Unqualified practice – The Australian Professional Liability Blog

10 November, 201412 November, 2014

Unqualified costs consultants

There has been another challenge to the legality of the work done by non-lawyer costs consultants. It did not go anywhere because of deficiencies in the way the client (himself a lawyer) went about trying to prove in the Magistrates’ Court that the costs consultant in question (a struck off lawyer) had engaged in unqualified practice, and because of the limited nature of an appeal from a Magistrate. The Supreme Court’s judges also emphasised the exactness of proof necessary to establish a breach of s. 2.2.2 Legal Profession Act 2004‘s prohibition on unqualified practice, given that it sets up an indictable criminal offence punishable by up to 2 years’ jail. Such exactness is needed even in civil proceedings which obviously do not carry criminal consequences.

But as three judges of the Supreme Court made clear, all this means is that this was not the vehicle to decide just how much non-lawyers are permitted to do in the realm of costs law, and subject to what level of supervision by a lawyer, and there is little solace for unqualified costs consultants in the judgments.

The reasons of the Court of Appeal for not granting leave to appeal the Supreme Court’s dismissal of an appeal from a Magistrate are: Defteros v JS [2014] VSCA 154. They are interesting for three reasons:

1. They endorse comments made by the Costs Judge in a June 2010 decision as to the need for consideration of reform of the ‘mini-industry’ of costs consultants (Kaye J did so at [2014] VSC 205 at [85] and Santamaria JA (with whom Neave JA agreed) did so at [2014] VSCA 154 at [21]);

2. They record an interesting submission of counsel, namely that the solicitor client was relying on his own contempt of the Supreme Court by asserting as a defence to a suit for fees a statutory prohibition on the recovery of money charged for the provision of legal services in contravention of the prohibition on unqualified practice — the contempt arose, so the argument ran, because the solicitor well knew at all relevant times that the costs consultant was not a practising certificate holder, and so had permitted the costs consultant to engage in unqualified practice if it had occurred, contrary to s. 2.2.10 of the Legal Profession Act 2004; and

3. They emphasise the modern trend of leaving to the Costs Court questions which have traditionally been dealt with by certificates of the trial judge (e.g. certification for two counsel).

It will not be too long before someone takes a grip of this issue and runs a test case carefully. An alternative battle ground might be found if the unqualified costs lawyers seek to influence the makers of the forthcoming Uniform Rules of professional conduct so as to provide an exemption for unqualified costs lawyers from the prohibition on unqualified practice: see s. 10(3), Legal Profession Uniform Law (Vic). That seems to me to be the most efficient means of resolving the question. In my books, if there is to be a place for the continued operation of unqualified practitioners there may be a case for restricting the exemption from unqualified practice to existing practitioners and closely defining the permissible ambit of their activities, perhaps to party-party disputes. Continue reading “Unqualified costs consultants”

19 December, 2008

Dentist does worse on appeal to VCAT than before the Dental Practice Board

In Von S v Dental Practice Board [2008] VCAT 2302, a dentist sought merits review in VCAT of a decision of the Dental Practice Board to suspend his registration for 3 months. He had practised for two and a half months without being registered (a crime punishable by a maximum fine of $11,000), practised without insurance for 20 months, and been uncooperative when the Board sought to investigate him by failing to respond to letters, and then breaking a promise to see a psychologist and provide a report. Continue reading “Dentist does worse on appeal to VCAT than before the Dental Practice Board”

19 November, 2007

NSW Law Society goes down and pays costs in unqualified practice case

In The Law Society of New South Wales v Spring [2007] NSWSC 1273, the Supreme Court of NSW referred to one of the defendants as ‘Lolly Pops’. Its principal was another defendant, Mr Spring. He was a retail leases specialist and helped people with retail lease problems, and represented them in statutory tribunals where advocacy was not the preserve of lawyers. The Law Society sought injunctions against him continuing to do what he does, saying he was engaging in legal practice though unqualified to do so. Justice Barr found for Lolly Pops, and ordered that the Law Society pay its costs. This is the case to read if your unqualified practice matter involves non-lawyer advocates in statutory tribunals.

25 July, 20074 August, 2007

Professional liability of in-house counsel: the US experience

The New York Law Journal has an interesting piece about liability exposures of in-house counsel. All sounds a bit foreign to Australian ears, but maybe it won’t in a few years’ time. Here are two examples:

SHAREHOLDER CLASS ACTIONS

Several shareholder class actions were commenced against a financial institution alleging breach of fiduciary duties, violations of Rule 10b-5 of the Securities Exchange Act of 1934 inclusive of fraud and insider trading, misrepresentation, negligence, and legal malpractice. These actions were ultimately consolidated. The consolidated plaintiff class named all of the board directors and certain senior level officers as defendants, including the general counsel and two associate general counsels.

The plaintiffs claimed that the general counsel and associate general counsels were negligent in their performance of legal research regarding financial reporting. In the factual allegations, the plaintiffs asserted that the general counsel delegated a research assignment to the associate general counsels who completed it incorrectly, but the general counsel did not review their work. Rather, she forwarded their work directly to the board of directors who in part acted on the inaccurate information.

Following the completion of discovery and on the eve of trial, the parties engaged in settlement negotiations and agreed to resolve this matter for $40 million. The insurer for directors and officers liability contributed $25 million to the settlement and the employed lawyers professional liability insurer contributed $2.25 million for the legal malpractice claims. The remainder of the loss was borne by the financial institution. Continue reading “Professional liability of in-house counsel: the US experience”

9 February, 2007

The standard of proof in unqualified practice cases

In Orrong Strategies Pty Ltd v Village Roadshow Limited [2007] VSC 1, Habersberger J considered the burden of proof required in a civil case in which contravention of s. 314 of the Legal Practice Act, 1996 (Vic.) was alleged. That was a criminal provision, providing for imprisonment for up to 2 years, and to breach it also amounted to a contempt of the Supreme Court of Victoria (s. 314(5)). It is a case in which one of Village Roadshow’s top managers sued Village Roadshow for remuneration allegedly owing to his consulting company, Orrong Strategies, and Village Roadshow unsuccessfully tried to invalidate the retainers for illegality in breaching the prohibition on unqualified practice. His Honour found:

‘821 It is clear that a contempt must be proved beyond reasonable doubt^[121], but that is not this case. As [Village Roadshow] submitted, this is a civil proceeding in which [Village Roadshow] is seeking to resist Orrong’s monetary claims and to obtain repayment of monies by, in part, asserting that there has been a breach of s.314 of the [Legal Practice Act]. In relation to the Legal Practice Act claims [Village Roadshow] is not seeking imprisonment and/or the imposition of a fine. It is not even seeking a penalty or any order tantamount to disqualification from acting as a solicitor. Therefore, in my opinion, the applicable standard of proof in this part of the case is on the balance of probabilities but, as with the allegations of breaches of the corporations legislation or other serious misconduct, findings of contravention of the [Legal Practice Act] should not be made lightly, bearing in mind what the High Court said in Briginshaw as explained by Neat Holdings.’^[122]

9 February, 200711 February, 2007

The law is specially jealous when it comes to will making

Here’s an interesting report on a little American case which is illustrative of the special jealousy with which the law reserves to lawyers the making of wills, together with some interesting broader commentary on the whole question of the reservation of “legal work” to lawyers. An insurance salesman engaged in unqualified practice by helping a 91 year old make a will naming him executor, using will making software, but the illegality of his conduct did not invalidate the will as the disappointed beneficiaries had hoped. Continue reading “The law is specially jealous when it comes to will making”

22 December, 2006

Solicitor refers costs dispute to VCAT’s legal practice list

In Robert J Lawyers v Kirby [2006] VCAT 2609 A client complained about his solicitor’s fees. The Legal Services Commissioner was unable to settle the costs dispute. The solicitor exercised his right to refer the matter to the Legal Practice List of VCAT. Unusual, but sensible, since the Legal Practice Act, 1996 empowers VCAT to give judgment, effectively, for outstanding fees, and that is what he got, after having 15% knocked off for what I would characterise as a rather technical breach of the Legal Practice Act, 1996’s costs disclosure rules. Continue reading “Solicitor refers costs dispute to VCAT’s legal practice list”