Does the Legal Services Board have the power retrospectively to excuse inadvertently practising briefly without a practising certificate?

As with most years, no doubt scores of Victorian lawyers forgot to renew their practising certificates last year.  For months, in some cases, this situation was allowed by the regulators to persist without intervention.  In Victorian Bar Inc v GSL [2006] VCAT 435 the VCAT, constituted by Judge Bowman, Peter Jopling QC, and Ms F Harrison made clear that the disciplinary Tribunal expected regulators to be proactive to prevent practitioners inadvertently practising uncertificated. Eventually, at least in some cases, the regulators seem to have raised the issue with some practitioners whose sudden apparent cessation of practice at a young age seemed unlikely.

May I respectfully suggest that you go and check, now, whether you actually have a practising certificate for the current financial year.

The question now that the regulators have apparently complied imperfectly with VCAT’s guidance is what ought to happen?  Should the practitioners who are close to blameless for practising without a certificate be given a new one with retrospective effect (some were told, for example, by their office manager that the applications had been lodged before the end of the year, and were entitled to assume that their existing practising certificate had ongoing operation pending the Board getting around to dealing with the application, by virtue of a legislative provision to that effect discussed below). Or should the full consequences of the law, including disciplinary investigation, and the refunding to clients of fees for work done while uncertificated (s. 10, LPUL), be brought to bear? The latter approach has the disadvantage of causing lawyers’ professional indemnity insurer to cancel cover during the period of non-certification and the Fidelity Fund may be unavailable to clients of the lawyers in question in relation to conduct engaged in while uncertificated.

What VCAT said was:

’10 We also wish to make a further observation. We are disappointed with the Bar’s procedures, or lack thereof, in dealing with a situation such as this. That no follow-up steps were taken when Mr L had not renewed as at 1st July 2005 surprises us. No letter saying his right to practice was at an end was sent. No check was made as to whether he was continuing to practice. His Clerk was not notified that Mr L could no longer accept briefs. He still occupied chambers. No enquiry seems to have been made of Barristers Chambers Limited in this regard. All of these steps would have been relatively simple to take. We trust the situation will be rectified and appropriate procedures put in place.’

Today, the Legal Services Board is in charge of practising certificates.  Its members are non-lawyers Fiona Bennett, Carolyn Bond, Lynne Williams and Cate Wood, solicitors Cate Dealehr and Steven Stevens, and barrister Peter Jopling QC.  The Victorian Legal Services Commissioner is the CEO. He is also charged, of course, with investigating alleged breaches of the LPUL and the Rules made under it which are sufficiently serious that they might amount to unsatisfactory professional conduct or professional misconduct.  Breach of the obligation not to practise without a practising certificate is, in some circumstances, an indictable criminal offence.  But it is also conduct which is capable of amounting to unsatisfactory professional conduct, or in the case of a reckless or wilful breach, professional misconduct.

Rule 17 of the Legal Profession Uniform General Rules 2015 provides that practising certificates commence from the date of renewal where renewed (sub-rule (1)(b), and from the date specified in the certificate if granted (sub-rule (1)(a)).  That seems simple enough and seems specifically to contemplate commencement on a date other than the date of grant (why, otherwise, would the drafters not simply state that all certificates commence on the date of renewal or the date of the grant?).

But note 1 to r. 17 says ‘If the certificate is renewed on or after 1 July, the renewal takes effect on the date of its renewal: see subrule (1)(b).’  Since we all know that practising certificates are granted until the end of each financial year these days, it is tempting to think that what this note must be taken to mean is that if a practitioner who is practising in year 1, fails to apply for a new practising certificate before the end of that year, and then applies for a new practising certificate early in year 2, that is in a sense a ‘renewal’ and cannot have retrospective effect.  Of course that assumes that notes of this kind are extrinsic materials by reference to which it is appropriate to construe the rules themselves and no doubt one could debate that question for a long time.

But that is not what Note 1 is about.  The circumstances in which a practising certificate will be renewed after the end of the financial year in respect of which it was expressed to operate are described by the very legislative provision referred to above, sub-rule (2) of r. 17.  Where a lawyer is practising under a certificate in one financial year and makes an application for renewal of that certificate during that year, the duration of the certificate in law, regardless of what the practising certificate says, is until the Board has decided whether or not to renew the certificate.  In the past, certificates have been given extended operation for years, pending challenges to the Board’s decision (see this post). The reason why a certificate renewed in those circumstances, the only circumstances in which a certificate would be renewed after the end of the financial year, must take effect from the date of renewal, in contrast to the grant of a certificate, is that the previous certificate will have operation up until the moment before the late decision of the Board.

The legislative scheme of which the LPUL is a part specifically contemplates an application by a practitioner who intended in year 1 to practise in year 2 but did not get around to applying for a practising certificate for year 2 by the end of year 1.  Upon the grant of such an application made within 3 months of the end of year 1, the practitioner must pay a fine equal to the fee for the certificate which would otherwise have been payable; twice the usual fee in other words: s. 73(2) and (3) Legal Profession Uniform Law Application Act 2014 (Vic.). Presumably, that is the price for being excused retrospectively for practising uncertificated for a short period so long as it is rectified within the three month period.  What else justifies the additional fee for a practising certificate which gives you nothing but prospective entitlement to practise for a shorter than usual period?

If I recall correctly, the Law Institute always used to give practising certificates with retrospective operation to those who deserved such a break and these were recognised as valid by the Legal Profession Tribunal. I expect regulators in other states take this pragmatic approach too.

One unusual instance of this kind of regulatory activity appears in Power v Hamond [2016] VSCA 25 at [51] et seq.  A key member of the Law Institute once failed to take out operative practising certificates for many years whilst engaging in practice on behalf of the Institute as a receiver of solicitors’ practices, for which he required practising certificates and LPLC insurance.  He made an honest mistake in thinking he had adequate professional indemnity insurance when in fact the Law Institute’s insurance cover was not adequate.  So the practising certificates he was issued, which were conditional on taking out insurance, did not come into operation at the time.  The Legal Practice Board granted the Institute’s man a retrospective exemption from the need to have insurance, presumably with the intention that the practising certificates would thereby retrospectively be said to have come into effect.  Then, Justice Cummins retrospectively granted the Institute’s man authority to conduct the receiverships. So far as I am aware, the Institute’s man was not prosecuted for unqualified practice, was not disciplined, and did not have to repay fees charged during the years of uncertification.  Now the Institute’s man is a senior employee of the Legal Services Commissioner + Board.  This is consistent with my general impression that the regulators used to be prepared, where it was appropriate from a public policy point of view to do so, to re-write history in a way which they say today they no longer have the power to do.

Clients would obviously be better off with continuity of insurance cover and Fidelity Fund cover if the law were read to allow the grant with retrospective operation of practising certificates to suitably innocent practitioners.  Let me tell you, honest hard working practitioners who make a very small error suffer serious distress when this problem pops up out of the blue.  Section 10’s direction to forego all fees for work done while uncertificated has the potential to bankrupt small practices.  If one looks at an innocent error in not checking adequately that an application was made before the end of the financial year (and there are  instances of people being confused by the new online procedures), the financial and reputational consequences which befall practitioners are entirely disproportionate to the disciplinary sanctions imposed for much more seriously wrongful conduct.

Once clients start arguing that their lawyers’ retainers were terminated by operation of law upon the expiration of the lawyer’s right to practice, and counterparties in litigation start subpoenaing the lawyer’s file during the period of non-certification on the basis that no privilege could enure in it, the ingredients are there for a public scandal which could seriously affect the standing of the profession.  Presumably, if the Board’s delegates could be convinced that they have the power to re-write history, they, like their predecessors, would on occasion do so.

According to the last edition of the Law Institute Journal the Insitute is making representations on behalf of its members in relation to this issue.  It is a question about which the Commissioner for Uniform Legal Services Regulation, Dale Boucher, will no doubt be interested, to ensure uniformity of approach between Victoria and New South Wales.  He has the power to direct the Legal Services Commissioners in relation to the exercise of their powers. If the government’s lawyers tell it that there is no power in the Board to grant certificates with retrospective operation, the Attorney-General might consider amending the legislation to allow the Board to do so.

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