The new Legal Profession Uniform Law takes effect from 1 July 2015. Be prepared.

The Legal Profession Uniform Law (“Uniform Law”) is a new statutory and regulatory framework which will apply to solicitors and barristers across NSW and Victoria from 1 July 2015. The Uniform Law is the result of years of negotiations at an intergovernmental level, and years of work by the National Legal Profession Reform Taskforce. At this initial stage, only NSW and Victoria are participating in the harmonisation, though it is expected other jurisdictions will adopt the Uniform Law after it has been implemented in NSW and Victoria. Almost three quarters of Australia’s lawyers work in NSW and Victoria, so this is a solid start to harmonisation. The Uniform Law standardises areas including practicing certificates, billing practices, complaints procedures, and continued professional development.

What is the purpose of the Uniform Law?

A main purpose behind the Uniform Law is to cut costs for law firms and clients. The harmonisation of laws is meant to make it easier and simpler for lawyers and firms practising across the Eastern states. The current system is particularly challenging for small firms operating in NSW and Victoria and the Uniform Law attempts to encourage the growth of smaller law firms and businesses. Section 3 of the Legal Profession Uniform Law (NSW) outlines the objects of the legislation as promoting the administration of justice and an efficient and effective Australian legal profession by:

a.       Providing interjurisdictional consistency in law applying to the legal profession;

b.      Ensuring high ethical and professional standards in the provision of legal services;

c.       Protecting clients and the general public;

d.      Empowering clients to make informed choices about services and costs involved;

e.      Promoting efficient, effective, targeted and proportionate regulation of the legal profession; and

f.        Providing a framework where the legal profession has an appropriate level of independence from the executive arm of government.

Outline of the new statutory regime

1.       Legal Profession Uniform Law

The Uniform Law is incorporated into the law of NSW by the Legal Profession Uniform Law Application Act 2014 (NSW). It covers areas including admission to practice, legal practice, practising certificates, business practice and professional conduct, costs agreements, costs disclosure, billing, costs assessment, professional indemnity insurance and fidelity cover. The Uniform Law will replace the Legal Profession Act 2004 (NSW).

2.       Legal Profession Uniform General Rules (“Uniform Rules”)

The Uniform Rules replace the Legal Profession Regulation 2005 (NSW), and “flesh out” in detail requirements under the Uniform Law, such as the threshold requirements for legal practice, trust accounting, legal costs, and business management.

3.       Legal Profession Uniform Admission Rules (“Admission Rules”)

Under the new regime, admission to practice rules have been separated into their own separate delegated legislation.

4.       Legal Profession Uniform Law Australian Solicitors’ Conduct Rules (“Solicitors Rules”)

The new Solicitors Rules replace the Professional Conduct and Practice Rules 2013 (NSW).

5.       Legal Profession Uniform Legal Practice (Solicitors) Rules (“Legal Practice Rules”)

The new regime also has a short set of Legal Practice rules dealing with transfer of a solicitors practice, debt collection, conducting another business, litigation lending, and loan and security documents.

Uniform Law timeline

February 2009	COAG appoints the National Legal Profession Reform Taskforce to propose draft uniform legislation and in the process enhance the clarity and accessibility of client/consumer protection.
May 2010	The Taskforce release a draft National Law and National Rules. The three month public consultation period began.
December 2010	The Taskforce release the amended draft National Law.
19 October 2011	The Attorney General of NSW and the Attorney General of Victoria commit their respective states to the implementation of the Uniform Law.
3 October 2012	Queensland withdraw from the harmonisation talks. NSW and Victoria continue reform discussions.
5 December 2013	NSW and Victoria sign an Intergovernmental Agreement and formalise their participation.
10 December 2013	Legal Profession Uniform Law Application Bill (Vic) is introduced into Victorian parliament.
25 March 2014	The Victorian Bill receives assent.
27 March 2014	NSW introduce legislation applying the Legal Profession Uniform Law.
20 May 2014	Legal Profession Uniform Law receives assent in NSW.
1 July 2015	The new Legal Profession Uniform Law and Rules will come into effect.

New bodies are created

The Law Society of NSW will continue having the same regulatory functions such as monitoring trust accounting and licensing. The Uniform Law creates the following new bodies:

1.       Standing Committee

The Standing Committee has a general supervisory role, supervising the functions and duties of the Council, Commissioner and local authorities such as the NSW Law Society (s391 Uniform Law).

2.       Legal Services Council (“LSC”)

The Legal Services Council is established by section 394 of the Uniform Law. Each Council is appointed for a 3 year term (s394). The LSC undertakes a number of functions including:

·         Rule making in accordance with the  Uniform Law (s419);

·         Monitoring the implementation of the Uniform Law to ensure consistent application in jurisdictions (s394);

·         Ensuring the framework remains efficient, targeted and effective at promoting the maintenance of professional standards (s394);

·         Ensuring the framework appropriately protects clients (s394);

·         Monitoring and reviewing the exercise of the Commissioner’s functions (s396);

·         Examining the Commissioner’s annual report (s396); and

·         Recommending to the Standing Committee any changes to the role of Commissioner (s396).

3.       The Commissioner for Uniform Legal Services Regulation (“Commissioner”)

The Commissioner has a range of functions including promoting compliance with Uniform Laws and Rules, making guidelines for dispute resolution and professional discipline, and raising awareness about the Uniform Law and its objectives (s398). The Commissioner is to act independently of the Council (s401).

4.       Admissions Committee

The primary function of the Admissions Committee is to develop and maintain Admission Rules. The Admissions Committee also has the role of advising the council about guidelines and directions relating to admission (s402).

What are some of the changes?

1.       Changes to cost disclosure protocols

There is a new “fundamental billing principle” in section 172 that a legal practice must not charge more than what is “fair and reasonable in all the circumstances”. In particular, the costs must be proportionately and reasonably incurred and proportionate and reasonable in amount (s172). The Uniform Law also introduces categories of disclosure:

a.       No formal notification of costs is required where the estimate is less than $750;

b.      “Short disclosure” is required where estimate of costs is between $750 and $3,000;

c.       “Full disclosure” is required where estimated costs exceed $3,000.

The system is still based on estimates, and law firms will not be required to provide a binding fixed fee at the beginning of the matter.

2.       Changes to complaint time limits

There is a reduction in the time limits for complaints processes. Clients must make the complaint within 60 days after the costs become payable or 30 days after receipt of the itemised bill (itemised bills must be requested within 30 days of the costs becoming payable). The time period can be extended by an additional 4 months.  The purpose of these changes is to encourage the quick resolution of matters at a lower cost to the client and the lawyer.

3.       New costs complaints vetting procedure

The relevant Regulator must conduct a preliminary assessment of the complaint and has powers to close the complaint if it is vexatious, misconceived, or lacking substance.

4.       Firms can now advertise their personal injury services

In NSW, legislation was introduced in 2005 prohibiting the advertising of personal injury services. This prohibition is not present in the Uniform Law. However, restrictions on false and misleading advertising still apply.

5.       Liability of principals

There has been a subtle but important change in the liability of principals. Under the current system a principal is deemed liable unless they can prove otherwise under a legislative exception. The Uniform Law has changed the onus of proof. Under the Uniform Law a principal will only be liable for contravention by their law practice if:

·         The principal knowingly authorised/per mitted the contravention; or

·         The principal was in or reasonably ought to have been in a position to influence the conduct of the law practice relevant to the contravention and failed to take reasonable steps to prevent it.

6.       Exemptions for government and corporate (in-house lawyers)

Under the Uniform Law, government and corporate lawyers will not have to contribute to the fidelity fund. This makes sense, as they do not handle trust money. Government and corporate lawyers will also be exempt from professional indemnity insurance requirements. These lawyers may need professional indemnity insurance however if they participate in pro-bono work or volunteer legal work.

This blog post is a short overview of the new Uniform Law. The changes are substantial. For further information, the Law Society of NSW website is a great starting point.