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Scheme Compliance Requirements

Scheme Participation

LIV membership
The LIV is committed to improving professional standards which enhance consumer protection. Therefore, the Scheme applies to:
  • all full members of the LIV who hold current practising certificates unless they are corporate or government lawyers, or are exempt
  • all incorporated legal practices (ILPs) that are LIV members.
Are all your lawyers Scheme participants? Is your ILP participating in the Scheme?
To limit liability in the event of a claim involving issues of contributory or vicarious liability, the Scheme operates on a ‘one-in all-in’ basis.
This means that the Scheme applies to:
  • all lawyers with an Australian practising certificate at your firm
  • all associated ILPs of the firm.
How do you ensure all your lawyers and ILPs are Scheme participants?
To safeguard your firm’s ability to rely on the Scheme to limit liability, you need to ensure that all lawyers and associated ILPs are Scheme participants. 
You can do this at any time by:
  • completing the applicable LIV membership and Scheme participation forms (see below) to ensure all eligible participants are LIV members and Scheme registered 
  • sending all relevant forms to membership@liv.asn.au, together with the applicable fees.
If there are staff changes, or an ILP is created / dissolved you must advise the LIV immediately by emailing membership@liv.asn.au.
 
LIV membership and Scheme participation forms
The following forms are available on the LIV website:

Professional Indemnity Insurance

Professional standards legislation and the Scheme require all practitioner and ILP participants to have professional indemnity insurance coverage and/or business assets insured to an amount that is at least equal to the value of the applicable limitation of liability monetary ceiling.

Scheme Disclosure

Limited liability status must be disclosed to clients
Professional standards legislation requires all practitioner and ILP participants to ensure that all documents given to current and prospective clients disclose their limited liability status. 
Failure to comply with this requirement carries a penalty of 50 penalty units and jeopardises your ability to rely on the Scheme in the event of a relevant claim.
 
What is the prescribed disclosure statement?
Professional standards regulations require the disclosure statement to be in the following form:
  • Liability limited by a scheme approved under Professional Standards Legislation
  • printed in a font size not less than Times New Roman in 8 point.
What materials need to include the disclosure statement?
With the exception of business cards, the disclosure statement must appear on all materials that are, or could be, given to a current or prospective client.
 
The Professional Standards Councils’ directs that the disclosure statement appear on:
  • letterhead and letters signed by the law practice or on its behalf
  • emails
  • fax cover sheets
  • documents, including written advice, memorandum of fees and invoices, and other documents produced for clients which are not accompanied by a covering letter containing the disclosure statement
  • newsletters and other publications
  • websites.
It is not necessary to include the disclosure statement on:
  • print media advertising, directory listings and similar promotion
  • social media networks, blogs, etc. that are accessed voluntarily by consumers, rather than being given, or caused to be given, by you or your firm to a client or prospective client.

Risk Management Framework

The Scheme exists to support the maintenance of high professional standards in the delivery of legal services by LIV members to protect consumers.
Scheme participants are expected to demonstrate their commitment to high professional standards by implementing policies and processes to:
  • identify the risks in providing the firm’s legal services
  • implement strategies to mitigate those risks
  • ensure compliance with the Uniform Law and Rules 
  • reduce the firm’s exposure to claims and complaints.

Provision of Information

Scheme participants are expected to provide information in a timely manner to the LIV as required by professional standards legislation. 
Specifically, all practitioner and ILP Scheme participants must:
  • immediately advise the LIV on receipt of a claims notification 
  • immediately advise the LIV if an existing claim approaches the firm’s applicable limitation of liability monetary ceiling
  • on request, provide information to the LIV about the firm’s claims, complaints and insurance coverage.

Scheme Compliance Monitoring

Professional standards legislation authorises the LIV to audit the compliance of all Scheme participants at any time.
Currently, the LIV requires participating members to complete an online annual declaration of compliance with Scheme requirements, and undertakes follow-up of non-compliance. 
The annual declaration is undertaken at the start of each calendar year.
The LIV is currently reviewing its Scheme compliance monitoring and enforcement activities and will advise Scheme participants of any changes.

Consequences of Non-Compliance

Non-compliance with the section 35(1) requirement to provide the prescribed disclosure statement to clients will result in you being unable to rely on the Scheme to limit your liability in relation to any relevant client who brings an action against you – see section 30(2) of the Professional Standards Act 2003.

Additionally, sub-sections 35(1) and (4) prescribe a penalty of 50 penalty units for non-compliance with the requirements to use the prescribed disclosure statement and provide a copy of the Scheme upon request.

As well as the prescribed legislative consequences, a court will likely have regard to your level of compliance in determining whether your liability can be limited, in the event a relevant claim is made against you or the firm and if the plaintiff raises the issue. Therefore, failure to comply with any requirements will likely jeopardise your ability to rely on the Scheme.

Further Information

 
Our Member Engagement team is available to assist if you have any questions about LIV membership or Scheme participation, and can be contacted at membership@liv.asn.au or 03 9607 9470.

 

Frequently Asked Questions