Ch 9 And in this Corner: New South Wales and Victoria

And in this Corner: New South Wales and Victoria

The LPUL took a proactive and progressive regulatory framework for ILPs and turned it into a reactive and regressive one...it took the jewel in Australia’s regulatory crown—and Australia’s regulatory gift to the world and tossed it away.

Prior to July 1, 2015, the regulatory framework for both New South Wales and Victoria was highly comparable to that of Queensland. Indeed, as explained above, the regulatory frameworks of both Queensland and Victoria were modeled upon that of the pioneer, New South Wales. However, the Legal Profession Uniform Law (LPUL), to which New South Wales and Victoria have ascribed,[1] has brought some notable differences for those states, as follows:

Elimination of the role of Legal Practitioner Director for ILPs; Modification and shifting of corresponding responsibilities: The LPUL eliminates the position of LPD for ILPs. At the same time, it modifies the responsibilities of this role, and it shifts those responsibilities to fall upon a larger group of people.

More specifically, under the LPUL, each of the “principals” of each type of legal service provider (not just ILPs) is responsible for the firm’s compliance with professional conduct and other rules.[2] As regards ILPs, “principals” are each of the lawyers of the ILP who are “validly appointed” directors under the Corporations Act.[3] As regards other types of structures, and notably partnerships, “principals” are each of the partners of the firm.[4]

The liability of each principal for the acts and omissions of the ILP is more nuanced than that of an LPD: a principal bears responsibility only if the principal “knowingly authorized or permitted” the act (or omission), or if the principal “was in or ought reasonably to have been in a position to influence”[5] the relevant conduct of the ILP.[6]  In comparison, while the liability of an LPD might not go so far as to qualify as strict liability, nor is it limited by terms such as “knowingly” or “was in a position to influence.”

Authorised Principal:” The LPUL requires ILPs have at least one lawyer to serve as an “authorised principal.” This person must be authorized under his/her practicing certificate to supervise others. [7]

Unincorporated Legal Practices: Multi-disciplinary practices are no longer regulated separately but as part of a larger category of Unincorporated Legal Practices (ULPs). This structure allows an Australian lawyer to form a partnership not only with persons who are not lawyers, but also with persons who are lawyers in foreign countries (but not registered in Australia) and with foreign law firms and other legal entities. Like ILPs, ULPs must appoint at least one Australian lawyer to serve as an “authorized principal.”[8]

Appropriate Management Systems: The LPUL does not contain a positive or proactive requirement for ILPs to have appropriate management systems in place. Instead, in the event of an audit by the regulator, the law allows for the regulator to require an ILP (as well as a ULP or any other kind of law practice) to implement and maintain appropriate management systems, and to provide periodic reports.[9]

Limited Right to Audit: The LPUL scales back the regulator’s authority to audit. Instead of having the authority to audit for no reason and for any reason at all, instead the Commissioner has the authority to audit only when it considers “there are reasonable grounds to do so,” based either upon the conduct of the ILP or of one of its lawyers or employees, or upon a complaint made against the ILP or one of its lawyers or employees (under the LPUL, this limited authority to audit also applies to other kinds of law practices).[10]

           Taking a Step Back

Considered as a whole, these differences with respect to ILPs that were ushered into New South Wales and Victoria under the LPUL take a step back from the pioneering regulatory framework first developed in New South Wales (the regulatory framework that is still in place in Queensland and the other Australian states). While they do not call into question the existence of ILPs or their right or ability to operate, they scale back significantly the regulator’s ability to regulate them. They do this in four ways:

1)         The LPUL eliminates the requirement to appoint at least one LPD, who, under the prior regime, had not only the responsibility to assure that the ILP implements appropriate management systems, but also a clearly and personally assigned liability in the event of unsatisfactory professional conduct or professional misconduct by the ILP. By eliminating this role, and spreading a lower level of responsibility (they must have knowingly authorized or permitted the act or omission or have been in or ought reasonably to have been in a position to influence it) amongst all of the ILP’s directors, it becomes much more difficult to identify precisely which individual(s) in an ILP has responsibility for what (mis)conduct, and it becomes more difficult to prosecute any one or more individuals for unsatisfactory or misconduct.

This change under the LPUL has been interpreted as a positive one, for the reason that it increases the number of persons responsible.[11] Commentators have predicted that it will be difficult for a principal—any individual principal—to escape liability because he/she would be forced to assert the “stupid lawyer” defense along the lines of “I was too busy” or “I was too naïve” to understand what was happening or do anything about it. On a superficial level, interpretations of this kind are difficult to argue with, at least in theory. But they fail to go beyond the theory to take into account the actual experience of the United States.

In fact, the language of the relevant sections of the LPUL is highly comparable to that of ABA Model Rules 5.1[12] and 5.3.[13] Taken together, these two Rules require a law firm partner and lawyer(s) having managerial responsibility in a law firm to take “reasonable efforts” to ensure that the firm has in effect “measures” that give “reasonable assurance” that the other lawyers as well as nonlawyers in the firm act in conformity with the Rules. Under Model Rules 5.1(c) and 5.3(c), a lawyer is responsible for the conduct of another person—lawyer or nonlawyer—in the firm if either (i) the lawyer ordered the conduct or knowingly ratified the conduct, or (ii) the lawyer, in a partnership or managerial role, or with “a direct supervisory authority,” knew of the conduct at a time when its consequences could have been avoided or mitigated but failed to take reasonable remedial action. These rules are little enforced in the US in large part due to the way they both diffuse responsibility among a large group of persons and apply a “knowing” or “reasonable” threshold. Together, those elements of the rules make it difficult to identify precisely which individual(s) are responsible for precisely what offense(s).[14]

As long ago as 1991, Ted Schneyer described Model Rule 5.1(c) in particular as a disciplinary “dead letter.”[15] He came to this conclusion in part because, as an evidentiary matter, in a group practice setting, courts may have difficulty in assigning blame to particular lawyers, each of whom has an incentive to shift responsibility onto others in the firm,[16] and in part because even if misconduct can be linked to one or more particular lawyers in a firm, courts and disciplinary agencies may be reluctant to sanction those lawyers for fear of making them scapegoats for others in the firm who would have taken the same actions to further the firm’s interests.[17] It is certainly possible that Australian regulators will not be susceptible to these same difficulties or reluctance, but the US experience over a period of several decades suggests otherwise.[18]

2)         The LPUL eliminates the generally applicable and proactive requirement that ILPs have appropriate management systems in place. Instead, the regulator can require they be put in place only reactively in the event of a compliance audit.[19]

3)         The LPUL significantly restricts the regulator’s authority to conduct a compliance audit—the regulator may do so only if “there are reasonable grounds” based upon specific conduct or a complaint made in relation to the ILP or one of its lawyers or employees.[20] (Of course, it remains to be seen how broadly the regulators, and perhaps subsequently also the courts, will interpret the term “conduct”).

4)         By reason of the combination of (1) and (2), the LPUL eliminates the grounds upon which the regulator asserted its authority to require ILPs to perform self-assessments.[21]

In sum, it could be argued that the LPUL took a proactive and progressive regulatory framework for ILPs and turned it into a reactive and regressive one. Stated more strongly, it could be argued that it took the jewel in Australia’s regulatory crown—and Australia’s regulatory gift to the world (based on Schneyer’s and Fortney’s high estimations)—and tossed it away.

Why? How Did This Happen? How Could This Happen?

In order to answer those questions, it is necessary to take a step back and look at the LPUL as a whole. Its principal purpose is much larger and more ambitious than the simple question of the regulation of ILPs: its principal purpose, as the name suggests, is to make uniform the regulatory framework for legal services across the country, in order to create “a common legal services market.”[22] Taken as a whole, the regulations governing lawyers and legal services in Australia vary widely from state to state, with the result of imposing significant costs and administrative burdens on lawyers and legal practices that seek to operate across more than one state. The principal motivation of the LPUL is to reduce those costs and administrative burdens[23] (the expected extent to which was detailed in a lengthy Consultation Regulation Impact Statement[24]). In this context, the LPUL seeks to standardize the rules across the states with respect to, just to name some examples: practicing certificates (bar admission), cost and billing arrangements, client trust accounts, complaint handling processes, professional liability insurance, professional discipline, and continuing professional education.[25] The resulting document is lengthy: the LPUL itself is over 360 pages,[26] and Victoria’s version, as enacted, totals 575 pages.[27]

Indeed, most of the literature in the Australian press and issued by commentators and the competent regulatory bodies at the time the LPUL was adopted and then entered into effect in New South Wales and Victoria either does not refer to ILPs specifically,[28] or mentions them grouped together with other types of “law practices” (sole practitioners, law firms), without a specific focus on how or why the regulatory framework for ILPs has changed, or what the consequences of those particular changes may be.[29] To the extent the literature might focus on ILPs more specifically, it might mention that the position of LPD has been eliminated and that a general responsibility for the conduct of the ILPs has been spread across a larger group of persons (the directors), it might mention the elimination of the proactive requirement to have appropriate management systems in place, and it might mention the limitations on the regulator’s authority to audit, but it does not mention the elimination of the requirement to conduct a self-assessment and it does not examine these changes in any depth.[30] Notably, beyond the overarching purpose of uniformity, there is little or no explanation or examination of the reasons for these changes as they relate to ILPs, or their expected consequences. Most of the available literature announcing the adoption of the LPUL and describing it gives the impression that either no one has thought about it, or, if someone has, they didn’t think that, in the larger context of the LPUL as a whole, it was important enough to merit any particular focus.

Does this mean that the changes the LPUL brought with respect to ILPs were an accident? Does it mean that they were made not with any specific intention on the part of the decision makers but simply as an unintended by-product of the process?

The response to that question is yes, and no. To understand, we have to go back even further, to the time of the development of the LPUL:

The draft bill that was ultimately adopted in New South Wales and Victoria as the LPUL was the work product of a special group established in April 2009 by the Council of Australian Governments (COAG) and called the National Legal Profession Reform Taskforce.[31] The 5-member Taskforce was made up of two Attorneys General, a representative of the Law Council of Australia (a national representative body of the legal profession), and two representatives of the Department of Justice (of Victoria and the Australian Capital Territory, respectively).[32] At the same time, the COAG also established a Consultative Group for the purpose of advising and assisting the Taskforce. The 18-member Consultative Group included principally representatives of law societies (representative bodies that share regulatory authority with the independent Legal Services Commissions in the Australian states) and the legal profession, as well as one representative of an ILP (Andrew Grech of Slater & Gordon), a representative of a consumer action group, a small number of judges and academics, and one representative of a Legal Services Commission (John Briton, the Legal Services Commissioner for Queensland).[33] During a consultation period of just over one year, the Taskforce issued a number of consultation documents, with respect to which the members of the Consultative Group had the occasion to express their opinions to the Taskforce both orally during a series of meetings, as well as in writing.[34]

The Taskforce’s consultation documents included a paper issued in November, 2009 that addressed the topic of business structures specifically.[35] This document began with these words:

The question of how different business models might impact on the responsibilities and liabilities of those who provide legal services has been a controversial issue in the past. For this reason, Incorporated Legal Practice and Multi-Disciplinary Partnerships are subject to their own regulatory regimes in the Model Bill. As there is now more confidence in different business structures, and in accordance with the Taskforce’s desire to simplify the legislation, the Taskforce proposes a new system that applies consistent standards to law practices of all kinds, while seeking to ensure that legal service providers cannot hide behind the corporate veil.[36]

With these words, the Taskforce signaled that within the larger purpose of standardizing rules across the states, the Taskforce had another purpose of also standardizing the rules across business structures, and notably to modify the rules such that all business structures, ILP or not, would be subject to the same regulatory standards.

In this context, the consultation document proposed a number of regulatory objectives for the LPUL, including:

1)         That the legal professional obligations for legal practitioners who are principals (partner of a traditional structure or director of an ILP or MDP) be the same for all principals, regardless of whether they practice in an ILP, an MDP, or another (traditional) structure;

2)         That each principal of a law practice be responsible for ensuring that all reasonable action is taken to ensure that: (i) all the legal practitioners within the law practice comply with their professional obligations and (ii) the legal services provided by the law practice are provided in accordance with the applicable professional obligations;

3)         That if the regulator considers it necessary to do so, the regulator may conduct an audit of the compliance of a law practice with the professional rules, and the management of the provision of legal services by the law practice;

4)         That if the regulator considers it necessary to do so, the regulator may require a law practice to: (i) ensure that an appropriate management system is implemented and maintained to enable the provision of legal services by the law practice in accordance with the professional rules and obligations of legal practitioners within the law practice, and (ii) provide periodic reports on its compliance with the appropriate management system.[37]

Briton warmly welcomed these proposals by the Taskforce, writing:

I strongly support the central argument of the paper that the principals of all law firms should be subject to the same overarching professional obligations irrespective of the business structure of their firm.

I have argued previously that the single most effective reform we could make to better protect consumers of legal services and to better promote, monitor and enforce high standards of conduct in the delivery of legal services would be to make all law firm principals subject to the same obligations as legal practitioner directors of incorporated legal practices and to make all law firms subject to the same regulatory oversight that now applies only to incorporated legal practices. The Taskforce’s proposals would effectively achieve just that.[38]

In endorsing the Taskforce’s proposals, Briton cited Parker’s research, which both “found ‘compelling evidence’ that requiring incorporated legal practices to keep and implement appropriate management systems and to undertake self-assessment audits has achieved ‘extraordinary cultural change,’” as well as resulted in a significantly reduced number of complaints.[39]

Briton did suggest a few modifications to the Taskforce’s proposals, most notably that the regulator “must conduct an audit in such a way as to keep the compliance cost to a law practice subject to audit proportionate to the value of the information that is sought.” Further, Briton pointed out that he would expect an oversight regulator to monitor the actions of the lower-level regulator to ensure there is not overreaching.[40]

For Briton, the regulator’s unencumbered authority to audit a legal practice was particularly important because “we have [no] reason to believe that consumers identify and bring to attention more than a fraction of the conduct that might justify a complaint thereby enabling the appropriate action to be taken.”[41] In fact, Briton’s experiences as Legal Services Commissioner had convinced him that most unsatisfactory as well as unprofessional conduct was never the subject of a complaint. For that reason, in his opinion, the regulator could not effectively discharge its duties without an unencumbered authority to audit, and notably the authority to audit in the absence of a complaint.[42]

Andrew Grech of Slater & Gordon (an ILP and the first law firm in the world to list its shares on a publicly traded market), echoed Briton’s endorsement:

It has been our experience at Slater & Gordon that the need to be externally accountable for the implementation of AMS has tended to create a greater level of awareness of compliance issues and as a consequence has generally improved the quality of our legal services. The application of AMS across all legal practices, regardless of the ownership structure, should serve to improve professional standards and, accordingly, ethical standards and client service should also improve.[43]

However, Grech’s endorsement of the Taskforce’s proposals differed from Briton’s in two ways: The first difference was that Grech was concerned that “from a practical perspective the requirements may prove unnecessarily cumbersome” for sole practitioners or small firms, and thus he proposed “an arbitrary cut off point as a definition of small firm,” for whom the implementation of AMS would not be required. The second difference is that while Grech did not express disagreement with the extension of a general responsibility to all principals of a law practice (the Taskforce’s first proposal above), he advocated that all ILPs should also have at least one director who is an LPD.[44]

Finally, one more member of the Consultative Group also endorsed the Taskforce’s proposal, and notably as it related to compliance audits. That member was Carolyn Bond, Co-Chief Executive Officer of the Consumer Action Law Centre of Victoria (again, this was the only consumer/public representation in the Consultative Group). Specifically as regards compliance audits, she stated that they were “an important part of the new system. A measure that has shown to prevent problems before they arise.”[45]

As strong as these endorsements of the Taskforce’s proposals were, the opposition by many other members of the Consultative Group was stronger, even vehement:

A first example is Robert Milliner, Chairman of the Large Law Firm Group Limited, an organization that represents Australia’s largest law firms. Of the Taskforce’s four proposals listed above, he objected to three of them.

As regards the second proposal, he opposed a general responsibility of a principal for the actions of other legal practitioners of the firm and for the services of the firm as a whole. Instead, he argued, “there should be no liability for acts which the principal could not reasonably have known of or could not influence or acts which they exercised appropriate diligence to prevent.”[46] The reason for this, he explained is that “it is not realistic to expect that principals are in a position to control all behaviour that may give rise to a liability,… especially in larger practices.”[47]

As regards the Taskforce’s third and fourth proposals, he stated:

The power to give management system direction [AMS] is unacceptably paternalistic, draconian and intrusive… The extension of the compliance auditing … powers to practices other than incorporated legal practices is unwarranted and highly intrusive. These powers should not be exercisable without cause. They should also remain exercisable only in relation to incorporated legal practices. No case has been made out to justify the expansion to unincorporated practices—there is no justification for allowing this intrusion into management of a business by principals who have unlimited liability for that business.[48]

A second example of the strong, if not vehement objections to the Taskforce’s proposals came from a collective group of eight out of the 18 members of the Consultative Group and consisting, for the most part, of leaders of various Australian Law Societies (again, representative bodies that share regulatory authority with the independent Legal Services Commissions).[49] Their objections were focused upon the Taskforce’s third and fourth proposals, stating:

The reason for the current regulatory obligations placed upon ILPs and MPDs…was to extend to the corporation, in its capacity as a separate legal entity, the “professional obligations” that already applied to Australian Legal Practitioners. The ILP was required to address these obligations in part by having in place “appropriate management systems,” which, in turn were designed to balance the potential limitation on liability of the principals in a corporation. There is no demonstrated need to extend this requirement to partnerships, which do not enjoy the potential limitation on liability, and which have limitations on the persons who may be partners.

To impose the additional obligations of [the third and fourth proposals] upon the many thousands of non incorporated law practices whose participants are required to observe their professional and other conduct obligations anyway is clearly unwarranted…[A regulator’s audit] has the potential to interfere at a micro level in the running of a business, and is fraught with difficulty…This proposal is also seriously at odds with the expressed desire to reduce compliance costs…We recognize that risk management, improved practice management and a sound understanding of applied ethics will support improved practice. However, we consider that this ought to be the primary work of the profession, through its member services organisations.[50]

The Taskforce was obviously swayed by these arguments as well as by Milliner’s. At the end of the consultation process, the Taskforce issued an “Interim Report on Key Issues and Funding,” in which it acknowledged that “concerns have been expressed that the Commissioner’s power to conduct compliance audits is unnecessarily broad,” notably because the Commissioner could conduct an audit simply because it considered it necessary to do so. The Taskforce explained that it had changed its position with respect to compliance audits, in favor of a compliance audit function that is “appropriately targeted.”[51] More specifically, the Taskforce:

now proposes a more clearly defined power. Under the proposal, the Commissioner may conduct an audit of the compliance of a law practice… if he or she considers there are reasonable grounds to do so, based on: (a) the conduct of the law practice or one or more of its associates; or (b) a complaint against the law practice or one or more of its associates. … In addition, the Commissioner may give a management system direction to a law practice if, after conducting a compliance audit, he or she considers it reasonable to do so.[52]

Indeed, as explained above, it is this proposal by the Taskforce that was ultimately reflected in the LPUL.

In sum, the LPUL rejects the world’s “prototype” for proactive, management based regulation, and the foundation of an “ethical infrastructure” as the result in part of an apparent oversight, and in part of an apparent miscalculation (or, if not a miscalculation, then an unfortunate ordering of priorities).

The apparent oversight concerns the elimination of the role of LPD. Nothing in the available documentation of the work of the Taskforce and the Consultative Group indicates that at any point either group or their individual members fully or directly addressed the fact that the LPUL would eliminate the role of LPD, what the reasons for this elimination were, or what its consequences might be. The only document that expressly mentions the role is Andrew Grech’s submission on the topic of business structures, in which he argues that the role should be maintained. While it is not clear by any means, it appears that the generally accepted assumption by the members of the Taskforce and the other members of the Consultative Group (that is, save for Grech) was that by extending a general responsibility across all the principals of a law practice, the singular role of the LPD was no longer necessary. Other than Grech, it does not appear that anyone at any point questioned this assumption.

The apparent miscalculation (or unfortunate ordering of priorities) concerns the elimination of the proactive requirement that ILPs have in place AMS and to conduct self-assessments and the significant restrictions placed upon the regulator’s authority to audit. At the beginning of the consultation process, the Taskforce fixed as an objective not only to make uniform the rules that governed the various states, but also to make uniform the rules that governed the various types of business structures. At the beginning of the process, the Taskforce appeared optimistic that it could do so not by lowering standards to the lowest common denominator, but, instead, by raising them to the highest. This optimism is evidenced in Taskforce’s November, 2009 consultation document, which proposed extending most if not all of the regulatory framework applicable to ILPs and MDPs to all types of structures. What the Taskforce appears not to have anticipated was the strong—vehement—opposition on the part of certain members of the Consultative Group. Nor, it appears, did the Taskforce anticipate that it would cede to that opposition yet at the same time maintain the objective to make uniform the rules governing the various types of business structures. The end result was that it was no longer an option to simply leave the higher standards applicable to ILPs and MDPs in place, without extending them to other types of structures. Instead, in order to meet the objective to make uniform the rules governing different business structures, those standards had to be lowered. It was in this way that Australia tossed away the jewel in its regulatory crown and negated its regulatory gift to the world.

John Briton has strongly criticized the LPUL for these reasons, stating:

The LPUL extends the power to conduct a compliance audit to all law firms but at the same time narrows it in a way which robs it of its greatest strength as a regulatory tool, its capacity to be used proactively—and in a way which is entirely unnecessary to protect law firms from being subjected to an unjustified, additional regulatory burden. It shrinks the broad, unfettered discretion [the prior framework gave] the relevant regulatory authorities to conduct a compliance audit of an ILP, albeit only of an ILP, to a discretion which is properly exercised only in response to conduct which has or is alleged to have occurred in the past—and conduct which inevitably comes to attention only haphazardly, in ways which underreport conduct which ought attract regulatory scrutiny by many tens, if not hundreds of times.

The consequences are all bad. The effect of the LPUL will be to prevent the relevant regulatory authorities using the compliance audit power imaginatively to ‘identify the roots of potential problems in advance’—by requiring law firms to participate in on-line ethics checks, for example, and by inventing and deploying other like tools. Certainly it will prevent them even from continuing much less extending to all law firms the program of self-assessment audits that has proved so successful with ILPs.

The LPUL was designed in this respect either in ignorance of or disregard for the evidence that self-assessment audits have achieved … ‘extraordinary cultural change’. [There is] well-documented evidence that ILPs which have completed a self-assessment audit are two-thirds less likely to be subject to complaint than ILPs which have not, evidence which has been complemented more recently with similarly well documented evidence that the large majority of the directors of ILPs which have completed a self-assessment audit acknowledge that the process prompted their firm to deliver improved client service. So much for evidence based policy—and another sure sign that the profession has been more responsive to practitioners’ concerns than those of the general public.

And I note with some irony that while the LPUL takes Australia backwards in this respect there is forward momentum elsewhere, momentum premised in no small part on the Australian experience in conducting compliance audits and that very same evidence.[53]

Briton has not been alone in his criticisms. Tahlia Gordon (who from 1994 to 2013 worked with Steve Mark at the Legal Services Commission of New South Wales) together with industry commentator Paddy Oliver, observed:

With the bar being this high to trigger a compliance audit (or an investigation or examination) it can be safely assumed that few compliance audits will be carried out with even fewer management systems directions being given.

So, in an attempt to stop “over regulation” the leaders of the profession have, potentially, done many law firms and clients a disservice by ensuring that appropriate management systems will now not be considered as a positive addition rather something which must only be done after regulatory intervention. This is an absolute shame, particularly when many jurisdictions outside Australia are either in the process of, or thinking about, implementing AMS.[54]

Indeed, in part IV below this book examines the Canadian provinces that are, as Briton, Gordon and Oliver have alluded, exploring the implementation of AMS (pioneered in but now rejected by New South Wales) in their own jurisdictions.

Stories

John Briton, former Legal Services Commissioner, Queensland and member of the Consultative Group to the National Legal Profession Reform Taskforce: Briton explains why he, a nonlawyer, was appointed to head the Legal Services Commission and he compares the regulatory framework of Queensland to that of New South Wales and Victoria under the LPUL.

This chapter is an excerpt from Modernizing Legal Services in Common Law Countries: Will the US Be Left Behind? To learn more about the book, please click here.

Notes

[1] For a general and brief history of the development and adoption of the LPUL, see, for example, “Professional Responsibility,” Find Legal Answers, last modified December 21, 2015, http://www.legalanswers.sl.nsw.gov.au/guides/hot_topics/you_and_your_lawyer/professional_responsibility.html.

[2] Legal Profession Uniform Law (New South Wales), 2014, Section 34, http://www5.austlii.edu.au/au/legis/nsw/consol_act/lpul333/s35.html; Legal Profession Uniform Law Application Act 2014 (Victoria), Section 34, http://www5.austlii.edu.au/au/legis/vic/consol_act/lpulaa2014406/sch1.html.

[3] Legal Profession Uniform Law (New South Wales), 2014, Section 6, http://www5.austlii.edu.au/au/legis/nsw/consol_act/lpul333/s6.html; Legal Profession Uniform Law Application Act 2014 (Victoria), Section 6.

[4] Ibid.

[5] Legal Profession Uniform Law (New South Wales), 2014, Section 35(1), http://www5.austlii.edu.au/au/legis/nsw/consol_act/lpul333/s35.html.

[6] Legal Profession Uniform Law (New South Wales), 2014, Section 35(1), http://www5.austlii.edu.au/au/legis/nsw/consol_act/lpul333/s35.html .

[7] Law Institute of Victoria, “Legal Profession Uniform Law Guide,” October 13, 2015, 7, http://fliphtml5.com/lxdj/eyqc/basic/.

[8] Legal Profession Uniform Law (NSW) (2014 No 16a),” current as of November 2, 2016, 47, http://www.legislation.nsw.gov.au/inforce/dec0a7ed-40e0-430d-9970-9917cf457fb6/2014-16a.pdf.

[9] Law Institute of Victoria, “Legal Profession Uniform Law Guide,” October 13, 2015, 7, http://fliphtml5.com/lxdj/eyqc/basic/.

[10] Legal Profession Uniform Law (New South Wales), 2014, Section 256, http://www.austlii.edu.au/cgi-bin/sinodisp/au/legis/nsw/consol_act/lpul333/s256.html?stem=0&synonyms=0&query=Audit.

[11] Law Institute of Victoria, “Legal Profession Uniform Law Guide,” October 13, 2015, 7, http://fliphtml5.com/lxdj/eyqc/basic/; see also John Briton, “National Legal Profession Reform and the Regulation of the Future,” (paper presented at the St. Vincents’ 48th Annual Queensland Law Society Symposium, Brisbane, Australia, March 27, 2010, 20-21, https://www.lsc.qld.gov.au/__data/assets/pdf_file/0015/106080/national-legal-profession-reform-and-the-regulation-of-the-future.pdf.

[12] “Rule 5.1: Responsibilities of a Partner or Supervisory Lawyer,” American Bar Association, accessed March 20, 2017, http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_1_responsibilities_of_a_partner_or_supervisory_lawyer.html.

[13] “Rule 5.3: Responsibilities Regarding Nonlawyer Assistance,” American Bar Association, accessed March 20, 2017, http://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_5_3_responsibilities_regarding_nonlawyer_assistant.html.

[14] As regards the difficulty of enforcing these rules see, for example, Schneyer, “The Case for Proactive Management-Based Self-Regulation,” 256-261. See also: Ted Schneyer, “Professional Discipline for Law Firms,” Cornell Law Review 77 (1991): 18-20, http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=3509&context=clr; Elizabeth Chambliss and David B. Wilkins, “A New Framework for Law Firm Discipline,” Georgetown Journal of Legal Ethics 16 (2002): 336-341, http://heinonline.org/HOL/LandingPage?handle=hein.journals/geojlege16&div=18&id=&page=.

[15] Schneyer, “Professional Discipline for Law Firms,”19.

[16] Ibid., 8.

[17] Ibid., 10.

[18] On this topic, see also Julie R. O’Sullivan, “Professional Discipline for Law Firms? A Response to Professor Schneyer’s Proposal,” Georgetown Journal of Legal Ethics 16 (2002): 16-24, http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=1900&context=facpub. Sullivan argues that it is more difficult to identify responsible individuals in large firms as compared to small firms. For that reason, she suggests, the chances of enforcing Model Rules 5.1 and 5.3 are best in the context of a small firm. Ibid., 20. For a case study examining how Model Rule 5.1 provides little incentive to lawyers to report or take action regarding ethical violations committed by other lawyers in a firm, see Thomas A. Kuczajda, “Self Regulation, Socialization, and the Role of Model Rule 5.1,” Georgetown Journal of Legal Ethics 12 (1998-1999): 119-149, http://heinonline.org/HOL/LandingPage?handle=hein.journals/geojlege12&div=13&id=&page=.

[19] See, for example, Tahlia Gordon and Paddy Oliver, “The Demise of Appropriate Management Systems for Australian Law Firms,” May 11, 2015, https://www.linkedin.com/pulse/demise-appropriate-management-systems-australian-law-firms-gordon.

[20] Ibid.

[21] Ibid.

[22] “A New Framework for Practising Law in NSW,” The Law Society of New South Wales, accessed March 20, 2017, http://www.lawsociety.com.au/ForSolictors/professionalstandards/Ruleslegislation/nationalreform/. Although all of the Australian states were involved in the preparation of the LPUL, only two, New South Wales and Victoria, have adopted it to date. The other Australian states are “encouraged” to do so, and in principle it is possible for them to do so without the need for significant changes. Martin Pakula, “Uniform Law to Cut Red Tape and Protect Consumers,” Premier of Victoria The Hon. Daniel Andrews MP, May 28, 2015, https://284532a540b00726ab7e-ff7c063c60e1f1cafc9413f00ac5293c.ssl.cf4.rackcdn.com/wp-content/uploads/2015/05/150528-Uniform-Law-To-Cut-Red-Tape-And-Protect-Consumers.pdf.

[23] National Legal Profession Reform Taskforce, “National Legal Profession Reform Project – Consultation Regulation Impact Statement,” May, 2010, 6-12, http://www.justice.nsw.gov.au/Documents/LPR_Documents/pdf/National+Legal+Profession+Reform+Project+-+Consultation+Regulation+Impact+Statement+(including+Attachments+A-C).pdf. See also, for example, “Uniform Law,” Legal Services Council, accessed March 20, 2017, http://www.legalservicescouncil.org.au/Pages/uniform-framework/uniform-law.aspx; Leanne Mezrani, “Rules to Govern NSW and Vic Lawyers Locked In,” Lawyers Weekly, May 28, 2015, http://www.lawyersweekly.com.au/news/16582-rules-to-govern-lawyers-in-nsw-and-victoria-locked-in.

[24] National Legal Profession Reform Taskforce, “National Legal Profession Reform Project: Consultation Regulation Impact Statement.”

[25] Ibid.

[26] “Legal Profession Uniform Law Application Act 2014: Authorised Version No. 003,” April 22, 2015, 122-484, http://www.legislation.vic.gov.au/domino/Web_Notes/LDMS/LTObject_Store/ltobjst9.nsf/DDE300B846EED9C7CA257616000A3571/E737D364AFDF26E5CA257E2F00139C2B/$FILE/14-17aa003%20authorised.pdf.

[27] Ibid., 1-575. The extra pages address constitutional and transitional issues.

[28] See, for example, Mezrani, “Rules to Govern.” See also, The Law Society of New South Wales, “Legal Profession Uniform Law,” undated, http://www.lawsociety.com.au/cs/groups/public/documents/internetcontent/879344.pdf; Monika Holmwood, “The New Legal Profession Uniform Law Takes Effect from 1 July 2015. Be Prepared,” Law Graduate in Pink, June 17, 2015, http://lawgradinpink.blogspot.fr/2015/06/the-new-legal-profession-uniform-law.html.

[29] See, for example, Law Institute of Victoria, “Legal Profession Uniform Law Guide,” October 13, 2015, http://fliphtml5.com/lxdj/eyqc/basic/.

[30] See, for example: The Law Society of New South Wales, “Practising in NSW under the Uniform Law

Law Practices – Incorporated Legal Practice (ILP),” undated, http://www.lawsociety.com.au/cs/groups/public/documents/internetcontent/1021145.pdf; See also Paddy Oliver, “ILP Forum: Incorporated Legal Practices & Legal Profession Uniform Law,” June 24, 2015, http://www.lexcel.com.au/wp-content/uploads/2015/07/Paddy-Oliver-ILP-Forum-Legal-Profession-Uniform-Law-Session-24-June-2015.pdf.

[31] “National Legal Profession Reform – Background Information,” New South Wales Department of Justice, accessed March 20, 2017, http://www.justice.nsw.gov.au/for-students-legal-profession/national-legal-profession-reform/background-information.

[32] The members of the Taskforce were: Roger Wilkins AO, Secretary, Commonwealth Attorney-General’s Department; Bill Grant, Secretary-General, Law Council of Australia; Laurie Glanfield AM, Director General, NSW Attorney General’s Department; Louise Glanville, Executive Director, Victorian Department of Justice; and Stephen Goggs, Deputy Chief Executive, ACT Department of Justice and Community Safety. Ibid.

[33] Ibid.

[34] A “document library” for the work of the Taskforce is available at this link: “National Legal Profession Reform: Document Library,” New South Wales Department of Justice, accessed March 17, 2017, http://www.justice.nsw.gov.au/for-students-legal-profession/national-legal-profession-reform/document-library#Consumerreport. Documentation relating specifically to the work of the Consultative Group is available at this link: “National Legal Profession Reform – Consultative Group Submissions,” Australian Government Attorney-General’s Department, accessed March 17, 2016, http://web.archive.org/web/20110607011704/https://www.ag.gov.au/www/agd/agd.nsf/Page/Consultationsreformsandreviews_NationalLegalProfessionReform-TaskforcePapers-ConsultativeGroupSubmissions. A fuller list of public submissions is available at this link: “National Legal Profession Reform – Public Submissions,” Australian Government Attorney-General’s Department, accessed March 17, 2017, http://web.archive.org/web/20110604185916/http://www.ema.gov.au/www/agd/agd.nsf/AllDocs/9C0BF3BDCF90D8ECCA2576E2007E36FA?OpenDocument.

[35] National Legal Profession Reform Taskforce, “National Legal Profession Reform—Consultative Group Paper: Business Structures — ‘Law Practices,’” November 25, 2009, http://www.justice.nsw.gov.au/Documents/LPR_Documents/pdf/NationalLegalProfessionReformTaskforcePaper-BusinessStructures-December2009.pdf.

[36] Ibid., 1.

[37] Ibid., 3-4.

[38] John Briton, “A Response to the Business Structures Paper of 25 November 2009,” December 15, 2009, 1, available at: http://web.archive.org/web/20110607011704/https://www.ag.gov.au/www/agd/agd.nsf/Page/Consultationsreformsandreviews_NationalLegalProfessionReform-TaskforcePapers-ConsultativeGroupSubmissions.

[39] Ibid., 3

[40] “Consultative Group – Summary of Key Issues,” July 23, 2010, 34, http://web.archive.org/web/20110408032839/http://ag.gov.au/www/agd/rwpattach.nsf/VAP/(9A5D88DBA63D32A661E6369859739356)~CG+key+issue+summary+-+as+at+11+August+2010.PDF/$file/CG+key+issue+summary+-+as+at+11+August+2010.PDF.

[41] John Briton, “National Legal Profession Reform and the Regulation of the Future,” 24.

[42] John Briton, “Between the Idea and the Reality Falls the Shadow” (paper presented at the fifth bi-annual Australian and New Zealand Legal Ethics Colloquium, Melbourne, Australia, December 3-4, 2015), 6-10, http://www.monash.edu/__data/assets/pdf_file/0004/374872/Briton-Between-the-Idea-and-the-Reality-Falls-the-Shadow-1.pdf. See also John Briton, “Between The Idea And The Reality Falls The Shadow: A Case Study In Lawyer Regulation,” October, 2015, 48-53, unpublished paper on file with author. For a brief discussion of “under-regulation as regulatory failure, see Salyzyn, “From Colleague to Cop to Coach,” 31-32.

[43] Andrew Grech, “Discussion Notes Prepared for the National Legal Profession Reform Consultative Group: Business Structures, December 15, 2009, 1, http://web.archive.org/web/20110607140709/https://www.ag.gov.au/www/agd/rwpattach.nsf/VAP/(8AB0BDE05570AAD0EF9C283AA8F533E3)~Grech,+Andrew+-+Business+Structures.PDF/$file/Grech,+Andrew+-+Business+Structures.PDF.

[44] Ibid., 1-2.

[45] “Consultative Group – Summary of Key Issues,” 34. A group of nine academics from Australian law schools also submitted a statement in support of the regulator’s power to conduct “proactive” compliance audits: Adrian Evans et. al., “Submission to National Legal Profession Reform Consultation on Proposed National Law,” June 22, 2010, 10, http://web.archive.org/web/20110603165707/http://www.ema.gov.au/www/agd/rwpattach.nsf/VAP/(9A5D88DBA63D32A661E6369859739356)~134+Christine+Parker+Submission+to+NLP+Project+Consultation+22062010.pdf/$file/134+Christine+Parker+Submission+to+NLP+Project+Consultation+22062010.pdf.

[46] Robert Milliner, “LLFG Limited Response,” December 22, 2009, 6, http://web.archive.org/web/20110607140759/https://www.ag.gov.au/www/agd/rwpattach.nsf/VAP/(8AB0BDE05570AAD0EF9C283AA8F533E3)~Milliner,+Robert+(Chair+,+LLFG+Limited+(Large+Law+Firm+Group))+-+Business+Structures.PDF/$file/Milliner,+Robert+(Chair+,+LLFG+Limited+(Large+Law+Firm+Group))+-+Business+Structures.PDF.

[47] “Consultative Group – Summary of Key Issues,” 14.

[48] Ibid., 34-35.

[49] Tony Abbott et. al., “Response to Taskforce Discussion Paper on Business Structures ‘Law Practices,’” undated, http://web.archive.org/web/20110607140350/https://www.ag.gov.au/www/agd/rwpattach.nsf/VAP/(8AB0BDE05570AAD0EF9C283AA8F533E3)~Abbott,+Tony;+Bradshaw,+Barbara;+Catanzariti,+Joe;+Cottee,+Harold;+L+Estrange,+Noela;+Hagan,+Martyn;+Selth,+Philip;+and+Stow,+Dudley+-+Business+Structures.PDF/$file/Abbott,+Tony;+Bradshaw,+Barbara;+Catanzariti,+Joe;+Cottee,+Harold;+L+Estrange,+Noela;+Hagan,+Martyn;+Selth,+Philip;+and+Stow,+Dudley+-+Business+Structures.PDF.

[50] Ibid., 3-5.

[51] National Legal Profession Reform Taskforce, “Interim Report on Key Issues and Funding,” October, 2010, 5, http://www.justice.nsw.gov.au/Documents/LPR_Documents/pdf/Interim_Report_on_Key_Issues_and_Funding_PDF.pdf.

[52] Ibid.

[53] John Briton, “Between the Idea and the Reality Falls the Shadow” (paper presented at the fifth bi-annual Australian and New Zealand Legal Ethics Colloquium), 12.

[54] Gordon and Oliver, “The Demise of Appropriate Management Systems.”

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