Discipline vs Regulation: Lessons from the Collapse of Tasmania’s Legal Profession Reform Bill
Linda HallerUniversity 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) 23 University of Queensland Law Journal 411, 415.
[10] New South Wales Bar Association v Murphy (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) 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) 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.
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