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Disciplinary costs insurance unavailable to solicitors, for now

July 12th, 2013 · 2 Comments

Readers of my last post but one would be forgiven for thinking that the cover for costs of disciplinary investigation and prosecution referred to is available to Victorian solicitors as well as for Victorian barristers.  Turns out it is not, for the time being.  Doctors and solicitors are different in that regard.  It would be remiss of me not to mention that that gentleman of the profession, Geoff Gronow, provides invaluable free support to solicitor members of the Law Institute of Victoria who find themselves the subject of a disciplinary complaint in his capacity as LIV Members’ Advocate.  And in Queensland, the Law Society has a scheme which provides free legal advice to solicitors who receive a letter from the Legal Ombudsman or the Law Society in a disciplinary investigation.

I’m sorry for the confusion I must have engendered.  But the interesting thing is that the post obviously struck a chord, to an extent which surprised me and, it would seem, certain others. There are a lot of solicitors who would love to have this cover. Paddy Oliver at Lexcel, a risk management consultancy for solicitors, bemoans lawyers’ abject failure to manage what he refers to as ‘regulatory risk’. Perhaps solicitors are in fact more interested than they are given credit for, but frustrated by a lack of easy fix. So great has the interest been that Affinity had a fresh look at extending the cover to Victorian solicitors, and while it was doing so I held off on publishing this clarificatory post, but it seems that it’s not to be, for now at least.  But if it is an issue that is important to you, tell Affinity that it is something you would purchase, and raise it with Raynah Tang, the (rather good) President of the Law Institute: @livpresident.

I’ll tell you two more reasons why the extension of insurance for investigations is desirable, from long personal experience.  The first is that legal ethics would be given a market economy boost.  Suddenly, there would be an entity with a genuine commercial interest in educating lawyers about their ethical obligations and managing ethical liability risk.  The outstanding work done by the LPLC’s risk management team in the civil sphere would be replicated in the disciplinary.  My view is that ethics education within the profession in Victoria (as opposed to the Academy) is moribund.

The second is this. When I was at Middletons, my practice group used to do a lot of work for solicitors insured by the LPLC.  The kind of work that we specialised in was Legal Profession Tribunal and subsequently VCAT Legal Practice List work.  Frequently, one complaint form would be characterised as a combined disciplinary complaint and what is now called a civil complaint (i.e. a claim for compensation, or a dispute about costs).  There would thus be an insured and an uninsured component.  That is just messy.  Either you have a solicitor representing themselves in the disciplinary side of things and a solicitor paid for by the LPLC handling the civil complaint, or you have a solicitor paying a lawyer they did not choose to do the disciplinary complaint, engendering disputes about what proportion of fees in general, or in the case of a particular bit of work ought to be allocated to the insured and uninsured fees account.  If there were drop-down top-up cover for solicitors, one firm could represent the insured in both sides of things.

Mind you, in the 6 years since I left Middletons, especially after the current Commissioner assumed office, the numbers of complaints being characterised as disciplinary has declined.  In part that is because the courts have held that it is up to the Commissioner to characterise the nature of complaints: Byrne v Legal Services Commissioner [2010] VSCA 162, discussed in this post.  But it is also because Michael McGarvie has concentrated more resources on fewer disciplinary investigations which are considered to be important, in part by being more willing than in the past to allow purportedly disciplinary complaints with a consumer redress flavour to be dealt with by early alternative dispute resolution rather than investigated formally.  So, whereas in the 2010 financial year one in four complaints were characterised as mixed civil and disciplinary complaints, two years later, only one in twenty were so characterised.  The absolute number of complaints characterised as disciplinary complaints has declined markedly too, from three in four to just over one in two (see figure 27, in the 2012 Annual Report).  But don’t relax too much: the decline in disciplinary complaints is probably comprised substantially of silly little complaints which, if you are reasonably competent, you wouldn’t bother making a claim in respect of to an insurer with a $1,000 deductible.  Further, I reckon the price for getting rid of a disciplinary complaint by alternative dispute resolution early on, as is increasingly possible, may well often be financial.  Cut the complainant some slack on the civil side of things — costs generally — and the disciplinary complaint will look after itself.  If the costs of a disciplinary investigation are removed from the mix, these kinds of compromises may not be as necessary.

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Tags: Discipline · Insurance