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A Uniform Change

Feature Articles

Cite as: December 2014 88 (12) LIJ, p.36

A uniform regulatory regime covering lawyers in Victoria and NSW is soon to begin. Some aspects of legal regulation will remain the same. Other areas will see significant changes to the powers of the regulators and the obligations placed on practitioners. 

By Michael McGarvie

In 2009 the Council of Australian Governments (COAG) initiated a push to establish a single legal profession regulatory regime across Australia to enhance consumer protection, reduce costs and simplify administration. Nearly five years later, this project is bearing fruit.

It is true that the reforms are not “national”. The Legal Profession Uniform Law will initially commence operation in Victoria and New South Wales – home to more than 70 per cent of Australia’s licensed lawyers. I am optimistic, however, that COAG’s goals will be largely realised and that other jurisdictions will sign up when they see the benefits achieved across the two states.

With commencement pending, the purpose of this article is to help practitioners prepare for legal practice under the Uniform Law by identifying what will change and what will stay the same for Victorian lawyers and their clients. This article is not intended to be a comprehensive guide to the new regime. Indeed, in the absence of the subordinate legislation (under development at the time of writing), it is not possible to provide definitive guidance beyond the text of the Uniform Law. I encourage you to familiarise yourself with the new legislation and check the Victorian Legal Services Board (the Board) and Victorian Legal Services Commissioner’s (the Commissioner) websites for the latest information.

It is important to note that the subordinate legislation, the Legal Profession Uniform Rules, may be made for any matter that the Uniform Law requires or permits to be specified in the Uniform Rules, or that is necessary or convenient for carrying out or giving effect to the Uniform Law.1 The breadth of that rule-making provision should be borne in mind when reading the Uniform Law.

Regulatory structure

The existing Board and Legal Services Commissioner will perform all the operational and regulatory functions required under the Uniform Law.2 They will operate under the oversight of two new inter-jurisdictional bodies – a Legal Services Council and a Commissioner for Uniform Legal Services Regulation – which will be responsible for setting inter-jurisdictional policy and guidelines. The Board and Commissioner will also perform local regulatory functions (that is functions that are specific to the regulation of the legal profession in Victoria). The delegated model adopted in Victoria will continue, with the option of functions being delegated to the LIV and the Victorian Bar by the Board and Commissioner.3

The professional associations will also nominate members of the Legal Services Council4 and Admissions Committee,5 and develop the Uniform Rules relating to legal practice, legal professional conduct and continuing professional development.6

Not all existing regulatory bodies will be retained. The Council of Legal Education and Board of Examiners – responsible for educational requirements and compliance with admission requirements under the Legal Profession Act 2004 (LPA) – will be replaced by a Victorian Legal Admissions Board. The Victorian Legal Admissions Board will assess applications for admission to the Victorian Supreme Court and will accredit Victorian law courses and providers of practical legal training.7

What will remain the same

The Uniform Law includes transitional arrangements to minimise the disruption caused when the new legislative regime is adopted. For example, practising certificates granted under the LPA will continue to have effect.8 Practitioner remuneration orders made under the LPA, and in force immediately before the commencement of the Uniform Law, will remain in force.9 Contributions to the fidelity fund determined under the LPA will remain payable under the Uniform Law10 and the terms and conditions of professional indemnity insurance approved under the LPA will remain approved under the Uniform Law.11

Looking beyond the transitional period, the Uniform Law appears to re-affirm a number of the substantive legislative rights, responsibilities, approaches and objectives applied under the LPA.

Practising certificates

Lawyers will still lodge their practising certificate applications with the Board under the Uniform Law if Victoria is their principal place of practice.12

Conditions authorising the holder of a practising certificate to engage in legal practice under the LPA as a principal or an employee of a law practice, a volunteer at a community legal centre, or a corporate legal practitioner will be maintained. In some areas, such as government legal practice, conditions will be expanded under the Uniform Law.13

Professional indemnity insurance

Local lawyers will still be prohibited from engaging in legal practice in Victoria unless they hold or are covered by an approved professional indemnity insurance policy under the Uniform Law.14

Approved policies are those either issued by the Legal Practitioners’ Liability Committee, or approved by the Board in relation to:

  • community legal services;
  • lawyers engaged in practice for or on behalf of a community legal service;
  • corporate or government lawyers who provide pro bono legal services outside a community legal service; or
  • Australian-registered foreign lawyers.15

Fidelity fund contributions

Most lawyers applying for a practising certificate will still be required to pay annual contributions to the fidelity fund set by the Board. Barristers, government and corporate lawyers, and any other lawyers who are members of a class specified in the Uniform Rules will not have to make contributions.16

Managed investment schemes

After a transitional period of three years, prohibitions on law practices promoting or operating managed investment schemes will apply.17 Subject to the Uniform Rules or approval granted by the Board, all law practices will also be prohibited from providing legal services in relation to managed investment schemes where an associate (employee or partner) of the practice has an interest. Acting as the legal representative of a lender, all practices and related entities will be prohibited from negotiating the making of, or acting in respect of, a mortgage, other than in certain circumstances described in the Uniform Law.18

There will be no transitional period for incorporated legal practices and related entities. They will be prohibited from conducting managed investment schemes from commencement.19

The Uniform Law allows for the Legal Services Council (LSC) to make Uniform Rules which prohibit law practices and related entities from providing specified services or conducting specified businesses.20

Barristers’ clerks

Currently barristers’ clerks may be approved to receive trust money on behalf of barristers.21 This arrangement is continued under the Uniform Law, but only where trust money is provided for future legal services to be provided by barristers.22

What will change

Costs fairness and disclosure

Legal costs must be fair and reasonable, measured against skill, complexity, urgency, quality and instructions.23 The nature, terms and amount of costs must be disclosed in writing.24

As under the LPA, the new Uniform Law provides that where matters are not likely to exceed $750 in total costs, law practices are not obliged to provide a client with a costs disclosure document. The Uniform Law does, however, explicitly allow for the new LSC to make a Uniform Rule changing this threshold amount.25

The Uniform Law also provides that for matters above $750 but not likely to exceed $3000, law practices need only make a simplified costs disclosure by providing clients with a standard form instead of a full costs disclosure document. The form itself will be developed by the LSC and prescribed in the Uniform Rules.26

Miscalculating and overrunning estimated fees will now have significant consequences for lawyers. If a law practice has not made a disclosure because the total legal costs were not likely to exceed $750, or if it made a standard disclosure because the costs were not likely to exceed $3000, and fees overrun the estimate, the law practice must act or risk losing a right to fees. When predicted costs thresholds are breached, the law practice will be required to inform the client in writing of the expected change in costs and make the required disclosure at that point. Failure to comply with the disclosure requirements will now void a costs agreement and can amount to misconduct.27

In my experience, the earlier in a professional relationship that a client understands exactly where they stand, the better. Clients need to know what services their lawyer can provide, how much they cost, what protections exist over their money and what remedies may be available if those services do not meet their reasonable expectations. Receiving non-trust money is an example.

Disclosure of receipt of non-trust money

The Uniform Law offers important reforms in this regard. It provides that if a law practice receives or holds money that is non-trust money (other than money for the payment of legal costs due to the law practice), it must give the person who provided the money written notice that:

  • the money will not be treated as trust money;
  • the money is not subject to the provisions relating to trust money in the Uniform Law or Rules; and
  • a claim against the fidelity fund cannot be made in respect of the money.28

Non-trust money includes money received by a law practice for a licenced financial service it provides and money received for investment purposes (unless received or invested in the ordinary course of legal practice).29 For example, money received from settlement proceeds is trust money. If, however, the legal matter is completed and the money is subsequently instructed to be invested into a managed investment scheme, the money is then no longer trust money. Money received and invested during the course of the administration of an estate however, where the investment is called in and paid out at the conclusion of the estate, is trust money.

Government lawyers

Government lawyers will now have to hold a practising certificate.30 The Uniform Law will not provide an exemption for government lawyers from the requirement to hold a practising certificate as exists under the LPA. Consequently, most government lawyers practising for government agencies and departments who do not currently hold a practising certificate will need to apply for one and pay the relevant fee.

Non-lawyers (that is those who have not been admitted) who are permitted to engage in legal practice for government under the exemption provided by the LPA,31 will continue to be allowed to do so under the Uniform Law. Those non-lawyers, however, must have been engaged in legal practice within the 12 months immediately before the commencement of the Uniform Law.32

To minimise the practical impact of the new requirement to hold a practising certificate, relevant government lawyers will be able to count their prior legal practice towards the supervision period required of new practising certificate holders.33 In many cases I expect the supervision period to be completely offset by experience.

Compliance audits

The Board will be able to audit a law practice’s compliance with the Uniform Law, the Uniform Rules and other applicable professional obligations if it considers there are reasonable grounds to do so. In determining whether such reasonable grounds exist, the Board may consider complaints made about lawyers within the law practice.34 Under the LPA, firm audits only extended to incorporated legal practices.35

After completion of the audit (or the investigation or examination of a law practice’s trust records), the Board will be able to issue a management system direction. Compliance is compulsory. Such a direction will require a practice to implement and maintain appropriate management systems to enable the practice to provide legal services in accordance with the Uniform Law, the Uniform Rules and other applicable professional obligations.36

A direction will also oblige a practice to provide periodic reports to the Board on the management systems implemented and maintained by the practice and on the practice’s compliance with those systems.37

Professional discipline and dispute resolution

The Uniform Law will introduce a number of reforms to allow for more efficient and effective handling of complaints. For example, a complaint may be made, or recorded, in writing38 to enable the complaint handling process to start as soon as the initial contact is made with the Commissioner’s office. It is possible that a small costs dispute, for example, may be resolved on the spot by the officer receiving that initial contact.

The Legal Services Commissioner is given increased capacity to resolve disputes, deal with complaints and improve outcomes for both lawyers and consumers. The Commissioner can now make binding determinations in consumer matters including:

  • cautioning the lawyer;
  • requiring an apology from the lawyer;
  • requiring the lawyer to redo the work in question at no cost or to waive or reduce the fees for the work;
  • requiring the lawyer to undertake training, education counselling or be supervised; or
  • ordering the lawyer to pay compensation up to $25,000 where such a loss results from the lawyer’s conduct.39

These powers are discretionary. A dispute can still be taken to the Victorian Civil and Administrative Tribunal if it cannot be resolved by the Commissioner.40 Ultimately the Costs Court could also be considered, but that is a more expensive option for consumers where costs are less than $100,000.

To further assist in the resolution of disputes, the Commissioner will now be able to order mediation, and may close a complaint if the complainant does not participate in good faith.41

The jurisdiction of the Commissioner over costs disputes has also been increased. The Commissioner will be empowered to deal with costs disputes where the bill is less than $100,000 (or more if the amount in dispute is less than $10,000),42 and will be able to determine the costs payable where the disputed proportion of the legal costs is less than $10,000.43

Complainants will also no longer be required to lodge the equivalent of the disputed legal costs with the Commissioner. This will mean that the dispute resolution process may begin as soon as a complainant makes contact with the Commissioner’s office.

To further enhance the complaint-handling process, staff investigating complaints will have more investigation tools such as options for search warrants and the power to enter premises.44 The existing obligations on lawyers to produce documents, provide written information and to cooperate with the investigator are maintained.45

The next steps

As well as ensuring that the Board and Commissioner are prepared for the commencement of the Uniform Law in Victoria, my staff and I are undertaking an education campaign to engage with individuals and groups with an interest in the legal profession. This will be done in conjunction with the courts, the LIV and the Victorian Bar. This engagement will continue to develop into a collaborative process involving all areas of the Victorian legal profession and consumers of legal services across the state.

The Board and Commissioner’s websites will be regularly updated with detailed information on the Uniform Law, and bulletins and fact sheets will continue to be published for lawyers and consumers explaining how the changes affect them. We will also continue to work closely with the professional associations, our New South Wales colleagues and the new inter-jurisdictional bodies to ensure that as the Uniform Law and Uniform Rules are implemented there will be minimal disruption to your own practice and to client services.

Once under way, there will be a significant responsibility on all of us to make the new scheme work, deliver efficiencies and harmonise regulation. The early success we achieve with 72 per cent of Australian lawyers will bear on its attractiveness to the rest of the country. Consumers and lawyers alike are entitled to hope that by this uniform scheme the goal of a single, nationwide system of regulating lawyers becomes a reality.

MICHAEL McGARVIE is the Legal Services Commissioner and CEO of the Legal Services Board.

What did you think of this article? Please let us know by leaving a comment below.

1. Legal Profession Uniform Law Application Act 2014 sch 1 cl 419.
2. Note 1 above, s10.
3. Note 1 above, ss 44, 56.
4. Note 1 above, sch 1 sch 1 cl 2.
5. Note 1 above, sch 1 sch 1 cl 21.
6. Note 1 above, sch 1 cl 427.
7. Note 1 above, s10 and sch 1 part 2.2.
8. Note 1 above, sch 1 sch 4 cl 12.
9. Note 1 above, s172.
10. Note 1 above, s174.
11. Note 1 above, s176.
12. Note 1 above, sch 1 cl 44.
13. Note 1 above, sch 1 cl 47.
14. Note 1 above, sch 1 cl 211.
15. Note 1 above, s13.
16. Note 1 aqbove, s73 and sch 1 cl 225.
17. Note 1 above, s170 and sch 1 cl 258.
18. Note 1 above, sch 1 cl 258.
19. Note 1 above, s170.
20. Note 1 above, 2014 sch 1 cl 258.
21. Legal Profession Act 2004 s3.3.70.
22. Note 1 above, 2014 s88.
23. Note 1 above, sch 1 cl 172.
24. Note 1 above, sch 1 cl 174.
25. Note 1 above, 2014 sch 1 s174, sch 4 cl 18.
26. Note 1 above, 2014 sch 1 cl 174.
27. Note 1 above, 2014 sch 1 cls 174, 178.
28. Note 1 above, sch 1 cl 134.
29. Note 1 above, sch 1 cl 129.
30. Note 1 above, 2014 sch 1 cl 10.
31. Note 21 above, s2.2.2(2)(g).
32. Note 1 above, s169.
33. Note 1 above, 2014 s169.
34. Note 1 above, sch 1 cl 256.
35. Note 21 above, s2.7.22.
36. Note 1 above, sch 1 cl 257.
37. Note 1 above, sch 1 cl 257.
38. Note 1 above, sch 1 cl 267.
39. Note 1 above, sch 1 cl 290.
40. Note 1 above, sch 1 cl 300.
41. Note 1 above, sch 1 cl 288.
42. Note 1 above, sch 1 cl 291.
43. Note 1 above, sch 1 cl 292.
44. Note 1 above, 2014 sch 1 part 7.3.
45. Note 1 above, sch 1 chapter 7.


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