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Scheme Compliance Requirements

Notify the LIV of Employee and Practice Changes throughout the year

If a new practising employee commences with your law practice, you must ensure they:
  • Complete an LIV membership application form and pay the relevant fee, if the practitioner is not already an LIV member
  • Complete the Scheme participation form and pay the relevant fee, if the practitioner is not already participating in the Scheme.
You must also notify the LIV immediately about any of the following changes in circumstances:
  • The structure of your practice changes
  • The number of principals changes from less than 20, to 20 or more principals
  • The law practice’s fee estimate changes from less than $10M, to $10M or more.

Professional Indemnity Insurance

Professional standards legislation and the Scheme require all practitioner and incorporated legal practice par-ticipants to have professional indemnity insurance to an amount that is at least equal to the value of the applicable limitation of liability monetary ceiling set out in the Scheme.

The table below provides a summary of the applicable monetary ceilings:


Class

Description

Monetary Ceiling

1

Participating members who were at the relevant time in a law practice consisting of up to and including 20 principals and where the law practice generated total annual fee income for the financial year at the relevant time up to and including $10 million.

$1.5 million

2

Any participating member which was at the relevant time an incorporated legal practice consisting of up to and including 20 principals and where the law practice generated total annual fee income for the financial year at the relevant time up to and including $10 million.

$1.5 million

3

a) Participating members who were at the relevant time in a law practice consisting of greater than 20 principals; or
b) Participating members who were at the relevant time in a law practice where the law practice generated total annual fee income for the financial year at the relevant time greater than $10 million.

$10 million

4

a) Any participating member which was at the relevant time an incorporated legal practice consisting of greater than 20 principals; or
b) Any participating member which was at the relevant time a law practice where the law practice generated total annual fee income for the financial year at the relevant time greater than $10 million.

$10 million

Scheme Disclosure Statement

Limited liability status must be disclosed to clients
Professional standards legislation requires all practitioner and incorporated legal practice participants to ensure that all documents given to current and prospective clients disclose their limited liability status.
 
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.
What are the consequences of non-compliance with the disclosure statement?

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 incorporated legal practice and if the plaintiff raises the issue. Therefore, failure to comply with any requirements will likely jeopardise your ability to rely on the Scheme.

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 with their law practices’ to:
  • Identify the risks in providing legal services
  • Implement strategies to mitigate those risks
  • Ensure compliance with the Uniform Law and Rules
  • Reduce exposure to claims and complaints.

Provision of Information

All Scheme participants are required to provide information to the LIV in a timely manner as required under the Professional Standards Act 2003 (Vic). Specifically, you must:

  • Immediately advise the LIV when a professional indemnity insurance notification or claim approaches the law practice’s applicable monetary ceiling under the Scheme
  • Provide information to the LIV, on request, about the law practice’s notification and claims, com-plaints and disciplinary findings, and PII 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.

Further Information

For more information about Schemes and compliance, please visit Professional Standards Council.

For more information about insurance, please visit Legal Practitioners’ Liability Committee.


 

Frequently Asked Questions