Wentworth, Elisabeth --- "A hard Act to follow" [1997] LawIJV 31; (1997) 71(2) The Law Institute Journal 10

• A Hard Act to Follow
• COMMONLY ASKED QUESTIONS
• Do I have to establish a trust account even if I only handle third-party cheques?
• What do the changes to the trust
• Can I still employ legal executives or law clerks?
• CONCLUSION

A Hard Act to Follow

The Legal Practice Act 1996 has well and truly landed. To help members

prepare for the 1 January start date, the Institute sent an information kit to firms in Victoria and held 38 briefing meetings across the state, sixteen of which were presented in-house to interested firms. The brochure that formed part of the kit (ambitiously entitled Everything you always wanted to know about the Legal Practice Act!) represented the basic information that everyone needed to have but is, of course, no substitute for a close reading of the Act itself. We also established a help line to try to provide some guidance for members in the New Year period. We were inundated with calls from members who had a great many questions.

This article sets out the most commonly asked questions and provides the answers where we have been able to find them. There are some questions we can't answer because the Act itself is not clear. There are other questions that can be answered but the answers are startling. In those cases, we have assumed that the drafters did not intend the particular results and have suggested amendments to the legislation.

COMMONLY ASKED QUESTIONS

 When do I have to describe myself as "a current practitioner"?

Can I still call myself a solicitor? Do I have to change my letterhead?

The Act uses two principal expressions to describe lawyers: "legal practitioner" and "current practitioner". It also refers to regulated practitioners, sole practitioners, corporate practitioners, incorporated practitioners and registered interstate practitioners.

In s3, "legal practitioner" is defined as a person admitted to legal practice in Victoria or an incorporated practitioner. "Cur-rent practitioner" means a legal practitioner who has a practising certificate.

Taking these definitions literally has the effect that, as soon as people are admitted, they can call themselves legal practitioners until they obtain a practising certificate. As soon as this happens they would, strictly, have to call themselves current practitioners.

The two expressions are problematic. The description of someone as a "legal practitioner" when he or she does not in fact have a practising certificate is misleading and likely to confuse the public. This in itself is an irony since s314(2) makes it a criminal offence for a person to represent that he or she is qualified to en-gage in legal practice unless admitted to practice and holding a practising certificate. The expression "current practitioner" is certainly inelegant, but of more concern is that as a stand-alone description it is incomplete - "current practitioner of what?" a member of the public might well ask.

A further difficulty is that the Act does not use the expressions consistently. In Part 7, the provisions relating to those who are to pay a Fidelity Fund contribution or levy refer to legal practitioners, but the provisions relating to the making of claims against the Fidelity Fund refer to current practitioners while the provisions relating to investigation of claims refer to legal practitioners. In Part 8, the provisions relating to professional indemnity insurance refer to legal practitioners (s227(1): "at all times whilst a firm or legal practitioner . . . is engaged in legal practice"). In Part 12, which deals with unqualified practice, the income sharing provisions (s317) refer to a current practitioner while s318 prohibits a "legal practitioner employing a legal practitioner who does not have a practising certificate in connection with the practitioner's practice".

As for the witnessing of affidavits, the Act is clear although the results are unfortunate. The amendments to s123C(1)(g) of the Evidence Act, which list the people authorised to witness affidavits, substitute "a natural person who is a current practitioner or registered interstate practitioner within the meaning of the Legal Practice Act 1996" for "any solicitor who holds a current practising certificate under the Legal Profession Practice Act 1996". This amendment was the basis of the advice by the Supreme Court's Rules Committee, which in turn prompted the "Affidavit Alert" which appeared in the January News, and in the letter to members from the president and executive director in Dec-ember. Unfortunately, the amendment has an absurd effect - apart from making affidavit stamps rather long. It ought hardly to be necessary to include the fact that a person is a natural person in official documents.

The words "barrister" and "solicitor" do appear in the Act. In the context of admission to practice, the Act recognises that a person admitted to legal practice in Victoria by the Supreme Court is a barrister and solicitor of the Supreme Court. Schedule 1, which sets out the consequential amendments, also refers to solicitors, but only for the purpose of substituting the words "legal practitioner" for "solicitor", "barrister" or "counsel" in 90 other Acts. Taking the amendments literally would mean that people who have been admitted but do not have practising certificates can act for an injured worker (s46 Accident Compensation Act) and appear in court (s4 Adoption Act, s8 Bail Act, s16 Crimes Act by way of example).

These consequences cannot have been intended. It is likely that the words "legal practitioner" were intended to refer to practising lawyers. But on any view the Act does require amendment to provide consistent nomenclature. Perhaps we could use the words "barrister" and "solicitor" again. At least everyone understands them.

In the meantime, the Institute has suggested, as a matter of caution, that lawyers with practising certificates describe them-selves:

in the jurat of affidavits and statutory declarations as "a natural person who is a current practitioner within the meaning of the Legal Practice Act 1996";

F on court documents and other public documents as a current practitioner, although we will be seeking a ruling from the Legal Practice Board that for such situations solicitors can continue to describe themselves as solicitors; and on letterhead and business cards as barristers and solicitors or lawyers. This view, which is practical rather than literal, was confirmed by the Department of Justice in December last year and is consistent with the fact that practitioners are still barristers and solicitors of the Supreme Court.

Do I have to establish a trust account even if I only handle third-party cheques?

Yes. The Legal Practice Act changes the requirements for opening trust accounts. Previously, solicitors who only handled third-party cheques which were passed over to another person maintained trust account records and recorded the third-party cheques as trust entries under the Rule 28 procedures but were not required to operate a bank trust account.

Under Part 6 of the Legal Practice Act it appears that s173(1) creates a mandatory requirement to establish a trust account before receiving any trust money. The reference to any trust money necessarily includes third-party cheques which do not require banking by the practitioner. The trust money definition in s3 is sufficiently wide to include third party cheques.

Although s174(1) recognises third-party cheques as a category of trust money that does not need to be banked, nevertheless the requirement is to have a bank trust account even though no money might ever be banked in it. Representatives of the Legal Practice Board have confirmed this view of the effect of the Act.

The Institute considers that there needs to be an amendment to exempt solicitors who only handle third-party cheques and who otherwise record the receipt and delivery of the cheques from opening an account and incurring unnecessary establishment and audit costs.

What do the changes to the trust

account banking requirements mean?

The Legal Practice Board has now sent all practitioners a brochure explaining changes to trust account banking procedures. Any queries about how it operates in practice should be directed to the Board. The decision to transfer the Law Institute's special account, held at a number of banks, to an account at one bank, namely West

pac, was a decision of the Board. The decision was opposed by the Institute because of the potential for additional bank charges and delays in solicitors accessing trust money held in the Westpac statutory de-posit account.

Can I still employ legal executives or law clerks?

The question arises because of the prohibitions on unqualified legal practice in Part 12 of the Act, read in conjunction with the client information requirements set out in s86.

Section 314 prohibits persons from engaging in legal practice unless they are admitted to practice and hold a practising certificate, are incorporated practitioners holding a practising certificate or registered interstate practitioners. The penalty is imprisonment for two years. Section 315 sets out exceptions to the prohibition. The exceptions do not include law clerks. Section 324 prohibits a practitioner or firm from permitting or assisting unqualified persons to engage in legal practice and states that to do so is a contempt of court.

Unfortunately, "legal practice" is not de-fined in the Act although "legal work" is defined in Part 13 (which deals with conveyancing business) for the purposes of that part, as "the preparation of any document that creates, varies, transfers or extinguishes any interest in land or . . . the giving of legal advice".

Section 86 sets out the information which must be given to a client including, in s86(3), the requirement to give the client a concise written statement setting out the name of the legal practitioner who will primarily perform the work and whether that person practises as a principal or as an employee. The requirement is not to nominate the legal practitioner who will supervise the work, but the legal practitioner who will perform the work. There seems to be an assumption that in all cases it will be a legal practitioner who carries out the work, but in many firms law clerks carry out some of the work under the supervision of a lawyer.

Section 318 enables a practitioner or firm to apply to the Board for authorisation to employ a legal practitioner who does not hold a practising certificate in connection with specified activities or functions that do not constitute engaging in legal practice. No such authorisation is available in respect of people who are not admitted to practice, which is the case with many law clerks.

It is unlikely that it was intended that the effect of these provisions would be that law clerks would no longer be able to be employed in law firms. They are usually skilled and invaluable employees who assist the firm to handle matters in an efficient and cost-effective manner. An amendment appears to be required to en-able the Board to authorise the employment of law clerks in connection with specified activities or functions, and for the client information to include the fact that the work will primarily be performed by a law clerk under the supervision of a solicitor.

CONCLUSION

The Legal Practice Act 1996 was certainly intended to effect significant change in the way in which the legal profession in Victoria is regulated. Whether or not you agree with the need for it in the first place, much of the Act is clear and straightforward. But there are some aspects of it which are not clear and some which do not work as well as they might. Two months into life with the Legal Practice Act, there are still many quest-ions.

ELISABETH WENTWORTH

Elisabeth Wentworth is the Law Institute's Manager, Strategy and Planning. The assistance of Eleanor Whyte, summer clerk, in the preparation of this article is gratefully acknowledged.