension or cancellation of a foreign lawyer's registration. The events include-- · obtaining the registration because of incorrect or misleading information; 10

 


 

· failing to comply with a condition imposed on registration; · failing to comply with the Act's requirements regarding foreign lawyers; · being found guilty of an offence; · becoming the subject of professional disciplinary proceedings in Australia or overseas; · failing to comply with the professional indemnity insurance requirements under section 3.5.3. Clause 30 makes further minor amendments to sections 2.8.26, 2.8.29 and 2.8.31 of the Principal Act, which deal with foreign lawyers' practice in Australia, for consistency with the national model provisions. Clause 31 substitutes section 2.8.46 of the Principal Act in accordance with amendments to the national model provisions to clarify that the section applies to both foreign lawyers who are currently registered and new applicants. Clause 32 makes amendments to Part 3.2 of the Principal Act, which provides for legal profession rules, in accordance with amendments to the national model provisions. The amendments clarify that, in relation to incorporated legal practices and multi- disciplinary practices, the legal profession rules do not allow legal services regulators to regulate non-legal services unless the non-legal services may give rise to a conflict of interest. Clause 33 makes amendments to definitions and terms in Part 3.3 of the Principal Act, which deals with trust accounts and trust money, in accordance with amendments to the national model provisions. The amendments include-- · an amendment to the definition of controlled money to clarify that money can be controlled money if the direction in relation to the money is given at a time after the money has been received by a law practice. This will allow a law practice to pay into a controlled money account (with a later direction) money previously held in a general trust account; · an amendment to the definition of controlled money account to allow a client to instruct that controlled money be deposited in an account with an authorised 11

 


 

deposit-taking institution that is not necessarily an approved authorised deposit-taking institution within the meaning of the Principal Act; · insertion of a definition of deposit record to replace "deposit slip" within the definition of trust records in order to recognise internet banking records; · a substituted definition of trust money to clarify that trust money is money entrusted to a law practice in the course of or in connection with the provision of legal services and includes controlled money, transit money and money subject to specific powers as set out in the further provisions of the Principal Act; · an amendment to the definition of trust records to include deposit records; · insertion of a further provision in section 3.3.2 to clarify what is meant by a power given to a law practice or an associate to deal with money for or on behalf of another person; · amendments to section 3.3.7(1) to clarify that a law practice receives money when the practice, or an associate of the practice, is given a power to deal with money for or on behalf of another person. Clause 34 restructures and makes minor amendments to section 3.3.9 of the Principal Act in accordance with amendments to the national model provisions, clarifying the liability of principals of a law practice. Clause 35 makes minor amendments to sections 3.3.11 and 3.3.13 of the Principal Act in accordance with amendments to the national model provisions dealing with receiving trust money. Clause 36 inserts a new provision in the Principal Act dealing with how trust money can be withdrawn from a general trust account. The provision reflects previous Law Institute of Victoria Trust Account Practice Rules and provides that payments from a general trust account are to be made by a cheque or electronic funds transfer. Cash payments, ATM and telephone banking transactions are prohibited. 12

 


 

Clause 37 inserts a new provision in the Principal Act dealing with how controlled money can be withdrawn from a controlled money account. Payments from a controlled money account are to be made by a cheque or electronic funds transfer. Cash payments, ATM and telephone banking transactions are prohibited. Clause 38 makes minor amendments to sections 3.3.16 and 3.3.17 of the Principal Act in accordance with amendments to the national model provisions to clarify that trust money must only be dealt with in accordance with the power relating to that money. Clause 39 inserts a new section 3.3.17A in the Principal Act in accordance with the amendments to the national model provisions to clarify how a law practice or approved clerk must deal with trust money received as cash. The new section provides as follows-- · general trust money received in cash must first be deposited in a general trust account even if the money is received with a written direction to deal with the money in another way; · controlled money must be deposited in a controlled money account; · transit money must be deposited in a general trust account before it is otherwise dealt with in accordance with the instructions relating to the money; · trust money the subject of a power must be deposited in a general trust account, or a controlled money account in the case of controlled money, before it is otherwise dealt with in accordance with the power. Clause 40 makes further amendments to the trust money and trust account provisions in the Principal Act, which include-- · amendments to section 3.3.19 in accordance with amendments to the national model provisions to allow the Legal Services Board to authorise the extent to which a law practice or approved clerk is permitted to mix trust money with other money; · a minor amendment to section 3.3.20 in accordance with the amendment to the national model provisions to reflect that the trust account procedures are to be found in both the Principal Act and the regulations; 13

 


 

· amendments to the references to relevant accounting bodies in sections 3.3.49, 3.3.51 and 3.3.58 to refer to "CPA Australia", the new company and business name for the Australian Society of Certified Practising Accountants, and to correct a typographical error in the reference to the Institute of Chartered Accountants in Australia; · amendments to section 3.3.56 to provide that-- · an approved external examiner may disclose information during the course of an examination to the Legal Services Board; · an examiner must report a deficiency in a trust account or a failure to comply with the Principal Act or regulations to the Legal Services Board; · an examiner must report to the Legal Services Board if they form the view that trust records are not being kept in a way that enables them to be properly examined. Clause 41 substitutes section 3.3.71 of the Principal Act to clarify who is authorised to receive trust money. Clause 42 substitutes section 3.3.73 of the Principal Act in accordance with amendments to the national model provisions to clarify the application of the provisions dealing with trust accounts and trust money to incorporated legal practices and multi-disciplinary partnerships. Clause 43 makes a number of amendments to the provisions in the Principal Act dealing with costs disclosure in accordance with amendments to the national model provisions. The amendments include-- · refinement of the definition of uplift fee, which is relevant to section 3.4.28 of the Principal Act; · repealing the definition of client in this section, as it now appears in section 1.2.1 of the Principal Act. Clause 44 inserts a new provision in the Principal Act setting out who is to be regarded as a third party payer. These people are not clients of a law practice but are under a legal obligation to pay all or part of a client's bill for legal costs. The terms include an associated third party payer who owes their legal obligation to pay legal costs to the law practice and a non-associated third party payer 14

 


 

who does not owe their legal obligation to the law practice but to the client or another person. The terms are used in further provisions in Part 3.4 dealing with how information about the legal costs is provided to third party payers and the rights of third party payers to seek review of legal costs. Clause 45 amends a number of sections of the Principal Act relating to costs disclosure. These include-- · section 3.4.4 is amended so that where a client and a law practice agree that the legislation of a particular jurisdiction is to apply to a matter, the agreement does not have to be signed but can be accepted either by signature or by conduct; · as a consequence of the above amendments to section 3.4.4, amendments are made to section 3.4.5 to refer to "entering" into an agreement, rather than "signing" an agreement. Similarly, amendments to section 3.4.6 remove the current requirement that instruction can only be received at an office. The amendment clarifies that instructions may be received in person, by post, telephone or other form of communication; · insertion of new provisions in section 3.4.8 to clarify that-- · an agreement that the costs provisions of the Principal Act will apply even though the matter involves law from another jurisdiction does not have to be signed by a client but does need to be confirmed in some written form; · where the costs disclosure provisions of another Australian jurisdiction applied to a legal matter, and subsequently the provisions of the Principal Act commence to apply, a law practice is not required to make a fresh costs disclosure to the client to the extent that this has already been done under the provisions of the other jurisdiction; 15

 


 

· amendments to section 3.4.9 to-- · provide that disclosure of the rate of interest (if any) that the law practice charges on overdue legal costs may be made by reference to a specific interest rate or a benchmark interest rate which may be specified in regulations; · provide for a form to be prescribed in the regulations that would allow a law practice to comply with the costs disclosure requirements across different Australian jurisdictions; · substitution of section 3.4.11(2) to provide that disclosure by a second law practice retained by a client's first law practice (such as in the case of a barrister retained by a law firm) must be made in writing before, or as soon as practicable after, the second law practice is retained; · amendments to section 3.4.14 to provide that disclosure about an uplift fee must include the basis of calculation of the uplift but this does not need to be expressed as a percentage of the law practice's legal costs. Clause 46 substitutes section 3.4.16 of the Principal Act in accordance with amendments to the national model provisions to clarify the ongoing obligation to make costs disclosures to clients when a law practice becomes aware of a change in circumstances that will affect their costs. Clause 47 amends section 3.4.17 of the Principal Act to entitle associated third party payers to be advised of changes to costs. Clause 48 inserts a new provision in the Principal Act to deal with the entitlements of associated third party payers to costs disclosures. Clause 49 substitutes section 3.4.21 of the Principal Act in accordance with amendments to the national model provisions to provide that-- · a law practice may charge interest on unpaid costs either in accordance with the Act or through a costs agreement; · a law practice must not charge interest on unpaid legal costs unless the bill for the legal costs contains a statement that interest is payable if the costs are not paid and of the rate of interest; 16

 


 

· the rate of interest cannot exceed the rate prescribed by the regulations. Clause 50 makes amendments to sections 3.4.26 and 3.4.27 of the Principal Act in accordance with amendments to the national model provisions to-- · include associated third party payers in the costs agreements provisions; · clarify what costs can be recovered from a client who ends a conditional costs agreement within the 5 day cooling off period. Clause 51 substitutes section 3.4.28 of the Principal Act to clarify the operation of conditional costs agreements involving uplift fees. The basis of calculation of the uplift fee must be identified in the costs agreement but does not need to be expressed as a percentage of the legal costs that would otherwise be payable if there were not an uplift fee. However, in a litigious matter, the costs agreement must not provide for the payment of an uplift fee unless the law practice has a reasonable belief that a successful outcome of the matter is reasonably likely and the uplift fee must not exceed 25% of the legal costs that would otherwise be payable if there were not an uplift fee. Clause 52 amends section 3.4.29 of the Principal Act in accordance with the amendment to the national model provisions by repealing subsection (1)(a) and amending subsection (2). The effect of the amendment is to permit contingency fees in non-litigious matters. Clause 53 amends section 3.4.32 of the Principal Act in accordance with amendments to the national model provisions by-- · removing "just" from the expression "fair, just or reasonable" on the basis that the term "just" is not used in later provisions in Part 3.4 with respect to the costs review criteria used by the Taxing Master; · including a further ground to which VCAT may have regard in determining whether or not a costs agreement is fair or reasonable, being matters arising before, when or after the agreement was made, including but not limited to the conduct of a party or a change of circumstances. 17

 


 

Clause 54 makes the following amendments to the Principal Act-- · amends section 3.4.34 to facilitate billing practices and to improve national consistency by providing that a bill for legal costs can be attached to a letter signed on behalf of a law practice by an Australian legal practitioner or an employee of the law practice, or, in the case of a barrister, by an approved clerk or an authorised employee of an approved clerk; · amends section 3.4.35 in accordance with amendments to the national model provisions to allow for the prescription of a form in the regulations that informs clients of their statutory rights to challenge a bill of costs, which law practices can voluntarily adopt for the purposes of complying with their obligations across jurisdictions. Clause 55 substitutes section 3.4.36 of the Principal Act to allow any person who is entitled to apply to the Taxing Master for a review of a bill of costs to also request an itemised bill within 30 days of the client receiving a lump sum bill. This will enable clients and third party payers to obtain further information about the costs that they are liable to pay before a decision is made about applying to the Taxing Master for a review. A law practice will have 21 days to comply with a request for an itemised bill. If the request is made by a non-associated third party payer, the law practice may charge for the preparation of the itemised bill. Clause 56 substitutes section 3.4.38 of the Principal Act in accordance with amendments to the national model provisions to set out how and when third party payers may apply for costs reviews. The amendment also increases the time for clients and third party payers to apply for a costs review from 60 days to 12 months. Out-of-time applications may be made with leave of the Supreme Court. Clause 57 amends sections 3.4.39 and 3.4.40 of the Principal Act with respect to the process by which a law practice that retains another law practice can apply for costs review of that other law practice's bill of costs. Clause 58 substitutes section 3.4.42 of the Principal Act to require an applicant for costs review to notify any law practice or client concerned, or any other person who the Taxing Master thinks should be notified, of the application. 18

 


 

Clause 59 repeals section 3.4.43(3) of the Principal Act. The provision is moved to a new section 3.4.44B inserted by clause 61. Clause 60 amends section 3.4.44 of the Principal Act to change the criteria the Taxing Master should apply in conducting a costs review to refer to the following new sections 3.4.44A and 3.4.44B. Clause 61 inserts in the Principal Act the new sections 3.4.44A and 3.4.44B mentioned above. These provisions set out how the Taxing Master should use a costs agreement, practitioner remuneration order and a scale of costs, as well as compliance with the costs agreement and disclosure provisions, in undertaking a costs review. Clause 62 amends section 3.4.45 of the Principal Act by inserting subsection (2A). The amendment requires the Taxing Master to order who should pay the costs of the review, unless the law practice is automatically liable due to gross overcharging or failing to disclose costs. Clause 63 amends section 3.4.48A of the Principal Act in accordance with amendments to the national model provisions which provide that a third party payer who would fit the definition of a sophisticated client may contract out of the Division dealing with costs review. Clause 64 makes minor amendments to section 3.6.2 of the Principal Act in accordance with amendments to the national model provisions. In particular, the definition of default has been amended to remove the concept of trust money "received by an associate of a law practice" as if an associate can engage in legal practice separately to a law practice. The clause also amends section 3.6.44 to clarify that it applies specifically to sole practitioners whose practising certificates have lapsed. The provision allows for the lawyer's practice to continue for a period of 6 months unless a manager for the practice is appointed earlier, or the lawyer's application for the grant or renewal of a certificate is refused. This does not apply if the lawyer's certificate has been suspended or cancelled, or their application for grant or renewal has already been refused. The purpose of this provision is to provide some protection for clients where a law practice constituted by a sole practitioner continues to receive trust money after the sole practitioner's certificate has inadvertently lapsed. 19

 


 

Clause 65 makes amendments to Chapter 4 of the Principal Act (Complaints and Discipline) as follows-- · amends section 4.4.4 in accordance with amendments to the national model provisions. The amendments add to the list of conduct that is capable of constituting unsatisfactory professional conduct or professional misconduct to include-- · failing to comply with an order of a disciplinary body, including a failure to pay a fine; · failing to comply with a compensation order; · makes a minor amendment to section 4.4.16 in accordance with amendments to the national model provisions. The amendment clarifies that VCAT may make any order it thinks fit after completing a hearing for a disciplinary matter; · amends section 4.4.18 in accordance with amendments to the national model provisions. Section 4.4.18 deals with orders of VCAT requiring implementation in another jurisdiction via a recommendation to a regulatory authority in another jurisdiction; · makes a minor amendment to section 4.4.25 in accordance with the national model provisions; · amends section 4.4.36 to broaden and clarify the application of the section to allow the Legal Services Commissioner to obtain and exchange information with interstate regulators and other investigative bodies with information or powers relevant to the investigation of a complaint; · amends section 4.4.37 to clarify that local regulators must give effect to orders made by a corresponding regulator in another jurisdiction. Clause 66 makes a number of amendments to Chapter 5 of the Principal Act (External Intervention) including-- · amending the terminology used in section 5.1.1 to be consistent with the national model provisions. The reference to lawyers and foreign lawyers has been replaced with a reference to law practices and Australian-registered foreign lawyers; 20

 


 

· amending the definition of regulated property in section 5.1.2 in accordance with the national model provisions; · stating that other expressions used in Chapter 5 have the same meaning as in Part 3.3 (Trust money and trust accounts); · providing that the Chapter also applies to former Australian-registered foreign lawyers; · amending section 5.2.2 to clarify the circumstances in which the Board may determine to appoint a manager for a law practice. This includes the Board forming the opinion that-- · intervention is required because of issues with trust account records; · appointment of a manager is necessary to protect trust money or trust property; · there is a need for an independent person to take over the running of the practice; · a number of minor amendments to Part 5.3 (Supervisors) in accordance with amendments to the national model provisions. In particular, the amendments provide for consistent terminology in relation to supervisors of trust money; · amending section 5.4.3 to recognise that there might be both a manager and a receiver appointed in relation to a law practice; · a minor amendment to section 5.5.1 to clarify that the Supreme Court may also order from the precincts of the Court any person who is not an employee of a party to an application for the appointment of a receiver; · amending section 5.5.2 to clarify that the notice of appointment of a receiver must indicate the extent to which the receiver has the powers of a manager; · amending section 5.5.3 to recognise that where both a manager and a receiver are appointed in relation to a law practice they will both require power to deal with the law practice's accounts; 21

 


 

· amending section 5.5.9 to clarify that a receiver may also require access to documents and information from a person who has or has had control of documents relating to the affairs of the practice and from a person who has information relating to regulated property of the practice; · amending section 5.5.9(4) to provide that, where a person objects to providing information on the ground that it may incriminate them, the information is also admissible in proceedings taken by the receiver for the recovery of regulated property; · amending section 5.5.11 to also refer to law practices. Clause 67 substitutes section 5.5.17 of the Principal Act to change how the appointment of a receiver is terminated to be consistent with other jurisdictions. Clause 68 amends section 5.6.4 of the Principal Act to provide that the appointment of a supervisor, manager or receiver is not stayed by the making of an appeal against the appointment. Clause 69 inserts a new section 5.6.5A in the Principal Act. The new provision provides for the situation where a manager and a receiver are appointed for a law practice. In this case, the decisions of the receiver prevail over those of the manager to the extent of any inconsistency. Clause 70 substitutes section 5.6.6 of the Principal Act to clarify the requirements on an ADI to disclose or provide information about trust accounts. The information must be provided without charge, as is the case for external examinations. There are penalties for ADIs who do not comply. Clause 71 amends section 6.2.18 of the Principal Act by deleting the words "necessarily or reasonably" in subsections (1) and (2). These amendments ensure that the wording of the statutory immunity for the Legal Services Board reflects the wording of the standard form immunity in the government's policy on indemnities and immunities. Clause 72 amends section 6.2.23 of the Principal Act to include in that section those additional particulars to be kept on the register that are currently prescribed in regulations. These particulars include the name of the law practice at which an employee legal practitioner works, the business name under which a sole practitioner carries on business, the name of the entity of which a 22

 


 

locally registered foreign lawyer is a director, officer or employee as well as the business name under which the lawyer carries on business. The section will also be amended so that the register indicates whether or not a practitioner is a barrister. This is related to the amendment set out in clause 77. Clause 73 amends section 6.3.11 of the Principal Act by deleting the words "necessarily or reasonably" in subsections (1), (3) and (4). These amendments ensure that the wording of the statutory immunity for the Legal Services Commissioner reflects the wording of the standard form immunity in the government's policy on indemnities and immunities. Clause 74 amends section 6.7.27 of the Principal Act which sets out how interstate legal practitioners contribute to the Fidelity Fund, to be consistent with the national model provisions. Clause 75 amends section 7.2.13 of the Principal Act to clarify that the Supreme Court has interim injunctive powers pending determination of an allegation of breach of the Principal Act, regulations or legal profession rules. Clause 76 amends section 7.2.15 of the Principal Act to set out when disclosure of personal information about a legal practitioner may be made by the Legal Services Commissioner and the Legal Services Board and their staff. Clause 77 amends how a legal practitioner becomes registered on the electoral roll for the Legal Service Board elections, who may stand for election and how the different types of practitioner may vote for their type of representative. The clause amends Schedule 1 to the Principal Act as follows-- · clause 2 is substituted to provide that a local legal practitioner included on the register kept by the Board under section 6.2.23 is automatically enrolled on either the roll of advocates or the roll of non-advocates. In order to make it clear which roll a practitioner is enrolled on, section 6.2.23 is also amended to provide that information recorded on the register must indicate whether the practitioner is a barrister (see clause 72); · clause 3 is substituted to clarify that a local legal practitioner is eligible to stand for election if they have at least 5 years' standing as a practitioner. Practitioners who are barristers may vote for an advocate member of the Board. Practitioners who are not barristers may vote for a non-advocate member of the Board. 23

 


 

Clause 78 makes amendments to Schedule 2 to the Principal Act by-- · correcting a typographical error in the reference in clause 4.3(3) to the Institute of Chartered Accountants in Australia; · amending clauses 8.3 and 8.4 to make it clear that for disciplinary matters that were pending or part-heard in the Legal Practice Tribunal immediately prior to the commencement of the Principal Act, in which the Law Institute and the Bar had brought the charge against the legal practitioner, the Law Institute and the Bar continue to have carriage of these matters now being heard in VCAT. Clause 79 inserts a new Part 12 into Schedule 2 to the Principal Act setting out transitional provisions for this Bill. They allow practitioners who have both a local and interstate practising certificate to be exempt, until the end of the current financial year, from the provision in section 2.4.3(8) that prohibits a legal practitioner from having more than one practising certificate. Clause 80 is a consequential amendment to the Conveyancers Act 2006 due to the definition of disqualified person moving location in the Principal Act. Clause 81 provides for the automatic repeal of this amending Act on the anniversary of its forced commencement. As suggested by the Scrutiny of Acts and Regulations Committee, all amending Acts now contain an automatic repeal provision, which will save the time and expense of having to repeal amending Acts in statute law revision Bills. The repeal of this Act does not affect in any way the operation of the amendments made by this Act (see section 15(1) of the Interpretation of Legislation Act 1984). 24

 


 

 


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