Lawyers and Conveyancers Bill

, on behalf of the Minister of Justice: I move, That the Lawyers and Conveyancers Bill be now read a first time. It is my intention to move that the bill be referred to the Justice and Electoral Committee for consideration, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of a House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 193 and 196(1)(b) and (c).

The bill reforms the structure of the legal profession and creates a new occupation of licensed conveyancers. As a result of the passage of this bill the Law Practitioners Act will be repealed. The structure of the legal profession is supported by the New Zealand Law Society, which favours a more responsive regulatory structure better suited to the changed nature of the legal services market. There is also a more general need for an improved structure that meets consumers’ needs for an accountable legal profession.

The impetus for the introduction of the occupation of conveyancers has its origins in the Hon Phil Goff’s 1997 Conveyancers Bill. More generally, the bill will provide consumers with greater choice among legal services providers. This choice is not, however, at the expense of their protection. The bill combines, appropriately, elements of professional self-regulation, with governmental control.

This is a large bill, comprising 11 parts. Part 1 sets out the fundamental obligations of lawyers and licensed conveyancers. Lawyers and conveyancers must be independent in providing services to their clients, and they must act in accordance with all fiduciary duties and duties of care owed by them to their clients. Subject to other requirements, and particularly in the case of lawyers in their overriding duties to the court—and I make the point to the House that they are, indeed, officers of the court—they must protect the interests of their clients, and, in the case of lawyers, they must uphold the rule of law and facilitate the administration of justice in New Zealand. Firms will be able to incorporate. The bill will allow lawyers to practice in incorporated firms in which all the directors and shareholders are lawyers actively involved in the practice, and it will allow conveyancers to practice in a similar structure. There will be requirements under professional rules for practitioners and incorporated firms to have indemnity insurance.

Part 2 contains title protection provisions. For example, it will be an offence to use the term “lawyer” or “law practitioner” if not entitled to do so. The part also defines the areas of work that are restricted to lawyers and licensed conveyancers. The select committee will need to consider which legal services should be restricted exclusively to lawyers. There are benefits, obviously, in a more open market, such as innovation and lower fees, but there are also possible risks for consumers when obtaining services from unregulated providers. As Minister of Immigration, I can certainly assure the House that that is so, knowing full well the implications of lack of regulation for immigration consultants who are often giving quite technical legal advice. I look forward to the select committee having a close look at what areas of work should be protected exclusively for lawyers, but specifically for the benefit of the clients.

Work reserved for lawyers includes representation before any court or tribunal, subject to existing statutory exceptions, giving legal advice for reward to a person in relation to the conduct of court or tribunal proceedings, and the giving of advice required by statute to be undertaken by a lawyer. Persons other than lawyers will be able to provide general legal advice in the drafting of legal documents. Generally, only lawyers will be able to draft court documents for reward, appear in courts or tribunals, give advice on the conduct of proceedings, or perform statutory functions, such as certifying matrimonial property agreements.

Part 3 provides the criteria for admission as a barrister and solicitor. Parts 4 and 5 make provision for the New Zealand Law Society and the New Zealand Society of Conveyancers respectively. Both societies will have a range of broadly similar regulatory responsibilities, including overseeing enforcement of the legislation, admission and enrolment of practitioners, and implementation and enforcement of complaints in disciplinary processes.

Part 4 separates the current regulatory and representative functions of the New Zealand Law Society. Although all lawyers will be regulated by the society, they will no longer be required to be members for the purposes of representative functions.

💬 Simon Power: Trying to do away with unionism.

District law societies will no longer be statutory bodies but may continue to exist and offer representative membership services. I hear the member interjecting across the House. I am a voluntary associate member of the Canterbury District Law Society already. Practitioners will determine the ongoing viability of district law society services, such as the provision of district law library services and local seminars. Until the New Zealand Society of Conveyancers is established, and Part 5 comes into force, the New Zealand Law Society will regulate conveyances.

Part 6 deals with practice rules on matters such as professional conduct, trust account rules, and indemnity insurance by the respective societies. These rules must be the subject of consultation with the relevant professions, and they require approval from the Minister. The part also contains provisions relating to trust accounts, which must be kept by those practitioners receiving money for or on behalf of others. Part 6 also provides that regulations may be made relating to the office of Senior Counsel, which will replace the title of Queen’s Counsel. Eligibility for appointment by the Attorney-General will be expanded to include all litigators, whether at the separate bar or in firms, so as to make it possible to select from the full range of leading advocates in New Zealand. There will be greater transparency in the appointment process. Existing Queen’s Counsel will have the option of retaining or changing their title.

Part 7 creates a new three-tier complaints and discipline system, with greater elements of independence and focus on timely resolution of complaints. Professional standards committees run by each society are intended to resolve consumer complaints quickly and effectively. A new legal complaints review officer will provide independent oversight of standards committee decisions. The legal complaints review officer may refer, overturn, or substitute decisions of a standards committee. In effect, the legal complaints review officer will replace the role of district lay observers and ensure more effective scrutiny of complaints.

The bill also creates a New Zealand Lawyers and Conveyancers Disciplinary Tribunal, which will hear and determine any charges against practitioners and any application for restoration of a practising certificate. Part 8 continues the Council of Legal Education. The council regulates the education of candidates for admission and the recognition of foreign legal qualifications.

Part 9 establishes the Lawyers and Conveyancers Special Fund. This fund is drawn from the interest paid by banks on trust accounts. The part requires any money standing to the credit of the fund to be paid to the Legal Services Agency for the purposes of funding community law centres. Part 10 requires both societies each to maintain a fidelity fund to compensate clients for particular pecuniary losses. This is an important consumer protection.

Finally, Part 11 contains the miscellaneous provisions. Two reforms are particularly significant in this part. Firstly, lawyers will be able to enter into conditional fee arrangements. A lawyer and client can agree that either the entire fee or an agreed proportion of the fee will only be payable upon the success of the client’s claim. This provision provides greater flexibility to clients in the way they choose to fund their legal services. However, Family Court, criminal, and immigration cases are excluded from conditional fee arrangements. The second element of this part is that a lawyer or a conveyance practitioner, or a person acting under his or her supervision, may undertake the work of a real estate agent—something I know that my colleague the Hon Phil Goff commenced with the bill he introduced into this House as a member’s bill back in 1997.

I commend the bill to the House.

Following on from the comments made by the Minister, I rise to say that the National Party supports sending this bill to the select committee. We have a few reservations, and I would like to talk about a couple of them. I know that my colleagues Simon Power and Richard Worth will be dealing with some, so I will keep mine to just a few.

One of the issues is that district law societies will no longer have any statutory powers or rights even to exist. I note that this bill has the support of the New Zealand Law Society, and, as the Minister did not refer to any support from district law societies, I have to question, as a former president of the Auckland District Law Society, whether district law societies are quite so keen on this bill. The work of the district law societies is great and varied. Certainly in relation to the Auckland District Law Society, I would like to take this time to praise the society for the work it has done.

One of the services that district law societies provide for the use of all lawyers is district law libraries. They are located in High Courts and District Courts around the country. Practitioners pay for the libraries in their areas. It is a service that we are constantly told by the larger firms is of no use to them. Certainly, in my time in a large firm that was said. But it is not true. Large firms, as well as small firms, and barristers, are constant users of the libraries. It is extremely important for the legal profession and the people it serves, and for justice generally, that lawyers have access to information in libraries. People who are in practice in small firms, who are sole practitioners, or who are barristers, often do not have the spare funds available to spend on extensive libraries. Even the most basic library will cost mere tens of thousands of dollars a year. That is all money that those people could use in building up their practices, in continuing their legal education, and in employing staff. So it is often a huge bonus for practitioners to have these libraries—libraries that are likely to face the chop.

In addition, the district law societies currently deal with complaints against practitioners. They do this, often on a no-cost basis, because the people making the decisions are fellow practitioners who are giving of their time voluntarily. Having sat on complaints committees for several years at the Auckland District Law Society, I know that many times we were faced with situations of practitioners who were somewhat past their use-by-date; who had really not done anything wrong but who had just come to the end of their practice life and someone needed to tell them that. So we often took a very kind view in the way we helped those people to leave the profession with some dignity and self-respect. I would hate to see a situation whereby the process becomes so institutionalised and bureaucratic that a kindly ear and a helping hand cannot be given to people who have perhaps stayed a bit longer than they should have in the profession.

Another area that the Auckland District Law Society is very much involved in is continuing legal education. I see that is given some emphasis in this bill, and I am very pleased about that. But the fact remains there was no such concept in this country until the Auckland District Law Society invented it. In addition, the society has been involved in the establishment and funding, through its practitioners, of the Grey Lynn Neighbourhood Law Office, as well as other law centres around the Auckland region. From that germ, as such, grew all sorts of other law centres and community law centres throughout the country.

Other innovations from the Auckland District Law Society included standardising forms for agreements for sale and purchase, and debentures. That district law society has done other things, including all sorts of things that today in legal practice, and even often in accounting practice and real estate practice, are accepted as the norm. The Auckland District Law Society produces those things, as a close look at the forms will show. Plenty of things are done by district law societies that have never been done by the New Zealand Law Society, and I have a concern that centralisation of issues and the people in Wellington—away from the very people who use the services—will fragment the legal profession. I would be very sorry to see that happen, and at the select committee the National Party will be looking very closely at that.

I am concerned as well about the costs of the new structure, because a lot of the bills that are intended to modify existing structures on the basis that it will make the whole process cheaper and more accountable often have exactly the reverse effect. That is one of the concerns I have, particularly in relation to complaints. I will be very pleased to see a standardisation of transparency in complaints procedures, and I will be very pleased to see practitioners who practise in large firms treated in the same way as practitioners who practise in small firms. Certainly, it has been my experience, in my many years of connection with both the Auckland District Law Society and the New Zealand Law Society, that there is often a disparity of power, and therefore a disparity of treatment. It is something that I personally took a stance on, and I have to say that many of my colleagues felt that it was very important, as well.

The conveyancing issues, which, of course, dominate this bill—and certainly they have been in the Hon Phil Goff’s mind since 1997—are in fact a bit of a nonsense really, because conveyancing has been a very unprofitable side of legal practice for many years for many practitioners, certainly for those in the bigger firms and those in the higher-rent areas. So conveyancing has, in many ways, been pushed out into the suburban parts of Auckland and other large centres, well away from the higher-rent areas.

Conveyancing has not been a monopoly, as many practitioners and former practitioners here in the House will know. It has driven us mad to hear politicians with very little between their ears talking about conveyancing being a monopoly. How can it possibly be a monopoly when there are 7,000 lawyers in the country, almost all of whom, at one stage in their life, have practised in conveyancing? Not only that, when the scale fees were done away with back in the 1980s—I was practising at that time and remember the consternation about that—a tremendous amount of effort was put into competing on the basis of fees, none of which effort, I have to say, has ever led to a rise in standards. That is one of the issues, and I do not think that opening up the area to licensed conveyancers will necessarily raise those standards. I do not see that it is a terrible thing to bring in licensed conveyancers. I welcome the fact that we will now see a process whereby they, along with lawyers, are licensed and regulated, because, at the end of the day, if we are to have these professions and industries, we need to have a level playing field as much as possible.

I raise a concern at this stage in relation to accountants and tax advice. I am concerned that clauses 6 and 18 may render some of the work currently done by tax accountants, and even by tax practitioners in the Inland Revenue Department, under some sort of threat, because they are not necessarily going to be registered as lawyers or conveyancers. That is something that the select committee will need to look at. So in many ways we have concerns, but, at the same time, we will allow and support this bill going to the select committee. I will be keeping a very close eye on the results and will be interested to see what comes back to us.

United Future will also support the first reading of this bill, but will not necessarily support it beyond that stage—that will be determined largely by the outcome of the select committee process. Unlike almost all the legislation now introduced, United Future has not had the opportunity to discuss with the Government the philosophy behind the bill, or to be involved in the development of the policy that is reflected in the bill. This is because the bill has been in train over many years.

I am aware, as a lawyer, that there has been much discussion within the profession, from the top to the bottom, about these reforms, and general acceptance of the need for reform to bring the Law Society in line with current business norms. However, the detail is yet to be analysed, and I look forward to hearing from submitters. I hope that not just the New Zealand Law Society but district law societies—as my colleague has encouraged—firms large, medium, and small, sole practitioners, barristers, Queen’s Counsel, and others will take the opportunity to make their views known so that we can look at all the various perspectives on this bill.

There are quite a number of issues involved in the bill, but there is time in this speech to address only a few of them. Obviously, the key one is the licensing of conveyancers, and, as a practitioner who did a great deal of conveyancing over my 26 years in practice, it is my opinion that lawyers have generally abrogated their exclusive right to conveyancing, and, in a sense, this bill is just a reflection of that. The abolition of the scale of charges in the late 1970s led to competitive pricing, which meant that solicitors were often doing conveyancing for less than the cost to their practices—a cost that they needed to recover. That led to a subordination of conveyancing to legal executives, who, often, had only a few years of polytech training to prepare them. In terms of the basic paperwork of conveyancing—the preparation of documents for the transfer or discharge of a mortgage—that is all very straightforward work that legal executives could certainly cope with, and with the information technology developments that have occurred at Land Information New Zealand over recent years, the paperwork has become more and more simplified.

The problem arises, in my view, when one comes to the complexities of conveyancing; when there are Resource Management Act issues, when there are disputes over contractual terms, and when contracts relate to unbuilt or partially built houses—those are just a few examples. It is not just a question of dealing with those issues when they arise, and I hope that the conveyancers who do this work will know their limitations and will know when they need to pass issues to a lawyer; it is seeing problems coming that is the lawyer’s real skill. It is providing clauses in agreements to protect against potential problems; it is taking early steps to ensure that potential problems do not arise; it is taking early steps to nip problems in the bud so that they do not become significant. Those are things that will be missed in the downplaying of conveyancing to conveyancers rather than lawyers. I fear that, effectively, the public will not get the same level of service in those areas.

However, as I said, many firms and, indeed, the profession generally have abrogated that responsibility. With legal executives doing most of the work, those issues are not being picked up, either. I refer to peripheral issues such as whether a client should register his or her property as a joint family home. That seems to be left to the side, and I think we are in real danger of losing the protection of joint family homes generally, simply because that provision is not used when it should be. The setting up of trusts and estate planning are other issues that arise at the time of conveyancing that a conveyancer will not have the expertise to address or recognise. There are property partnership issues, and things of that nature. That is really where we are going to suffer a loss, I think, in terms of this proposal.

The second major impact of the bill is in enabling lawyers to sell real estate. I guess this is an attempt to bring competition into the real estate industry, but I have real questions about it. Again, as a solicitor with extensive experience I established good working relationships with real estate agencies, but learnt that it was very dangerous to get involved in mutual referral arrangements, because of the conflict of interest that very easily arises when one does. I remember one occasion when a real estate agent rang and said: “I’ve got a chap here who wants to sign an agreement for a house, but he wants a lawyer to check it over before he signs it. Can you see him now?”. I said that, yes, I was happy to, and when I questioned him about it, it seemed that the house was probably not the house best suited to him. I had some misgivings, and he had some misgivings, so I suggested he sleep on it overnight before rushing into a decision. The next day he advised me he had changed his mind, and when I told the real estate agent about it he was absolutely ropeable because he had sent me his client and now was going to lose his commission.

Those sorts of difficulties arise where marketing business, such as the sale of houses, conflicts with professional business that requires the giving of independent advice. Selling property, or any product, requires a different sort of approach from that of the provision of independent advice. I know valuers, who were used to giving independent advice, who became real estate agents and tried to sell properties, only to discover that they simply could not tolerate the situation that they could tell the purchaser only the good things about the house, and not the bad things, and they pulled out from being real estate agents as a result. That just demonstrates the two different approaches.

Lawyers may simply, if they have this power, put clients’ houses on a website in order to market them, and be fairly non-active when it comes to the actual marketing. But the danger is that if they get into marketing, they will end up selling existing homes for their vendor clients to clients who are purchasers, and therefore be in a situation where one firm is acting for both vendor and purchasers. However, lawyers have looked at this whole thing quite closely over a number of years, and whilst, initially, there were some shopfront stores that explored and flirted with the idea of selling real estate, and looked at ways of getting round the Real Estate Agents Act, I notice that in the last few years there has been a backing off from that, and perhaps this part of the bill will also have little impact.

However, the danger that is there, in terms of conveyancers, is similar to the danger in terms of conflict, and the close affiliation that conveyancers may well have with real estate agents is likely to cause problems. For example, mortgage brokers are often aligning themselves with real estate agents, and even working out of their premises, and I know from my experience that conflicts have arisen that have caused a disservice to the public. If a mortgage broker in those circumstances does not get the finance, the real estate agent loses his or her commission, so there is a lot of pressure on such mortgage brokers to deliver. Therefore, they lose a degree of the objectivity and independence that are necessary for their clients.

There also can be breaches of confidentiality. Mortgage brokers are privy to personal information that real estate agents are not. I have known examples where that information has been passed on, to the client’s detriment. Conveyancers will be expected by real estate agents to get the transactions through so that the commission is received, and I have some concerns about that. If the bill goes through, I hope that the Society of Conveyancers is able to regulate to ensure that that danger is protected against. Independence, lack of conflict of interest, and confidentiality are ingrained in the law profession. Legal executives within firms are taught the importance of those. That is not so with conveyancers, and whether the same high ethical standards will be able to be expected is yet to be seen.

As I have said, there are a number of issues. The abolition of QCs is another one that is quite contentious. There is the incorporation of law practices. In relation to cost revision, I have real questions as to whether it is still appropriate for law societies to be running cost revisions, but I do not have time to deal with that now. There are many issues. The select committee process will enable those to be worked through. They are matters that the Law Society and lawyers generally will have to consider carefully. They will have to make sure they have their say, so that the select committee will be able to look at all sides of the issue and all the potential consequences that come out of the legislation. I look forward to reading and hearing those submissions, and being part of that process.

New Zealand First will support this bill going to a select committee, but will be strongly opposing the creation of the new rank of Senior Counsel. It is New Zealand First policy that the office of Queen’s Counsel should be retained, and on New Zealand First coming into Government after the next election we will make sure that the office of Queen’s Counsel is reinstated in the New Zealand way of life and in the New Zealand legal way of life. Of course, in so far as this legislation is concerned, it may be that if New Zealand First can get the support of other parties in this House—and it seems that there might be considerable support—we might be able to prevent the office of Queen’s Counsel from being removed from the bill. I will be interested to hear the National Party’s views on that. United Future, which has close links with the Government, has said that it is a contentious issue. The Greens being almost a coalition partner, I would be interested to hear their view on Queen’s Counsel, to see whether they want it retained, and I would be interested to hear the ACT view, as well.

New Zealand First has said, for example, on the Supreme Court Bill, that it supports excellence in New Zealand, excellence in the law, and excellence in having a Privy Council still hearing our cases. For much the same reason, we support the continuation of the office of Queen’s Counsel. I started my legal career in 1961 as a clerk in the then Magistrate’s Court.

💬 Simon Power: That can’t be right. The member looks far too young.

I was 16 at the time. That tells members how old I am. I have had more than 40 years experience in the law, for which I am eternally grateful. I have never aspired to be a Queen’s Counsel. It is a bit too lofty for me, perhaps a bit too academic for me, and perhaps a bit beyond my capabilities. However, just because I do not want to be a Queen’s Counsel, or am not capable of being a Queen’s Counsel, is not a reason to remove the office of Queen’s Counsel.

I suspect that Labour’s view on this bill is that it has a dumbing-down approach, as it has to so many areas in New Zealand. It is dumbing down the education system and our superior court system, and it wants to dumb down the way in which the legal system operates, as well. Not many people become a Queen’s Counsel or even want to become a Queen’s Counsel. It is a title that is earned. It is not a title that is given to one as a matter of course. It is something that is earned. We could have the new title of Senior Counsel in addition to that of Queen’s Counsel, but the title of Senior Counsel is very general. It is very broad-based, and it does not reflect the superior intelligence, superior work, and ambitious nature, perhaps, of those who want to leave their mark on the law at the highest possible level.

New Zealand First will work hard to ensure that, when this bill comes back from the select committee, of which I am a member, the office of Queen’s Counsel remains, and any regulations to replace the office of Queen’s Counsel are not passed; or, if we are to have Senior Counsel, that it is in addition to Queen’s Counsel, and I can see no problem with that situation. The Government has tried to create a South Pacific legal backwater with the Supreme Court Bill, and now, once again, it is trying to create a South Pacific backwater in the quality of the representation to which people will be entitled in our courts.

Of course, people are strange; they want to pay for Queen’s Counsel. Time and time again, big firms, small firms, and ordinary citizens seem to want to have someone at the top, someone with the rank of Queen’s Counsel, representing them. As members may know, in view of the trans-Tasman legal links Australian Queen’s Counsel can practise in New Zealand as Queen’s Counsel. Big banks, big commercial concerns, and people who can afford it will employ Australian Queen’s Counsel to represent them in the New Zealand courts. That is inevitable. It is just a fact of human nature. People like to have a big name representing them. If they have the money, they want to big note in the pub, or the club, or wherever, and say that they have X Queen’s Counsel representing them. It sounds so much better than X Senior Counsel, whatever that means. We will find more and more Australian Queen’s Counsel working in the New Zealand courts, taking over the role that New Zealand Queen’s Counsel used to have, and thereby depriving New Zealand lawyers of work. This Labour Government takes the view that it wants New Zealanders to have more access to the law. The way in which it is running the Supreme Court Bill and this bill will result in less work being available to New Zealanders, and lawyers from other jurisdictions coming into New Zealand, due to the reciprocal way in which we practise these days. I make that strong point. New Zealand First opposes that aspect of the bill.

It is good to see that law firms can now be incorporated. That is long overdue.

💬 Stephen Franks: Why?

I support the concept of an incorporated law firm. It is an option, if one wants to have it. I say to those people who will be making submissions on the bill that I would be interested to know their views on multidisciplinary firms as well. The bill seems to have left out that concept. I would be interested in submissions being put to the Justice and Electoral Committee on the concept of multidisciplinary firms. I went to a seminar on this in about 1986. It has been around for a long time; it is not a new concept. I think the people out there who want to make submissions should not be disbarred or prevented from making submissions on matters that are not in the bill at the moment. If they do have good ideas on multidisciplinary practices, those views should be expressed to the select committee.

Previous members have made comments about conveyancing and suchlike. Most of my work was involved in conveyancing. I did a fair amount of criminal law and civil law, but generally it was conveyancing.

I see no problem with any degree of competition from licensed conveyancers and suchlike. If they can do the work for the type of rate for which a lawyer does that work today, good on them. There is competition between lawyers already, and I have the feeling—I have had it since early last year—that those licensed conveyancers who were out there in practice last year were feeling the pinch, and that life was not as simple as they had thought it might be. Those who had set up in the inner city of Auckland were finding it rather difficult, compared with those lawyers who practise out in the suburbs because of the better availability of parking and the lower rents, as the National member Judith Collins was saying.

I have to express a concern I have, having been a lawyer for many years. I am concerned that there is now too great reliance on legal aid, and that the more lawyers rely on legal aid, the more they come within the possible control of a Government. If the Government is paying lawyers legal aid to the extent of tens of millions—if not hundreds of millions—of dollars, it can start to call the tune on the legal profession. I am slightly concerned that we have allowed ourselves, as a legal profession, to become tied to the financial strings of the Government in the legal aid area. Although many lawyers try, time and time again, to extend the field of legal aid, one sometimes gets the impression that, as the Government tries to cut back here and cut back there, at the same time it is trying to cut back on the standards that apply in areas where legal aid is being obtained and granted. I feel, looking back on the whole situation, that there used to be greater independence; lawyers in general practice were more independent, more likely to take a Government on, and more likely to disagree with a Government than they are today, when they are so dependent on legal aid. So many law firms today would go out of business if legal aid were not paid to them. That, on its own, must give us concern about the independence of the legal profession.

I say that also of the New Zealand Law Society. The Law Society knows that many hundreds of lawyers out there are dependent on legal aid. If the Government says to them that it might be cutting back on legal aid if such-and-such does not happen, the Law Society has to try to balance the needs of the profession as a whole with the society’s own requirement to stand up for all New Zealanders, big or small. That is the ultimate role of a lawyer. If someone goes to a lawyer and has a good case, the lawyer has a responsibility to present that case regardless of who might be on the other side, and regardless of whom the lawyer might be taking on. I trust that the Lawyers and Conveyancers Bill, which will be repealing a bill that, in 1982-83, went through a select committee of which I was the chairman, will have that as its main standard.

I look forward to sitting on a Justice and Electoral Committee that has as a member a former committee chairman, Dail Jones, whose institutional memory goes back as far as that. That will be very interesting.

In particular, it will be interesting because the Lawyers and Conveyancers Bill is an absolutely monstrous bill. It is an extraordinarily large piece of drafting. I am not sure whether it is a monstrous indulgence. In other words, the legal profession has been allowed by Ministers, and departments that do not know what they are doing to write, essentially, the prescription it wanted. I suspect that might be the case. I cannot tell whether, instead, it is a monstrous imposition. It is possible that the officials wore down the representatives of the profession and, eventually, succeeded in prescribing in minute detail the structure of the profession in a way that is almost unbelievable. Or is it a monstrous own goal that they, in fact, have finally succeeded in persuading the Minister of Justice, who has been totally engrossed in foreign affairs? Although he was the author of a bill in 1997, I think, that was going to open up what he called the conveyancing monopoly, he lost all interest in it as soon as he became the Minister and had the power to do what he had been threatening to do.

This bill seems to have been handed to the Hon Lianne Dalziel for her to try to finish it. From the look of it, she has probably decided that being captured by Wellington and by the officials is a better fate—

💬 Simon Power: She’s got other things on her mind.

She might have other things on her mind. Lianne Dalziel was asked to introduce the first reading of a bill that is of an unbelievable size, particularly when it is compared with, say, the re-regulation that the accountants managed to achieve. I see nothing in this bill to explain why we do not have a simple empowering statute that used the precedent that reformed the New Zealand Society of Accountants, given that the importance of the functions carried out by the professions are probably comparable. Given the extent to which the community relies on the integrity of audit and the standard of accounting, in a country that has 30,000 accountants, the importance we place on their integrity should be at least the same as the importance we place on the integrity of lawyers and the legal profession, which has only 7,000 or 8,000 practising lawyers. Yet we have a bill that goes into micro-management and micro-detail on all sorts of aspects that should surely, in a genuinely self-governing profession, have been left to evolve. This is not self-governing, in any respect.

This measure is the muddy outcome of the loss of confidence that the profession experienced 10 or more years ago, when the Law Society engaged a firm of economists to take a bottom-up look at the society and at the profession. When the economists’ study came back, it terrified the board of the society. The board sat on it for months. A bowdlerised, or censored, version finally emerged. From recollection, the board had taken out chapters 3 to 7, or something like that. The resulting rather puzzling economists’ study of the profession and of optimum methods of regulating the profession emerged and caused bewilderment all over the country. It seemed to the conveyancers that it was a subtle plot to get rid of the remaining restrictions on entry to that profession. It seemed to the large firms that it was an excuse for not ending the subsidies that they had been providing to the smaller firms for a very long time, through their fees, which supported activities mainly availed of by the smaller firms. It did nothing, eventually, for the fidelity fund—a foolish piece of work if ever there was one—or the cost review jurisdiction, an equally foolish piece work, and it did nothing on multidisciplinary practices or anything else that had been seen as a topical issue. So it got buried. Then we had the long obfuscation and repeated new arrival dates for this legislation from the Minister of Justice, the Hon Phil Goff. Finally, this bill emerged.

What does it do? It nationalises the profession. The mark of a genuinely self-governing profession is its control over its brand, over its quality standards, and over the members of that profession. Although this legislation keeps the form of self-regulation, it completely subordinates the profession to New Zealand politics. When the Minister of Justice has final approval of the rule book of the Law Society, which is what this legislation does, the Minister of Justice is politically responsible and politically liable every time a lawyer defalcates. Where will the buck stop, every time there is a failure of practice by a lawyer? Obviously, it will stop with the Minister. Why did he not make rules that would have stopped it, prevented it, or fixed it?

Once a Minister is faced with that kind of liability he or she cannot afford to allow any rule that leaves an element of risk, but law is a business as well as a profession. Rules have to be written so as to allow for a certain level of experimentation, flexibility, and judgment, and they have to recognise that people will fail, there will be dishonesty, and it will sometimes have adverse consequences. Of course, the Minister has the best of intentions, at the moment, to ensure that the standard is not set so high that it becomes a barrier to entry, or becomes an undue cost, which is spread across all clients. But the Minister will have almost no choice. When the Minister has to approve the rule book, and when every rule that looks as though it has failed becomes a matter of political liability, the Minister has to dictate.

That is what has happened in other areas. It is what has happened in the securities industry, and to the self-regulatory organisations in Britain after the “bold new dawn” in 1987 in Britain’s finance industry. The British finance sector was the envy of the world, and now it is the creature of Ministers, because they cannot afford not to dictate.

What is the Minister inheriting here? A profession that is truly ludicrous in its own eyes. When the profession has not managed to bring Russell McVeagh before its own disciplinary processes in over a decade, since the bloodstock partnership scandal erupted, when it has spent, apparently, more than half a million dollars, and is still arguing about what evidence will be provided, we have an absolute spectacle. It is a profession that purports to be self-governing and self-disciplining, but it cannot even manage to get one of its largest members before its disciplinary processes for a substantive hearing. That is what the law has come to.

I think that the Minister should not be rescuing the profession from its own shame in this position. The Minister will now have to make the rules, and will be held accountable next time there is a Russell McVeagh - type scandal. He will not be able to do any better than the Law Society has done, because it has not analysed yet what it is that is going wrong. We will now see that the conduct, the standing, and the branding of the profession will be a matter for politicians to resolve, however fondly the Law Society thinks it has managed to rescue the profession from that class.

We also have the provisions that have attracted a little bit of media attention, like the fact that multidisciplinary practices are not allowed. The offence, actually, is to share income with non-lawyers. I wonder how that works with a turnover lease, for example, which is pretty common—for shops, anyway. Is one sharing income when the lease rental is determined by turnover? What about all the other Islamic banking practices that manage to disguise interest as profit, or profit as interest? There are plenty of ways of getting round something as silly as a rule that says income cannot be shared with non-lawyers. We have the prospect of compulsory indemnity insurance, which is another way, basically, of supporting those who otherwise ought to be pushed out of the market. There is the fidelity fund, which is the sole practitioner benefit from the large firms.

There is the cost revision regime. In a business as competitive as law, what possible justification is there for the very extensive provisions in this bill that preserve and extend cost revision and what is called the client care regime? I wonder whether the other lawyer members have noticed that there is now to be a set of rules governing client care. Is that not what business competition is about? Is that not what all those seminars are about? I tell members that there is an awful lot to do on this bill.

I support this bill.

I do not intend to make a long speech this evening on this bill. I want to indicate that the Green Party supports this bill at this first reading and in going to the Justice and Electoral Committee. The various provisions in this bill have been well canvassed by previous members, so I will not go into great detail about them. I understand this to be a large bill, as was pointed out by Mr Franks. It is a highly technical bill—

💬 Stephen Franks: Just weigh it.

Ha, ha! I understand that there has been significant consultation on the bill, and that it has had broad support from the profession. I look forward to going over it in detail at the select committee—

💬 Stephen Franks: I don’t believe you.

Ha, ha—because I have such erudite colleagues to assist the committee in that regard. I am not a lawyer, so I am not able to speak with the level of experience and erudition of some of the members who have spoken this evening, but I hope that I can bring something to the committee as a non-lawyer. I think that that perspective is useful.

In general, I understand this bill to be a substantial review of the law relating to legal practice, including a restructuring of the New Zealand Law Society, the establishment of the New Zealand Society of Conveyancers, which is new, and the ending of the statutory status of district law societies. The bill makes provision for how practice rules will be set. It opens up the real estate industry, by enabling lawyers and conveyancing practitioners to sell real estate. It establishes a new complaints procedure, and allows the formation of the incorporated societies that Stephen Franks referred to earlier.

The bill continues to provide for the special fund used for the funding of community law centres, and I am pleased to see that continue. The underfunding of community law centres has been of great concern to the Green Party for some time. We have attempted to address that in previous years by means of Budget initiatives negotiated with the Government, to provide some extra funding for community law centres. We believe that those organisations provide a crucial role, in terms of making the law accessible to some of the most underprivileged members of society. It is very much an access-to-justice issue, and at the select committee I have queried a number of times why banks have always kept 50 percent of the interest generated by that fund as banking fees. I have always thought that that was a bit extortionate. I am pleased to see that the percentage kept as banking fees has been reduced by 5 percent to 45 percent, so at least there is a minor gain there.

The other thing I would like to touch on before I finish is the provision to establish a new rank of Senior Counsel, to replace that of Queen’s Counsel. Dail Jones queried the Green Party’s position on that provision, and it will be no surprise to the members of this House to learn that the Green Party is totally in support of it. We believe that the title of Queen’s Counsel is a colonial vestige, and that it is high time it went. We find it quite bizarre that Mr Jones should think that changing the name of those senior practitioners from Queen’s Counsel to Senior Counsel would somehow make them less intelligent or less able. That seems quite a bizarre notion.

💬 Simon Power: It’s obvious.

Well, he said that we would see a reduction of the quality of representation that people are entitled to. That is quite bizarre, when we are talking, primarily, about a change of title in terms of that provision.

Dail Jones also made the point that people will go to Australia to get a QC to represent them in New Zealand, so that they can go and boast about it to their friends at the pub. I would suggest to Mr Jones that people do not pay the significant fees of a QC in order to boast about it at the pub; they pay the money because they want to get the best representation that they can. Whether such a person is called a QC or a Senior Counsel, he or she will still be the best representation that is available, so we support that provision wholeheartedly.

We support the bill going to the select committee, and I look forward to working with my colleagues to see whether it needs amending.

I rise to support this bill. I commend it to the House.

It is not often that I rise in the House to agree with Nandor Tanczos. In fact, I think that in the time we have been in this House together, which is nearly 4 years, this is probably the first time that I have done so. It could be the last time, too. But I agree with him that it is odd to say that having a QC is a good thing to brag about in the pub. Perhaps Mr Jones could take a call from Labour, fill 10 minutes, and explain that position to the House a bit further.

I come from, I guess, a slightly unique position, in the sense that—

💬 Hon Judith Tizard: You can’t be “slightly unique”. It’s either unique or it’s not.

Thanks. I appreciate that outburst from the Associate Minister for Arts, Culture and Heritage. It was a more substantial contribution than she has made towards the reading of this bill, so I thank her very much for that. I practised law for 5½ years before coming into the House as a member, and I think that a number of the things that are proposed in this bill make reasonable sense. As my colleague Judith Collins has said, members of the National Party will be supporting this bill’s referral to the select committee for what I consider to be an initial look at how these provisions are to be enacted, and at how those within the profession view them and the effect they will have on their ability to deliver quality legal services to their clients.

However, National does have some grave reservations about this bill, particularly with regard to the issues surrounding the abolition of the rank of Queen’s Counsel. Unlike my colleagues who have spoken previously, I do not necessarily hold a view on the weight associated with that title in terms of colonial vestiges and hangovers, as Mr Tanczos suggested, nor do I agree with Mr Jones’ view that it is a title that one can brag about in the House. However, I am extremely concerned about that particular title being removed from the profession—not for the reasons that my colleagues on the Opposition side of the House have outlined, but for this reason. I say to Mr Tanczos, who will be sitting on the Justice and Electoral Committee, that the role of a Queen’s Counsel as an independent member at the bar is to hold an office that allows him or her to challenge authority, Governments, and those who conform to the rules of our society, in a way that gives him or her a certain degree of independence from such conformity.

I am worried that the way in which it is proposed that the rank of Senior Counsel will replace that of Queen’s Counsel could easily see senior members of legal firms that are involved primarily in the area of Government work end up with the title “Senior Counsel” next to their name. I direct my comments to Mr Tanczos when I say that what worries me the most about that is that it will remove the independence of a senior member of the bar to challenge the police and the Government, and to challenge any other arm of what I guess could be called the last conservative vestiges of the State, through that appropriate avenue for the taking of such action.

I am worried that the role of Senior Counsel will be too readily available to those members of the profession who practise in large law firms and who undertake substantial commercial work for the Government. They act on behalf of the Government in those roles. The idea of a Queen’s Counsel is to lift an individual barrister above the mire, so that he or she is able to take on the unpopular cases that other barristers and solicitors turn down, and is able to hold without fear the view of a client whom all others in society may view as having committed wrongs—be they civil or criminal—well ahead of the time that a judge or jury has to make those decisions.

I say to the Green Party that it should think very carefully before it votes to remove that last vestige of barristers’ independence at that level, and to replace it with a label that could easily be assigned to any senior lawyer in any firm. Many of the large firms in New Zealand do large amounts of commercial work for State-owned enterprises, Crown entities, and other Government departments, and in my view that is where the real concern lies in relation to the removal of the rank of Queen’s Counsel.

This bill is intended to maintain public confidence in the provision of legal services, and to provide protection for consumers. Who would have thought that Mr Dempster would cause all this? Who would have thought, when Mr Dempster decided to try to register as a conveyancing agent, that it would lead to the monster bill that is about to go before the Justice and Electoral Committee? I am sure he did not think for one moment that this would be Parliament’s answer to his quandary with regard to carrying out conveyancing as a person who has not been admitted to the Bar as a barrister and solicitor of the High Court.

I am not particularly concerned about some of the issues that Mr Smith from the United Future party has raised in respect of ethics, integrity, and the way that lawyers or conveyancers carry out their duties. There is a combination here of clients who are not silly working out who does, and who does not do, a good job. People who need surgery do not go to someone who might like to try to be a surgeon; they generally work out the best place to go to for an operation, and it is the same when seeking legal services. I am convinced that the practice of law in New Zealand has reached a level of maturity where self-regulation and competition in that paradigm will make the practise of law perhaps a little more exciting to be in than it has been in previous years. The right of lawyers and conveyancers to sell real estate is an interesting concept. As Mr Smith has said, it has been tried in various forms by various solicitors around New Zealand over time. Frankly, I have never met a lawyer who has been a particularly good salesperson, and I think one will probably find a situation where, again, the separation between those who sell property and those who provide legal services will pretty much find its natural equilibrium after a period of time.

I return to the point I made initially, which is the grave concern that the National Party has over the issue surrounding the removal of silks from our system. What concerns me the most is that the level of independence available to those who wish to challenge the State, the police, and those in authority who make the laws will be seriously undermined, by replacing the high level of independence that Queen’s Counsel enjoy in New Zealand with a far more politically muddied appointment to the rank of Senior Counsel. During the select committee process the National Party will be monitoring that very carefully indeed, and I place on record our reservations about that issue. As I said in the first instance, we will be supporting this bill going to the select committee, notwithstanding the reservations that I have outlined.

I am delighted to rise in support of this bill.

Was that not a helpful contribution that we just heard from the senior Government whip? He gave no reasons for the views he offered, yet he gave a clear statement of support for legislation for which we have waited a substantial period of time. It is important legislation, because there are some key issues of principle that will clearly challenge the intellect of the Justice and Electoral Committee.

Members before me have spoken about key aspects of the bill, and I will not cover that ground again. I want to focus on a specific area touching client care, and also on an issue that relates to the professional indemnity obligations that sit on lawyers. Before I do that, I will just highlight the main changes in the bill. They are quite clearly to end the exclusive right of lawyers to provide conveyancing services, and to restructure the New Zealand Law Society and abolish district law societies.

There are a number of district law societies throughout the country of varying effectiveness and efficiency, and some of those law societies with small numbers and in quite remote areas clearly find it difficult to discharge their obligations under the Law Practitioners Act. Allied to that is the plan to establish a new complaints and discipline regime. In a small district law society area, where there are, say, 10 members, and where members are constantly sitting in judgment on their peers, it is difficult to run an effective system of sanctions that will provide quality legal peer review in cases where errors occur.

There is a plan to enable lawyers to incorporate their practices.

Sitting suspended from 6 p.m. to 7.30 p.m.

My recollection is that before the break I was talking in a general way about what the main changes to the bill were, and I would just like to conclude by noting that a significant provision is to continue a fidelity fund. It is an arguable proposition when a number of professions and trades—if that is an appropriate distinction to draw—have done away with such funds, and I question the need for lawyers to continue with a fidelity fund. But that is certainly the way this legislation is structured.

In the remaining time I would just like to talk about two aspects of the bill that are not given great flesh in the introductory state in which it is currently drafted. They deal with the ability of the Law Society to make rules, and it is very much part of the plan that the New Zealand Law Society is to be the dominant animal in all of these events, and that the district law societies will fade into desuetude. What I would like to talk about are rules that the Law Society may make under these enabling provisions in respect of client care. I hope that something perhaps not far short of a clients charter of rights may emerge from the rules that the Law Society is given power to make in terms of this legislation. I would like to touch on what lawyers can legitimately be asked to do, and what can be required of them from the client perspective, and I would put it first under the heading of “engagement”.

The first proposition is that at the commencement of an engagement the lawyer must agree with the client the objective and intended outcome of the engagement—in other words, the service to be provided. Second, there needs to be a discussion between the lawyer and the client as to the events that are likely to occur, the processes to be gone through, the actions to be taken, and the best estimate that the lawyer can give as to the likely outcome of that engagement. That was a truly difficult proposition in the good old days of a judicially active Court of Appeal, where the best one could say might be: “Well, it depends what the Court of Appeal thinks is fair on the particular day.”

The third proposition I would advance in the context of engagement is that the lawyer defines for the client at the commencement of the engagement the basis of the charging and the charges that will be applied during the course of that process. Of course, the lawyer will inform the client of the client’s entitlement to that cost estimate. I think it is also very necessary to provide an estimate of the time required to carry out the engagement, and the probable time schedule for the main components within that engagement.

The second broad heading would be “performance”. That is the obligation to respond in a timely manner to client requests for information, and also to proactively keep the client informed when the main components of the transaction are achieved. Then, of course, there are the obligations of due care and skill, which are now put in the context of the provision of professional services by a provider to a consumer.

Finally, in the context of the relationship, consideration needs to be given to the aspect of complaints. The lawyer needs to document processes that will enable the validity of a complaint to be determined. That documentation should be made available to the client on request, and in the event of the client expressing a complaint in respect of which judgment is to be made as to the lawyer’s performance.

Those are aspects relating to client service. I guess if I have a reservation about the power that exists in the legislation to make rules, it is in respect of compulsory professional indemnity insurance. Lord Levene, the chairman of Lloyd’s, has just visited New Zealand, and he made some comments about professional indemnity and the obligations that sit on professionals to provide professional indemnity cover. In looking at the materials that are currently in the bill, I see that it is proposed that there be a fair degree of specificity as to the terms of any policy of professional indemnity insurance that should be arranged. I simply note that with the rise in premium costs in Lloyd’s and other markets, competent lawyers might find themselves rated out of the market.

I suggest that one of the key aspects in running a professional legal services firm, or any professional firm, is the skill of the owners in managing the risk of the business. There are choices to be made in managing risk, which include the transfer of risk. One of the core elements in transferring risk is the application of insurance. For the law firm and the professional services firm, judgments have to be made as to how much cover should be secured, what the upper indemnity level should be, and what should be deductible, or the amount that the law firm, in the first instance, meets—what is more popularly known as the excess. In respect of the Law Society, and particularly with rules to be made with the concurrence of the Minister of Justice, a non-worldly view might be taken to the setting of such terms, with the outcome that either the cost of cover will become prohibitive or, alternatively, lawyers will seek to take short cuts in the context of that aspect of risk management known as risk transfer.

Sure, there are other issues that the select committee will have to consider. One of those issues—as a member of the committee, I am conscious that there are other members present in the House who will also be on that committee—relates to the issue of reservation of work. What work is it appropriate for lawyers to do on an exclusive basis? What work is appropriately no longer the domain of lawyers? We all know the story that just as there are good doctors and bad doctors, so there are good lawyers and bad lawyers.

, on behalf of the Minister of Justice: I move, That the Lawyers and Conveyancers Bill be referred to the Justice and Electoral Committee and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 193 and 196(1)(b) and (c).

I raise a point of order, Mr Speaker. I rise on a question of clarification. That vote, of course, has now been taken, but I would be grateful to learn from you whether what has happened is an unusual occurrence, whereby for non-urgent legislation the select committee may sit during a period that the House is sitting. I am saddened to see that United Future and one other party joined that vote.

It is a debatable point. The reality is that it does actually occur.