Legal Practitioners (Miscellaneous) Amendment Bill

Second Reading

I indicate my appreciation for the contributions of the member for Heysen and the member for Kaurna, and in particular the at least partial support that has been provided from the opposition. I think it is fair to say that both areas of concern on their part, one relating to the interest distribution and, secondly, in relation to the retrospectivity arising out of the obligations for applications that are made out of time to the Legal Practitioners Disciplinary Tribunal, are qualified to be reserved at this stage pending consultation.

In respect of the first matter, can I outline to the house the following because I think it is important, when considering the question of distribution that is being amended here, that I do remind the members about the proposed amendments to section 57A of the Legal Practitioners Act as to the distribution or how moneys can be paid from the interest accrued from trust accounts.

To understand some background here, section 57A tells us that, in relation to the interest that is a accrued on trust accounts, the interest has to be paid to the Law Society, and then it makes provision as to how it is to be applied. I think I need to clarify this by saying that the principle underlying the payment of interest on trust accounts to the society is on the basis that, when individual clients of solicitors place money in their care in trust and the solicitor is obliged to pay those moneys into a trust account, there is interest that accumulates from that and that it would be obviously unreasonable for the financial institution holding the money to have the benefit of that interest.

So there has been now a longstanding provision that any interest on these moneys that are held in trust accounts have to be paid into a combined trust account interest benefit to the Law Society. Under section 57A, subject to some aspects of the bill that allow for the Attorney-General to have some powers of distribution, there is an application that instructs the society that they must deal with those moneys as follows: 50 per cent goes to the Legal Services Commission or other legal centres, 40 per cent goes to the Fidelity Fund, and 10 per cent gets paid to any person nominated by the Attorney-General, subject to conditions that may be imposed by the Attorney-General. So there is some flexibility there.

The member for Kaurna is quite correct in his assertion that for some decades now that 10 per cent has been applied to the Law Foundation of South Australia. They are an important institution headed by a chair that is frequently populated by a Supreme Court judge or other eminent people. I think members of parliament have always been represented. I think the member for Little Para is currently on the foundation board, but in any event it is a worthy organisation—

 Elizabeth, I beg your pardon. It is a worthy organisation. It has an admirable charter and it provides support both academically and in the advancement of legal research and education and the like. Half goes to the Legal Services Commission—I do not think I need to explain to members that, along with community centres, it provides legal services frequently to people who are unable to avail themselves privately of services—40 per cent goes to the Fidelity Fund and 10 per cent goes to the Attorney-General to distribute in the manner I have just suggested.

I need to explain what has happened with the Fidelity Fund, which gets 40 per cent of this. The Fidelity Fund is basically a guarantee fund for legal practitioners. It is for the benefit of people who are the losers in respect of the misconduct or misappropriation by legal practitioners where there has been a negative detriment and who may not avail themselves or have access to alternate means of redress.

I will not go into all the details to qualify it, but, in short, this fund sits there to make sure that, if lawyers do the wrong thing and their clients miss out, or it has a negative impact on them, they have a capacity to be able to get some of their money back or some compensation for the misconduct or failings on behalf of the legal practitioner.

I think that is the primary responsibility of having the Fidelity Fund, but the law under the Legal Practitioners Act reminds me a bit of overextraction from the River Murray. Everyone wants a piece and over the years others have climbed on board to get a share and it has led to a circumstance where the bank account—the available resource—to help people who have been adversely affected by lawyers gets ever diminished because it is slowly being drawn down.

Whilst it has a balance sheet, if we continue to extract from it, as has occurred over recent years—and apparently it had been brought to the attention of the previous government but they had not done anything about it—we are going to end up with a situation where the money that goes into the Fidelity Fund, which is this 40 per cent distribution, is simply not going to be enough to arrest the loss. Potentially, a claim will come along and we will wipe out the fund, so there is a real and present danger if we do not do anything about this.

The amendment before the house is not necessarily designed to be a detriment to the Law Foundation. It is designed to ensure that we make extra provision for money to go into the Fidelity Fund, which frankly was an original and important purpose for having this fund in the first place as well as collecting the interest to ensure that we have that provision.

Just so that you appreciate the operation of the Fidelity Fund, under the act money is paid into the fund from the interest, as I have referred to. There are also certain circumstances in which the Law Society recovers costs or other money by virtue of other actions, and they can have an obligation to pay it in there. It also pays for the cost of any fee paid to the commissioner. The draw on the fund is, as I said, quite extensive and I want to explain that to the house.

All of these are worthy purposes and they are in need of funds in order to be funded. They have been added onto quite extensively, even in the time I have been in the parliament. Money in the Fidelity Fund may be applied to meet all the expenses incurred by the Legal Practitioners Education and Admission Council (LPEAC), the Board of Examiners, the Legal Practitioners Disciplinary Tribunal and the Legal Profession Conduct Commissioner and also the costs incurred by the Law Society in appointing a solicitor to appear in proceedings in which a person seeks admission.

In addition, it is to meet all the costs of investigating complaints under the act and disciplinary proceedings which relate to the work of the commission and the tribunal. It is also to meet all the costs of proceedings instituted by the commissioner for the adjudication of legal costs, the costs of prosecution of offences against this act and the costs consequent on the appointment of a supervisor or manager under this act. That relates to where a practitioner might have been arrested or unfit to continue to operate the practice, or they may have disappeared, and a manager needs to go in. The Law Society attends to that, so there are costs associated with that.

In addition to that, we have the costs of investigations or examination under schedule 2 of the act; the payment of any honoraria, approved by me as the Attorney-General, to members of LPEAC and the tribunal; the payment of the salaries and related expenses of the commissioner (currently Mr Greg May) and his or her staff; the legal costs payable by any person in relation to any action arising from an honest act or omission in the exercise or purported exercise of powers or functions under schedules 2 or 4; the payment of money towards the costs of an arrangement under part 3; the costs of processing claims under part 5 and of paying out those claims; defraying any management fee; and educational or publishing programs conducted for the benefit of legal practitioners or members of the public.

It is a very long list. There are a whole lot of people taking money out of this fund, which they are entitled to do under this act, and it is reducing the pool, just like the River Murray. I make this point and I hope it is clear to people: we cannot just do nothing. Because there is an important list of things that need to be provided for out of this fund, we need to ensure that one of its principal purposes takes priority. That is the basis upon which the government has reviewed this matter and considers that an increase from 40 per cent to 45 per cent of those moneys ought to be paid into the Fidelity Fund.

The other matter, which may be known to many in the profession but perhaps not as well known in the parliament, is that the Law Foundation, as important and impressive as their work is, also has a very significant accumulated reserve, and it continues to increase. I was actually surprised, in coming to office and examining this issue, to find that it is now over $7 million. It has a very large reserve—a growing reserve. The member for Kaurna offered in his contribution one of the reasons they have apparently diminished their payment to an organisation called JusticeNet. Quite frankly, it has a lot of other money that it can draw on if it wishes to apply towards worthy causes that it assesses are important to support.

I am not persuaded by the competing demands of the Law Foundation, which, as Attorney-General, remains my discretion to apply the funds to, by virtue of the reduction of the total pool going from 10 per cent to 5 per cent as a result of this proposal and therefore the consequential increase to the Fidelity Fund. I am not persuaded by the relative merits or plight of the Law Foundation relative to the Fidelity Fund. It is our view, on this side of the house, that the Fidelity Fund must take priority. That is what the purpose of this legislation started as. Others have joined in to seek a share, which I think must be a secondary recognition on the list of priorities.

Another matter I will touch on is the reference to JusticeNet and the claim that prior to coming into government, as the shadow attorney-general, I was complimentary of the good work of JusticeNet but that that has somehow or other changed. The 'sentiment disappeared' I think were the words used in relation to this organisation. For the benefit of members, JusticeNet is a three-person operation and its job is to coordinate the distribution of pro bono work to legal practitioners. It is a program that a large number of legal practitioners around the state sign up to and offer their staff and/or partners to undertake pro bono work.

They are really a sorting house for that distribution. They receive requests, they identify relevant or capable lawyers to undertake that work and they distribute it to them. For people who need to have representation, who cannot afford it through their own means or who may be ineligible for legal aid, this is an important service that is provided by lawyers and it needs to be coordinated. This is an important job. I do not in any way withdraw or diminish my accolades in relation to the work they do. I think they still do excellent work and they do very important work.

I attend their annual walk, which helps raise usually $50,000 plus a year, and I encourage others to do so. I am very proud of the fact that the state government has, via the Attorney-General's Department and in particular via the Crown Solicitor's Office, also been signed up to this service. We provide hundreds of thousands of dollars worth of pro bono work to help those who receive the benefit of this program.

A large amount of their work relates to commonwealth areas of responsibility, particularly migration matters. Not surprisingly, the commonwealth provide quite a significant amount of funds to JusticeNet. I think they are under a three-year provision of substantial moneys, in addition to other funds or benefits, such as what the state government gives them via free legal work to operate. I do not accept the member for Kaurna's statements and I do not detract from the work that is done by that agency.

Why the Law Foundation of South Australia has apparently reduced its contribution to JusticeNet is a matter for the Law Foundation. I cannot answer that. JusticeNet have $7 million and they could apply some of that if they really needed to. If there is a persuasive case to have further funds to support that organisation, I can only suggest that that be revisited by JusticeNet.

In relation to the second matter—the foreshadowed amendments to deal with the Legal Practitioners Disciplinary Tribunal, or applications to it, and in particular the commencement of the proceedings within certain time frames—members would be familiar with the fact that, when claims are made in a lot of legal arenas, there is a time limit within which the matter can be progressed.

There were two areas which the commissioner for legal practitioners presented to the government for consideration. One was as a result of a Supreme Court determination, which said that if you apply for an application and it is out of the time limit and you want leave to be able to proceed, it has to go before three members of the tribunal, not one, which had been the practice of operation. Apparently, six cases had all been approved and if one was invalid they needed to relitigate them.

The second thing was that it was a difficulty for the commissioner, who had a running of the time of that limit from the time of the alleged misconduct, as distinct from the time the complaint was made. The problem with that was, if the commissioner received the complaint at or near the time of the expiration of time, there were some difficulties in being able to progress the assessment of that matter, its investigation and dealing with it in the time required, which may culminate in a recommendation that it be referred to the tribunal or that charges be laid. Then there is another process, usually which comes back through my office, to approve that to happen. That was producing challenges also for the commissioner.

At first blush, the remedy which was provided in this bill, which had been sought by the commissioner, was to provide for the time for lodging of applications before the tribunal to run from the time that the complaint is made as distinct from the time of the misconduct. The second thing is to have made those applications for these to be before one member of the tribunal for leave out of time rather than having to require three to attend.

In addition to that, the effect which the drafting provided was that it would have the retrospective effect and capture not only the six cases that had been dealt with by one, one of which is still pending, but also some other cases for which there had not been an application lodged. The inequities in relation to retrospectivity had been then brought to our attention, firstly by the President of the Bar Association, Mr Mark Hoffmann QC, and otherwise with submissions from SABA, to point out the inequity of progressing with a reform which had this retrospective effect.

We have sat down with them. We have had some discussion about it. We have gone back to the commissioner and explained the difficulty in relation to progressing a law where this has been identified and clearly highlighted. Quite reasonably, we raised it. In fairness to the shadow attorney-general, I think he understands the concerns raised by the Bar Association and is sympathetic to that, so I would be very disappointed if, on further consideration of the matter, they do not accommodate these amendments that are foreshadowed that we will introduce in committee.

But I make this point: on the amendments that are foreshadowed, whilst we have provided some discussion with the shadow attorney-general on the matter, we appreciate that he may need some time to confer with his caucus to identify the position of the opposition, and obviously he will have that time in the course of the time between the houses. I make it quite clear that if any member requires further briefing or information in respect of this I am happy for it to be provided.

I also acknowledge that the Legal Practitioners Act is not something most people in South Australia sit down and read—most of them have probably never even seen it or care about it—but it is an important piece of legislation that deals with the profession and sets out all the regulations of the practice of the law. This is important for the safeguarding of the community generally. It has some fairly sophisticated structures, a significant number of protections, and imposes a number of obligations, which are largely carried out by the Law Society of South Australia and some by the Bar Association, those who are representatives of the independent bar and members thereof.

Otherwise, in the context of this discussion, it is very much in the ambit of the Legal Profession Conduct Commissioner, Mr Greg May. I am appreciative of his advice on where he sees improvement can be made to the process, balanced against the importance of not prejudicing people's rights in the transfer of a regime that is at one date interpreted by the judiciary to be applied as follows and then remedied retrospectively by legislation that has a significant adverse impact. We are not in the business of doing that. On our side we recognise that in those circumstances that needs to be tempered, and that is exactly what these amendments will do.

Again, I thank members for their contributions. I especially want to thank the member for Heysen. He always maintains a diligent interest in all matters legal, and I appreciate his advice in relation to a number of these matters as well as his contribution to the house. I look forward to the passage of the second reading and, if that occurs, moving into the committee stage.