ILPs & Legal Profession Uniform Law

8/10/2019 ILPs & Legal Profession Uniform Law

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lexcel consulting

ILP Forum

Incorporated Legal Practices &

Legal Profession Uniform Law

2nd September 2014

Paddy Oliver

Managing Director

lexcel consulting

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ILP Regulatory Structure Post 2015Subject to

Corporations Act, 2001

Legal Profession Uniform Law 2014

Uniform Rules

Competition & Consumer Act 2010

Regulated by Legal Services Council

Designated Local Regulatory Authority

Victorian Legal Services Board & Commissioner Supreme Court of Victoria or NSW

ASIC

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Definition of Law Practice & Law Firm

! Law practicemeans

(a) a sole practitioner; or

(b) a law firm; or

(c) a community legal service; or

(d) an incorporated legal practice (ILP); or

(e) an unincorporated legal practice (ULP);

! Law firmmeans a partnershipconsisting onlyof:

(a) Australian legal practitioners; or

(b) one or more Australian legal practitioners and one or

more Australian-registered foreign lawyers.

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Definition of ILP #1

! Sect 6 - Definition of Incorporated Legal Practice

! A corporation which satisfies the following criteria:

! (a) (i) - it is a company within Corporations Act; or

! (ii) - corporation, or a corporation of a kind approved under Sect

114 (Approved Business Structures) or specified in the Rules;

! (b) it has given notice under section 104 that it intends to engage

in legal practice in Australia andthat notice is still operative;

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Definition of ILP #2

(c) the legal services it provides or proposes to provide are

not limited to either or both of the following services:

(i) in-house legal services for the corporation or a related

entity;

(ii) services that are not legally required to be provided by

an Australian legal practitioner and that are provided by anofficer or employee who is not an Australian legal

practitioner

(d) it is not excluded by the Uniform Rules from being an ILP

Does not include a community legal service

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Definition of Unincorporated Legal Practice

! ULP means an unincorporated body or group that satisfies the

following criteria

! (a) it is

(i) a partnership; or

(ii) an unincorporated body or group, or an unincorporated

body or group of a kind, approved by the Council under

section 114 or specified in the Uniform Rules for thepurposes of this definition!..

! but does not include

! (e) a law firm; or

!

(f) a community legal service; or! (g) an incorporated legal practice

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Approved Business Structures

! S114 - Approval of Business Structures

! Council may approve:

(a) a corporation, or a kind of corporation, for the purposesof the definition of ILP; or

(b) an unincorporated body or group, or a kind of

unincorporated body or group, for the purposes of the

definition ofULP

.! S115 - Rules may make provision with respect to any aspect

of ILPs & ULPs, so far as concerns the provision of legal

services or matters that affect or may affect the provision of

legal services.

! Comment - S115 - Appropriate management systems by the

back door?

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Qualified / Unqualified Entities

! Qualified entitymeans (a) an Australian legal practitioner; or

(b) a law practice!..

! S 10! (1) An entity must not engage in legal practice in this

jurisdiction, unless it is a qualified entity.

! Penalty: 250 units or imprisonment for 2 years, or both.

!(2) An entity is not entitled to recover any amount, and mustrepay any amount received, in respect of anything the entity

did in contravention of subsection (1). Any amount so received

may be recovered as a debt by the person who paid it.

! (3) Exemptions!..

! Comment - until s104 notice given a corporation is an

unqualified entity, not an ILP, therefore cannot recover legal

costs.

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Principal of a Law Practice! Principalof a law practice is an Australian legal practitioner who

! (d) In the case of an ILP or an ULP

! (i) holds an Australian practising certificate authorising the holder

to engage in legal practice as a principal of a law practice; and

! (ii) is

(A) if the law practice is a company within the meaning of the

Corporations Acta validly appointed director; or

(B) if the law practice is a partnershipa partner; or

(C) if the law practice is neitherin a relationship with the law

practice that is of a kind approved by the Council under

section 40 or specified in the Uniform Rules for the purposes

of this definition.

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Authorised Principal of a Law Practice

! Authorised Principal- a principal who is authorised by his or

her Australian practising certificate to supervise others.

! Note- S 47(6) provides that an Australian practising certificate

authorises the holder to supervise legal practice by others,

unless the certificate is subject to a condition requiring the

holder to engage in supervised legal practice or a condition to

the effect that the holder may not supervise legal practice by

others.

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Part 3.6 - ILPs & ULPs

!S104 Notice of intention continued

!(3) If an ILP or ULP applies ceases to engage in legal practice

in this jurisdiction, it must give the DLRA a notice of that fact

within the period specified in the Uniform Rules.

!Civil penalty: 50 penalty units.

!(6) A notice given by an entity under subsection (1) operatesuntil it gives notice under subsection (3).

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ILP Must Have an Authorised Principal

!S 105 Principals

!An ILP or ULP must have at least one authorised principal.

!S 106 ILP or ULP without a principal

! (1) An ILP or ULP contravenes this section if it does not have

any authorised principals for a period exceeding 7 days.


! (2) If an ILP or ULP ceases to have any authorised principals,the law practice must notify the DLRA within 7 days.


! (3) An ILP or ULP must not provide legal services in this

jurisdiction during any period it is non-compliant with relevantrequirements under this section.

!Penalty 250 penalty units

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Disclosure Obligations

!S 107 Disclosure obligations

!(1) This section applies if a person engages an ILP or ULP to

provide services that the person might reasonably assume to

be legal services and the law practice provides both legal

services and other services.

!(2) The law practice must, in accordance with the Uniform

Rules, make a disclosure to the person informing the person

(a) whether the services are legal services; and

(b) of any other matters specified in the Uniform Rules for

the purposes of this section.

!(3) If a proper disclosure has not been made under this

section, the standard of care owed by the law practice inrespect of the service is the standard that would be applicable

if the service were a legal service that had been provided by an

Australian legal practitioner.

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Other Issues

! S108 - DLRA can intervene in external administration

proceedings under Corps Act (displacement provision)

! S109 - ILP subject to receivership under LPUL & external

administration under Corps Act application to Supreme Court

regarding dual appointment (displacement provision)

!

S110 - ILP subject to receivership under LPUL and alsoexternal administration under other legislation

! S111 Extension of vicarious liability relating to failure to

account, pay or deliver and dishonesty to ILP

! Phoenix-ing of ILPs - LPUL silent

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Compliance Audit

!S256 (1) The DLRA may conduct, or appoint a suitably qualified

person to conduct, an audit of the compliance of a law practice

with this Law, the Uniform Rules and other applicable professional

obligations if the DLRA considers there are reasonable grounds todo 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 itsassociates.

!(2) The appointment of a suitably qualified person may be made

generally, or in relation to a particular law practice, or in relation to

a particular compliance audit.

!(3) A report of a compliance audit is to be provided to the law

practice concerned and may be provided to the DLRA.

!Note - Chapter 7 applies to a compliance audit.

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Management Systems Direction


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Management Systems Direction

!S 256 (1) The DLRA may give a management system direction

to a law practice if the authority considers it reasonableto do

so after the conduct of any examination, investigation or audit

referred to in Chapter 7.

!(2) A management system direction is a direction to a law

practice or class of law practices

(a) to ensure that appropriate management systems are

implemented and maintained to enable the provision oflegal services by the law practice, or by a law practice of

that class, in accordance with this Law, the Uniform Rules

and other professional obligations; and

(b) to provide periodic reports to the DLRA on the systems

and on compliance with the systems.

!(3) A law practice must comply with a direction given to it.

!Link to S115?

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Uniform Rules for Legal Services

! S 259 The rules may make provision with respect to:

! (a) the provision of legal services by law practices or

particular categories of law practices; and

! (b) the provision of other services by law practices in

circumstances where a conflict of interest relating to the

provision of legal services may arise and the imposition ofadditional duties and obligations in those circumstances; and

! (c) requirements for law practices in or in connection with

providing legal and other services referred to in paragraph (a)

or (b).

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Chapter 7 Investigatory Powers

! S 368 (1) The objective of this Chapter is to set out powers

that are exercisable in connection with

(a) trust records examinations; and

(b) trust records investigations; and

(c) compliance audits; and

(d) complaint investigations.

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Investigatory Powers & ILPs

!S 382(1) This Part applies to:

(a) trust records investigations; and

(b) compliance audits; and

(c) complaint investigations:

!Conducted in relation to ILPs.

!S 383 - Examination of Persons - Exercise same power as

those conferred on ASIC by Div 2 of Part 3 of ASIC Act

!S 384 - Inspection of Books - Exercise the same powers as

those conferred on ASIC by sections 30(1), 34 and 37 to 39 of

the ASIC Act.

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Chapter 3 - Legal Practice

! S30 The objectives of this Chapter are

! (a) to enable the provision of legal services through a range of

business structures; and! (b) to ensure that any particular type of business structure

does not hinder a law practice and the legal practitioners

within it from complying with this Law, the Uniform Rules and

the other professional obligations of Australian legal

practitioners; and

! (c) to ensure that clients of law practices are adequately

protected regardless of the business structure through which a

law practice provides legal services; and

! (d) to regulate the provision of legal services throughcommunity legal services.

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Major Changes

! Definition of law firm

! Duties / responsibilities placed on LPDs now placed upon all

law practice principals.! No explicit requirement for ILPs to implement appropriate

management systems.

! Management systems direction only after audit

!Audit now conditional on trigger factors Conduct and / or Complaint

! No power to audit management of provision of legal

services!(including the supervision of officers &

employees!)

! Doubt that conduct equates to management

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lexcel consulting

lexcel consultingPaddy Oliver

LL.B., M.Litt., M.B.A., GAICD

Managing Director

tel 03 9029 1632

mob

0431 174 124email [email protected]

web www.lexcel.com.au

twitter @lexcelconsult

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ILPs & Legal Profession Uniform Law