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Professional conduct: the new rules

Feature Articles

Cite as: (2004) 78(1-2) LIJ, p. 46

New Professional Conduct and Practice Rules which came into force on 1 December 2003 codify a lot of common law and make only a few changes of real substance. However, it would be a mistake - and a breach of your professional obligations - not to read them.

By Sarah Gaden

The Professional Conduct and Practice Rules 2003 (the Rules) began life at the Law Council of Australia in the mid-1990s. A set of model rules was eventually adopted in March 2002 in the hope that each constituent body would adopt them, supplemented locally where necessary.[1]

Following the recommendation of the Law Institute’s Rules Committee, they were adopted in their current form by the Institute Council on 9 October 2003, distributed to all practitioners statewide in issue 5/2003 (November 2003) of the RPA News and came into force 21 days later.[2]

Some key elements

Some things stay the same, including the basic threefold object of the Rules, in accordance with s64 of the Legal Practice Act 1996: to ensure compliance with the general principles of professional conduct, to support the administration of justice and to offer a high standard of legal service unaffected by personal interest.

Advocacy and litigation
One significant change is the introduction of dedicated advocacy and litigation rules. These include a range of communication obligations, designed to improve clients’ understanding of court processes and options.[3]

They codify the long-accepted view that it is unethical for a practitioner who is also a material witness to act, other than in exceptional circumstances (r13.4), or for a practitioner to stand as surety for a client’s bail: (r13.5). They incorporate some of a practitioner’s obligations when pleading or alleging fraud: rls (16.2–16.5). They outline obligations in preparing or dealing with witnesses (rls 17.2–17.6), prohibit inappropriate communication with the court outside the knowledge of an opponent (r18.5) and prohibit informal personal familiarity with court members (r19.2), reflecting concerns recently expressed by the Bar Ethics Committee.[4]

In advocacy and litigation, r30 expressly prohibits conduct which is “calculated or likely” to be prejudicial to the administration of justice, diminish public confidence in the legal system or adversely prejudice a practitioner’s ability to practise according to the rules. Any such conduct must now be disclosed promptly to the Recognised Professional Association (r31), as must a number of other “disclosable events” such as bankruptcy and a range of disqualifications and convictions.

The rules clarify some limitations on a solicitor’s duty to act according to a client’s lawful instructions. A practitioner cannot be a “mere mouthpiece” in advocacy or litigation but must exercise forensic judgment, which is defined to exclude actual commencement and several other identified stages of proceedings. This allows practitioners to confine a hearing to its real issues and to move quickly through a case without being open to allegations of failure to follow instructions: rls 13.2 and 13.3.

More guidance is provided on what is meant by a solicitor’s duty to the court. Again, some longstanding practices are confirmed – for example, there is no general obligation to actively correct an opponent’s error: r14. However, misleading statements must be corrected, obtaining the client’s waiver of privilege where necessary, without which the court must be informed that some relevant information may not have been disclosed: r14.5. Obligations to inform the court of relevant authorities are spelled out (r14.6) and there is some guidance for solicitors depending on timing of discovery of various errors or omissions.

Other common ethical dilemmas
The new Rules also provide guidance in line with the common law on several of the real ethical dilemmas of practice – first, conflicts of interest and second, that sometimes difficult balance of legal professional privilege and confidentiality versus honesty and candour.

Conflicts of interest
The general rules relating to conflicts of interest are unchanged. A practitioner must not act in conflict between two or more clients (r8.2, formerly r10(1A)(ii)) and may act only where no material conflict has arisen and there is a reasonable belief that such a conflict arising is unlikely: r8.2B, formerly r10(1B). Many of the same exceptions still apply in relation to a range of arm’s length property and finance transactions (r8.5, formerly r10(2)), requiring fully informed written consent in the form provided in the Schedule. However, practitioners should be aware of some deceptively small changes. For example, removal of the “arm’s length” proviso in old r10(8) appears to prohibit any action for a builder, developer or subdivider and another party in relation to land: r8.7.

The new Rules clarify some obligations surrounding executor’s commission, to advise the client in writing and explain the client’s other options before execution of the will. They also require a solicitor to decline to act and offer to refer a client (other than immediate family) who wants to include the solicitor as a substantial beneficiary under a will: r10.

The actual handling of potential conflicts is a little different. Where no material conflict has arisen but may be more likely than usual, such as when acting for two clients in the same matter, a practitioner must obtain fully informed written consent in advance: r8.3. This must include notice of intention to cease acting if a material conflict arises and an acknowledgment of potential inability to disclose all relevant information, or a potential obligation to advise one client against the interests of the other. However, in the author’s view, the general prohibition in r8.2 and the general obligation to act in the best interests of every client as well as the common law on conflicts mean r8.3 (similar to the old r10(4)) is superfluous at best.

Rule 4 codifies the prohibition against acting against a former client of a former firm, as well as former clients of a current firm, where personally acquired information means the former client might reasonably conclude there is a real possibility of detriment. This is nothing new, yet it is one of the most common requests for assistance made to the Institute’s Ethics Committee. The new Rules provide a timely reminder to all firms to implement an effective conflict search system and to be aware of obligations when changing employment or when employing new staff.

Maintaining clients’ confidences
Practitioners are sometimes invited, or feel ethically bound, to divulge confidential client information. In most situations that is simply not acceptable. There are many good reasons for confidentiality and privilege within the legal system. However, there are exceptions and this is another common dilemma put to the Ethics Committee. Aside from the specific rules for the advocacy and litigation context, the new Rules spell out five situations in which disclosure is permissible (not mandatory). Most obvious are client authorisation (r3.1.1) and information obtained from a non-confidential source: r3.1.5. Permission “where confidentiality has been lost” (r3.1.4) sounds obvious but can be dangerous. If you are relying on information in the public domain, make sure you are not confirming something that was previously just a rumour, lending weight by your credibility as a solicitor. Not only will you be in trouble under the Rules but you may just find yourself on the wrong end of defamation proceedings.

Compulsion of law is an interesting exception. Existing guidelines[5] make it clear that a warrant alone does not justify handing over an otherwise privileged file. The Ethics Committee accepts that a court order does oblige disclosure,[6] although even that view is challenged by some.

The most curious exception allowing disclosure of confidential information is “in circumstances in which the law would probably compel its disclosure, despite a client’s claim of legal professional privilege, and for the sole purpose of avoiding the probable commission or concealment of a serious criminal offence”: r3.1.3. Previously, in Victoria it was generally accepted that a solicitor had some rights of disclosure where a client revealed an intention to commit a serious criminal offence.[7] Inclusion of the word “concealment” extends this approach to disclosures of past offences. The public policy arguments for disclosure of “past offence information” are weaker – it is not after all going to stop the crime from happening – but one can imagine situations where it may be warranted.[8] Similarly, if a client informs a practitioner of an intention to breach an order, the practitioner must warn the client of the dangers of such action but must not inform the court or opponent unless there is reasonable belief of threat to a person’s safety: r15.3. Fortunately, the permissive wording of the Rules (particularly outside advocacy and litigation) retains room for a solicitor’s personal judgment on such fact-dependent issues.

Within the advocacy and litigation rules, special provision is made for the client who confesses but pleads not guilty: r15. In summary, the practitioner may cease acting, time permitting and with the client’s consent. If continuing to act, the practitioner may argue that the client is not guilty for some reason of law, but must not set up an affirmative case inconsistent with the confession: r15.2.

Undertakings
There is a view (correct in the author’s opinion) that increased legislation of ethical obligations encourages people to think about ways of getting around them. Nowhere is this more likely to happen than under the new rules relating to solicitors’ undertakings. It has always been unwise to offer an undertaking that relies on a third party, no matter how well-intentioned. It is now a blatant breach of the professional conduct rules (r22.2) and therefore potentially unsatisfactory conduct or, at worst, misconduct under s137 of the Legal Practice Act, with all the possible sanctions that implies. Equally, it is now expressly prohibited to seek such an undertaking from another practitioner: r22.3.

Communications with others
Solicitors all know they must not communicate with another practitioner’s client. In exceptional circumstances this can create real problems. The Rules set out very limited situations in which contact will be acceptable. In litigation, it is allowed with consent or to make fair and urgent inquiries about representation: r18.4. In non-litigious matters, r25 (under the heading “Relations with other practitioners”) allows communication either with consent or on notice to the other practitioner, solely for the purpose of asking the client to contact their solicitor, again provided the communication is urgent and “not unfair”.

Rule 28 prohibits communications with third parties which are untrue or calculated to mislead, which threaten criminal proceedings in default of civil settlement, or which affect legal rights without suggesting independent advice.

If a practitioner obtains services from a third party in a client’s matter, the practitioner must now inform the third party of the arrangements for payment, including whether the practitioner will be personally liable: r26. This aims to deal with the relatively common problem of third parties providing services and being unable to recoup their fees. It reflects existing recommended practice in several areas.[9]

Offensive and provocative language and conduct
Practitioners must avoid bringing the profession into disrepute. Whether this prohibits the use of bad language has been the subject of some debate by practitioners under investigation by Professional Standards. New r21 expressly prohibits “offensive or provocative language or conduct” in dealings with other solicitors, although exactly what will offend or provoke remains undefined and must depend on the facts. Common sense and common courtesy are called for in equal measure.

Termination of retainer
Termination of retainer and the exercising of solicitors’ liens are often poorly understood.[1]0 The guidance offered in the new Rules may be helpful. If you terminate a retainer (as opposed to the client terminating, or termination by agreement, or your employment ending at the retained firm), you must have just cause and provide reasonable notice: r6.1.3. In serious criminal matters, failure to pay will not amount to just cause without adequate warning to both the client and the registrar: r6.2.

One anomaly in the new Rules is the “six-year rule” for retention of client documents in r7.2, inconsistent with the seven-year rule in s443 of the Legal Practice Act. It is also worth noting that the operation (and perhaps the effectiveness) of liens is limited by rls 7.4 and 23.4. These require documents essential to current proceedings to be delivered to the client in exchange for “satisfactory security” or to the new practitioner on a number of other pre-conditions, reflecting current practice in some criminal jurisdictions.[1]1 There is no provision in the Rules for the client who moves on to a third practitioner, who is uninvolved in any earlier agreement in relation to the first practitioner’s lien.

Other changes
Other changes scattered through the Rules mean they are essential reading for all practitioners. To give a few examples, old r7 – the rather confusing prohibition against certain loan negotiation commissions – has been omitted. Under new r38, practitioners now have 60 days (up from 30 days in old r5) to comply with a request for an itemised bill of costs under s180 of the Legal Practice Act.

Rules relating to practice names and hours (r36) and delay (r2.2) remain unchanged, as do the general rules relating to advertising: r35. However, there are new additional requirements for “no win no fee” advertising,[1]2 and a requirement that inclusion of debt collection or mercantile agencies on letterhead must not be in a manner likely to mislead the public: r29.1.

Conclusion

In real terms, the new Rules are largely a codification of existing common law. Is this a good development? Certainly there is a valid argument that we should welcome the extra guidance. The new Rules clarify how to reduce complaints, or at least how to reduce the chance of some complaints being upheld. They are said to reflect the consensus view on best practice.

Unfortunately, the perceived need to codify our ethical obligations is also something of an indictment on 21st century legal practice. Where have we gone wrong? Without room to exercise our own value judgments, what role will be left for personal ethics in one of the original noble professions?

For a profession striving to achieve best practice, professional conduct rules must be a work in progress. This is illustrated by the re-writing of our conduct rules after only three years and multiple times since the introduction of the current Legal Practice Act. Practitioners wishing to comment on the 2003 Rules are encouraged to write to the Institute’s Rules Committee.


SARAH GADEN is the manager of legal ethics at the Law Institute. With a background in commercial litigation, white-collar crime and recognition and prevention of money laundering, she is available to assist members facing ethical dilemmas across all practice areas (tel 9607 9383, email sgaden@liv.asn.au).

This article is not intended to be a comprehensive guide. It merely highlights some of the key changes that all practitioners should take the time to follow up.


[1] See Introduction to the Rules.

[2] At the time of writing, it is expected that some further minor changes may be adopted at the request of the Office of the Legal Ombudsman, to whom the rules are sent for comment under ss74-76 of the Legal Practice Act 1996. Any such changes are likely to be effective from February 2004 and will be notified to all practitioners separately.

[3] See, for example, r12 Duty to Client.

[4] See, for example, Bar Ethics Committee Bulletin no 6 of 2003.

[5] See, for example, General guidelines between the Australian Federal Police and the Law Council of Australia as to the execution of search warrants on lawyers’ premises, law societies and like institutions in circumstances where a claim of legal professional privilege is made, as amended in March 1997 and available from the LIV Ethics Department.

[6] See, for example, R3955 (May 2003, published November 2003), in which a practitioner was advised to retain confidential information on behalf of a client, presumed deceased subject to a court order to the contrary.

[7] See, for example, Lewis, G and Kyrou, E, Handy Hints on Legal Practice (2nd edn), 1993, LBC, at p25; R v Cox and Railton (1884) 14 QBD 153.

[8] For example, establishing the innocence of another person wrongly charged may justify disclosure of privileged information – see R v Barton [1973] 1 WLR 115.

[9] See, for example, Guidelines for Cooperation Between Doctors and Lawyers, 2001, AMA Victoria and Law Institute of Victoria, under “Payment of fees for reports”.

[10] The LIV Ethics Committee and inquiry lines receive numerous queries indicating real confusion within the profession about rights and obligations on termination of retainer.

[11] See, for example, County Court of Victoria (Criminal Jurisdiction) Practice Notes No 1 of 2001 at para 2.9 and No 1 of 1999 at para 13.

[12] See notes on legal costs on page 72 of this journal.

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