It is up to those who own and manage a legal practice to decide upon its ownership and management structures. That is a decision that we see no reason to be involved in.
The Queensland Legal Services Commission is an independent statutory body. It is the sole body authorized under the Legal Profession Act 2007 to receive and deal with complaints about lawyers, law firms or their employees. It has the right to audit Incorporated Legal Practices (ILPs) to verify it compliance with applicable laws and ethical rules. This interview was conducted in December, 2014, when McLean was serving as Principal Legal Officer of the Commission.
In the early 2000’s there was a push for a nationalization of many of the rules pertaining to lawyers and the practice of law. This occurred in order to make it easier for legal service providers to work on a national rather than on a regional level. As a result, the rules governing legal services in Queensland were harmonized with those of New South Wales.
In Queensland, there are a total of 1828 law practices. Of those, 690 are ILPs. So in Queensland just over 37% of all law practices are ILPs. This is consistent with New South Wales’ numbers.
The economies of scale don’t exist in Queensland like they do in the UK and the US. This probably explains why you don’t see the development of many large legal businesses based in Queensland.
The argument that nonlawyer shareholders will unduly influence the judgment of the lawyers does not hold any water here. In the first place, many of the nonlawyer shareholders of ILPs in Queensland are the spouses of solicitors — they have nothing to do with the work of the ILP and they are shareholders mostly if not only for the tax benefits it offers. As for the nonlawyer shareholders who do play a role of some kind in the operation of the ILP — if at any point there is a problem, the Legal Practitioner Director of the ILP must answer to us (the legal regulators) and all the Directors of the ILP, including the ones who are not lawyers, must answer to ASIC (the corporations’ regulator). In our experience, the risks presented by the ILP structure have been overblown.
It is up to those who own and manage a legal practice to decide upon its ownership and management structure. That is a decision that we see no reason to be involved in. That is because regardless of whether a legal practice is an ILP or not, it must conform to the ethical rules. If it does not, it will face disciplinary action.
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