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Watch out for regulatory risks

Watch out for regulatory risks

By Paddy Oliver

Practice Management Uniform Laws 


A major source of legal obligations for lawyers is the Uniform Law.

Lawyers by definition understand the law and, more specifically, the areas of law in which they practise. But what about the laws and regulations that directly affect their work as a lawyer and their law firms as a business? There are many legal and regulatory obligations that impact a lawyer and a law firm. Most lawyers have a broad understanding of the legal and regulatory obligations but may not have an in-depth understanding of the risks associated with those obligations.

The major source of legal obligations for a lawyer and a law firm is the Uniform Law and its associated secondary legislation. Other sources include taxation and superannuation laws, workplace health and safety laws, employment laws and the Australian Consumer Law. If the law firm is an Incorporated Legal Practice then obligations arise from the Corporations Act for both the company and its directors. In the future there may be legal obligations arising from the Anti-Money Laundering & Counter-Terrorism Financing Act. Obligations may arise in discrete areas of legal practice, for example, verification of identity for conveyancing.

The major sources of regulatory obligations are the Australian Solicitors Conduct Rules and lawyers’ general ethical obligations, as well as regulatory guidance and principles issued by the Victorian Legal Services Board/Commissioner and/or the Legal Services Council. Obligations under contracts of insurance (Legal Practitioners Liability Committee professional indemnity insurance and other business insurances) are also important.

Identify legal and regulatory risks

Lawyers need to identify all the legal and regulatory obligations which affect them and/or their firms. The reality is that while most lawyers and law firms have a good understanding of major legal and regulatory obligations under the Uniform Law, their understanding of other obligations is lacking.

The most effective way to understand, and then assess the risks of obligations is to identify and then list all obligations in an Obligations Register. A spreadsheet works well. Initially, this is a time-consuming exercise. However, once the Obligations Register has been completed, it is relatively straightforward to keep up-to-date by amending it as legislation and regulations change.

Partners and/or directors also need to undertake a risk assessment process to assess risks to their personal practices and firms due to legal and regulatory obligations. Once the risk assessment has been completed, risk mitigation strategies can be implemented to reduce and manage risks.

No defence

It is no defence, especially for a lawyer, to say that they were not aware of legal and regulatory obligations on them and their firms. Listing those obligations in an Obligations Register and then assessing the risks will ensure that all laws and regulatory obligations are met by the lawyer and the firm. Ultimately, it is good risk – and reputation – management to do this.

Paddy Oliver is the managing director of Lexcel Consulting.

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