Lawyers and Conveyancers Bill

I move, That the Lawyers and Conveyancers Bill be now read a second time. I would like to thank the Justice and Electoral Committee for its consideration of the bill. I accept all but one of the committee’s amendments, and I intend to move a Supplementary Order Paper in relation to that amendment at the Committee of the whole House.

The vast majority of submitters agreed that there was a need to reform the regulatory regime for lawyers. This bill replaces the existing regulatory framework for lawyers with a co-regulatory regime that also covers the new profession of conveyancers, created by the bill. The new regime will enable both professions to respond more effectively to the changing needs of consumers and suppliers in the legal services market.

Many areas of work traditionally reserved to lawyers, such as conveyancing and the making of wills, will be opened up to other service providers. Consumers will have greater choice about where and from whom they purchase their legal services, and suppliers will have greater choice about the range of legal services they provide. Freeing up the market in this way will not, however, compromise consumer protection. Those areas of legal work requiring the level of expertise and knowledge that can be gained only by completing a law degree and obtaining a practising certificate will remain the preserve of lawyers.

Consumer protection will be further enhanced by a strengthened complaints and disciplinary scheme. The first of its three tiers is an accessible, low-level complaints service, funded and operated by the professions. The second tier is a complaints review body appointed by the Government and independent of both professions. The third tier is a disciplinary tribunal comprising professional and lay representatives. The new occupational framework for lawyers and conveyancers combines the benefit of industry self-regulation, flexibility, innovation, and industry buy-in with sufficient regulatory oversight to maintain consumer confidence.

I turn now to the changes to the bill recommended by the committee. The new purposes clause in Part 1 gives greater emphasis to the bill’s aims of consumer protection and the maintenance of public confidence in the legal and conveyancing professions. The changes in clause 6, dealing with interpretation of terms, are largely technical. An important clarification, however, is made in the amended definition of “reserved areas of work”. This term could have been interpreted as meaning that non-legal specialists, such as accountants and patent attorneys, could no longer advise clients on matters within their area of expertise, if those matters relate to litigation proceedings. The bill will not, and was never intended to, have this effect. Although lawyers retain the exclusive right to appear for clients before courts and tribunals and to provide advice on the direction and management of court and tribunal proceedings—that is, subject to statutory exceptions—this will not prevent non-legal specialists from providing litigation-related advice. I am confident that the committee’s amendment will clarify the policy intent.

The committee has also recommended amending the definition of “conveyancing” to address concerns that the term could capture work currently undertaken by non-legal specialists in areas such as taxation and intellectual property. It is not intended that any additional work should be reserved to lawyers, and the amended definition makes this clear. The committee also recommended two changes to the definition of “misconduct” in relation to the provision of regulated services by employees. I am comfortable with the first of those changes, which clarifies that volunteer lawyers in community law centres or citizens advice bureaus can provide regulated services to the public. I do not, however, support the committee’s second amendment to that provision. The amendment is intended to clarify that lawyers employed by non-legal specialists are not prevented from holding a practising certificate if they are providing legal services to their employer’s clients.

I understand that the committee drafted that amendment to address concerns raised by the accountancy profession. There is no intention to stop in-house lawyers employed by non-legal specialists, such as accountancy firms, from holding a practising certificate. Nor do we intend to prevent those employed lawyers from providing a full range of legal services to their employer, or from assisting their employer to provide certain services to the employer’s clients. However, the committee’s amendment is inconsistent with the bill’s prohibition against multidisciplinary practices and could undermine consumer protection. Both the accountancy and legal professions are now in agreement that the committee’s amendment is unnecessary and should be dropped. I therefore intend to move a Supplementary Order Paper at the Committee of the whole House to replace that clause and to clarify the intent of the original clause.

There are also changes to the “misleading descriptions” provisions in Part 2. The committee wanted to address the problem where a service provider who is not a lawyer uses a title such as “legal specialist” with the intention of causing clients to think that he or she is a lawyer. The amendments will provide additional safeguards against non-lawyers attempting to pass themselves off as lawyers, and I know that that was something Lianne Dalziel was particularly interested in.

I support the enhancements made by the committee to the complaints and disciplinary provisions in Part 7. It is recommended that standards committees be empowered to direct publication of their decisions, that the legal complaints review officer be empowered to publish its decisions, and that the chair of the disciplinary tribunal be required to publish the notice of an order prohibiting a person from employment by a law firm. These changes will improve the accountability and the transparency in the complaints and disciplinary scheme. Changes to widen remedies for complainants and enhance the cost-recovery and enforcement procedures will make the scheme more accessible and effective, and improve procedural efficiency.

In Part 8, which deals with the functions and powers of the New Zealand Council of Legal Education, the committee has recommended changes to the formula and process for setting the levy on lawyers to address the concerns of the Law Society and the council. These will lower the levy ceiling, require the Law Society to consult the council in setting the levy, and provide for the matter to be referred to the Minister where agreement cannot be reached. These proposals appropriately balance the interests of both parties and will improve the workability of the provisions.

There is a change to the Part 9 provisions relating to the division of interest on nominated trust accounts. The bill as introduced provided for community law centres to receive 55 percent, and the banks to receive 45 percent. On the basis of the submissions made by the Bankers’ Association and community law centres, the committee has recommended an increase in the proportion of interest received by community law centres to 60 percent, with the banks’ share reducing to 40 percent.

The committee supported the requirement in Part 10 for each profession to maintain a fidelity fund for consumer protection purposes. It has, however, recommended an additional rule-making power for the respective societies, enabling them to make rules providing for the minimum size at which the fidelity fund must be maintained if it is to be held out as a protection for clients.

I thank members of the Justice and Electoral Committee for their contribution, which has resulted in improvements to the bill. The bill will enable the legal profession to continue to provide high levels of service to the New Zealand public, and will enable the long overdue establishment of the occupation of licensed conveyancers. I commend this bill to the House.

On behalf of the National Party I say that with some reservations, which will be covered more fully by myself and by other members of National, we support the Lawyers and Conveyancers Bill. But we do so against the background that this bill provides for a long, cherished hope that the present Minister, who is a non-lawyer, has had for non-lawyers to carry out conveyancing tasks. I wish to say something about that in the course of the short period of time I have to speak about this legislation.

The purposes of the bill are simply stated: to maintain public confidence in the provision of legal and conveyancing services; clearly, to protect the consumers of those services; to recognise the status of the legal profession; and to establish the new profession of conveyancing practitioner—Mr Goff’s dream. All that is miraculously encompassed in no less than 350 clauses and seven schedules. In fact, there are more clauses than that, because a number of clauses have additional lettered clauses.

There are parts dealing with the restrictions on the provision of legal services and conveyancing services, the admission and enrolment of barristers and solicitors, a whole lot of material on the New Zealand Law Society and the new fangled New Zealand Society of Conveyancers, and the conduct of practice by practitioners. There are also parts dealing with complaints and discipline, the New Zealand Council of Legal Education, and so on.

I would like to talk about some specific aspects of the bill that I believe should warrant the concern both of the profession and of the public. I do that against the background of the New Zealand Law Society’s having a respected and honoured history. The New Zealand Law Society was established by statute in 1869, and in this bill we are amending legislation set out in the Law Practitioners Act of 1982.

There has been a concern—and I can speak of this with some knowledge, because I was a treasurer of the New Zealand Law Society for a number of years—that the work of the society has been made more difficult by the number of districts there are throughout New Zealand. Quite clearly, the functions of the New Zealand Law Society and district law societies have overlapped to some extent. That has been particularly demonstrated in smaller district law societies, where it has been troublesome for them to administer a complaints and discipline function when they have known their confreres almost too well.

The issues I would like to talk about tonight concern the reservations I have in respect of this legislation. The first issue is that lawyers have traditionally maintained a fidelity fund. That is a hark back to the period when lawyers were actively involved in the business of moneylending. It was a period in New Zealand’s history, which continued for quite a significant time, when banks provided a most limited range of financial products and when lawyers substantially provided second mortgage finance on a flat basis for relatively short terms. There was always a risk, because for lawyers to be involved in that business was not seen as necessarily compatible with the delivery of legal professional services, so to manage the risk a fidelity fund was established.

It is the Government’s plan—which is wrong in my view, completely wrong—that the present bill should legislate for that fidelity fund to continue in place. I would say that no sufficient case has been shown for the continuation of the fidelity fund, under Part 10. In case people think that some special exception is being made for lawyers, I tell them that is not so, because the fund has been abolished for most other occupations, including chartered accountancy, motor vehicle dealing, and sharebroking. The fund had its place when lawyers were actively involved in mortgage lending, but the current range of banking products has meant that lending by lawyers is rare, and in the major urban areas it is exceedingly rare. So the fidelity fund is the first point.

The second issue I would like to deal with is the Minister’s plan for this New Zealand Society of Conveyancers. I would like to draw to the attention of this crowded House, and this crowded gallery, the fact that the Justice and Electoral Committee heard evidence from the New Zealand Law Society that there might be five or six persons who would be qualified to join the society, and that there is the faint possibility that Australian conveyancers might also seek to join. The indication in looking ahead—Mr Goff’s fulfilment of his dream—was that there might in total be seven or eight such people in the future. That clearly raises the justification for highly prescriptive statutory rules, and signals the impossibility for this New Zealand Society of Conveyancers realistically to fund a fidelity fund. How could eight people fund a fidelity fund?

💬 Russell Fairbrother: It could work in New Zealand!

It is foolishness in the extreme. I do not know who that troublesome young member is who is interrupting at the moment, but I would like to go on and deal with another issue that relates to reserved areas of work. Mr Goff has indicated some further changes are required to that part of the bill by way of a Supplementary Order Paper, and we need to see what those changes are. But quite clearly it is critical that the law be clear, and that it permit, for example, taxation lawyers to practise in accounting firms.

The next area concerns complaints and discipline. I am not persuaded by that—in my view—cumbersome and overly bureaucratic structure proposed in the legislation, albeit that the Law Society has blessed that model. I would rather see that the legal complaints review officer was reconstituted as a legal ombudsman resourced by the legal profession.

Finally, in the limited time I have I shall talk briefly about the last issue, the question of rule-making powers. National is concerned that issues of policy like compulsory legal education, like permission for senior counsels to practise within law firms, and like compulsory indemnity regimes, are being left to rule-making powers. There is also a proposal in the legislation that the Minister approve such rules.

I shall take one example, which is the whole issue of professional indemnity insurance. Now, insurance is a significant cost for lawyers. The reality for most law firms is that the market is an English market, either accessed locally or through Lloyd’s of London. Each year the terms and conditions of acceptable cover change, as the underwriters form a view as to the acceptability of the risk.

This is an area where the Minister and the Government should not be involved. What will happen is that the making of rules touching things like maximum indemnity levels, terms and conditions of cover, and minimum acceptable indemnity levels—I am talking about excesses when I make that comment—will change, year in and year out. It is an issue for lawyers to grapple with as to what is acceptable and appropriate cover, both in terms of affordability and in terms of looking after the people to whom they provide legal services.

I am not aware, and I do not think that National is aware, of comparable powers being held by a Minister of State in respect of any other professional organisations. I do not believe that the Minister, with all the skill he may have as a non-lawyer, is in any better position than the New Zealand Law Society on rule-making issues, or that he—or she, as it may be in the future—will be able to strike a balance between the interests of the legal profession and the interests of the consumer. So those are the reservations that I offer

Of course, we see in this legislation a further step that the Government is taking towards its determined path of republicanism. I express regret that the bill proposes that the office of Queen’s Counsel should go. I express the hope that when there is a change of Government, probably in the period of September 2005, a bold National Government will reinstate the role of Queen’s Counsel.

This is a lengthy bill that has been long in development. It has been long in development because it is the work of the Minister of Justice, in his aim to make the law applicable to people who cannot afford high-priced services, but who need good quality delivery of legal work. [Interruption] That is reflected in the conveyancers’ provisions that Mr Franks has not read. The bill enables the development of a profession of conveyancers who concentrate on the straightforward transactions in land sales.

The important thing about the bill is that it is the child of the Minister of Justice, and the Law Society itself. That takes us to how we should approach this lengthy bill. Members will not find in the bill the essence of what is a lawyer, and they should not. Lawyers, probably along with politicians and doctors, are the last true professionals in our society. They are professionals because they put the public interest ahead of their own personal gain. It is that paradoxical position where one earns one’s income because one advocates against one’s own personal interest. Most lawyers—in fact, all lawyers—are bound by their obligation to the court to accept instructions, even though they personally may not approve of or like what is happening. As long as what they do is advancing their client’s interests and is not deliberately misleading another party or the court, then they stand aside their personal feelings and recognise their obligation, steeped in a long period of study and experience, to advance the cause of those who do not have those advantages.

As I look at clause 4(a) I find some reference to the essence of what being a lawyer is all about. It refers to upholding the rule of law and the administration of justice. These terms are very easy to write and very easy to read, but are very rarely understood. We hear on many occasions in this House members of this Parliament who seem to fail to understand what the role of a lawyer is in this society. Too often they align the position a lawyer takes as being a lawyer’s personal position, as opposed to the position taken by a doctor on behalf of a patient.

To uphold the rule of law a lawyer must put aside his or her feelings and make sure that the law develops in an organic fashion. Whether it be a conveyancing practice or a commercial practice, or whether a lawyer’s work is in arbitration or at the cutting edge of the court, he or she must advocate to advance his or her client’s interest. In the hurly-burly of legal practice, the truth emerges from debate and the adversarial system. In this bill we see that, by the introduction of the concept of conveyancers. There may be only eight people today who want to be conveyancers. There may not be a great demand for them, but we will not know until it operates. If conveyancers lower the cost to the average person who is buying and selling houses and still deliver a good product, then much will have been achieved in this bill.

This bill should stand as a salutary reminder to the firms that now seem to require themselves to populate high-rise towers in the middle of our city streets and to have men who wear uniforms, which are dark suits—they all look alike; they could be street cleaners, with shiny shoes—who charge exorbitant fees and go to the top of the market for their work. The top of the market does not trickle down. It is the people at the bottom, on low wages, who have to find the community law centres, and find law firms that will now do legal aid. A law firm that does legal aid is now a rarity. One is more likely to find a firm that says it does not do legal aid. To be a true lawyer in this society, one must be prepared to do pro bono work and to act for those who cannot afford the top-flight services. Paying a lawyer a lot does not mean that one gets good services. Delivering a good job for one’s client, in the public interest, means that one is a good lawyer, as long as he or she abides by his or her obligations to the court and puts his or her client’s interests ahead of his or her personal interests.

Members will not find in this bill the essence of what is a lawyer. It is not a prescriptive bill. It is a bill that sets up a regime for the Law Society to govern itself, because the essence of a true provision is a society that governs itself in the interests of the public. So I urge this bill upon the House. It has been a long time coming. It is long overdue. It demonstrates to the profession at large, particularly those insular members of the profession who spend their time in high-rise buildings, that many members of the public require a range of services that cannot be reached by a fast-moving lift.

The previous speaker from the Labour Party spoke with a great deal of sincerity and a great deal of knowledge about the criminal law side of a lawyer’s work—a side he is very familiar with and very well qualified in. Unfortunately, however, when he started to drift into conveyancing, especially modern-day conveyancing, perhaps in Queen Street or on Lambton Quay, he was totally off the mark. Those big, shiny law firms, with their lawyers in their dark suits and shiny shoes, would not know a mortgage from a search of a title, but they could tell us all about bank debentures and the like.

In 1963 when I started off as a law clerk, law firms in Auckland did everything. The senior partner did the conveyancing and the big finance deals. Today that does not happen. Those who work in big law firms today and are members of the conveyancing team are never ever able to match the amount of fees earned by those who are part of the corporate banking team. The people on the conveyancing side struggle to do about one-fifth of the fees earned by the people on the corporate banking or other side. All that those people in those big shiny offices ever do—if they do any conveyancing at all—is to provide a service to existing clients, and such like. They are not there to make money, because at Queen Street prices there is no money to be made in conveyancing. That is why people are moving out into the suburbs. That is the only way they can afford to do conveyancing. Lawyers will tell us that they have no problem in competing with conveyancers, because conveyancing fees from lawyers are so low already that if anyone else can do it for a lower fee and still pay all the costs lawyers have to pay in the way of fidelity fund, professional fees, and such like, then “Good on them—let’s have the competition.”

At least that is where this bill provides a level playing field. If we are to have conveyancers, then bring them on. But, as any lawyer would say, they must have a fidelity fund as well, because if lawyers have to have a fidelity fund then so should conveyancers. The problem for conveyancers, of course, will be that if they have only five, eight, 10, or even 20 members, then that is too few in number to fund a fidelity fund adequately. As Mr Worth pointed out, at the moment it is a struggle, with all the insurance and other things involved, to keep a fidelity fund going when there are 1,000 members.

If the honourable Minister Phil Goff and Mr Russell Fairbrother think that conveyancers can get under way with a fidelity fund when they have only seven or eight members, then, as far as this is concerned, they are trying to hoodwink the public. In that sense this bill is an entire sham. To put lawyers and conveyancers into the one piece of legislation is, to take the medical profession as an example, like putting obstetricians and midwives into the one piece of legislation. My experience with obstetricians and midwives is that they have no time for each other at all, and up until now lawyers and conveyancers have had very little time for each other, as well. This bill will change that and, as I said, lawyers have no problem with that whatsoever.

As far as the bill is concerned, New Zealand First will support it. We have a couple of issues to raise, one of which relates to Queen’s Counsel and the inclusion of a new thing called senior counsel, by way of statute. As mentioned by the Minister, there is a change to the provisions in clause 276 that means that banks will now have to run those accounts at a loss. They will pass on the costs to the lawyers, who will, of course, then pass them on to their clients. As a result, this bill will have the effect of making conveyancing and legal services even more expensive. I will come to that in a moment.

As far as introducing senior counsel is concerned, we already have senior counsel in the court system. Often a judge will refer to someone as senior counsel rather than as Queen’s Counsel, which is a title that is awarded. We currently have a system of senior counsel, and those senior counsel are usually lawyers who appear before the court. We are now to have a senior counsel system that will effectively remove the title of Queen’s Counsel. The senior counsel system will apply to those who might be working in an office in a high-flying law firm, or perhaps in a firm out in the suburbs, based on their experience and such like. Many lawyers will be confused for a long time as to what is meant by the term “senior counsel”, as we already have that term in practice. Some other name might have been used. It is not only the title of Queen’s Counsel that we are getting rid of but also the special role that Queen’s Counsel have. If called upon, Queen’s Counsel must appear for the Crown and assist it in a case. We are to get rid of that situation, and the Crown will then appoint certain people to assist it—I will not say “cronies”, because the trouble with appointing lawyers who we think might be cronies is that because of their traditions, experiences, and such like, they often disagree with one straight away. It is very hard to get lawyers to do what any particular client may want. It goes against their whole training and experience.

Getting rid of Queen’s Counsel is a sad day for New Zealand. As Mr Worth pointed out, it is just another example of this Labour Government’s republican attitude. It got rid of the Privy Council and it now has a select committee on the constitution whose chairman, Peter Dunne, has already shown his republican sympathies by suggesting he is looking forward to the day that New Zealand ceases to be any part of a monarchy and becomes a republican state. That is the way the Labour Party is going, supported by United Future and Peter Dunne. There is no reason to get rid of Queen’s Counsel.

I have never aspired, or felt inclined, to be in that position, but I have the greatest admiration for those who have the brain, who have the ability, who work hard, and who aspire to doing something day in and day out at the highest possible level of the profession. That is what being Queen’s Counsel is all about. It shows up the people who are the very, very best of the profession. Senior counsel will not do that, because they will be hidden away in law firms and never appear before a court. We will never know who those people are. It will just be x, y, and z senior counsel who are very good at the Northern Club, the Wellington Club, and, perhaps the Wellesley Club—“So and so is senior counsel now, whatever that means.” Queen’s Counsel have to prove themselves before judges and before the whole country, and that is a very important role. It is sad that the level of attainment we insist upon for the All Blacks—the top 30 who play out there on the field—because we want to see the best in sport, is not the same as for the law, with its tradition going back about 700 or 800 years. This Labour Government wants to get rid of that tradition, because somehow or other it is linked to the monarchy.

My other point, which I have lodged by way of a Supplementary Order Paper, relates to clause 276 and the reduction in the amount available to the banks. At the select committee, Lianne Dalziel made the point quite clearly as we discussed the matter around the table—I seem to recall that the point was raised, and she was discussing it, too—that if we reduce the amount available to the banks below cost, then the banks, if they are making loss, must pass that on. The information that has been made available to us all is that on the figures, now at 40 percent, the banks will make a loss.

💬 Murray Smith: No, they won’t!

Mr Smith can make his comments if he likes. I have the information from the banks. Mr Goff has been misinformed, if he says the select committee discussed it fully. The banks will make a loss, and the costs will be passed on. The clients of lawyers will have to pay. Time will tell whether I am correct, but the banks told us they will make a loss. I have the information, and I will table it further at the Committee stage. If the Labour Party wants to see the banking system make a loss, then that is up to the Labour Party. But, of course, the costs will be passed on to lawyers’ clients when doing conveyancing transactions. They will be shown in disbursements. The lawyers will just pass them on. At the end of the day they will probably even have GST added on to them, as well.

This is a sad state of affairs—and so far as community law firms are concerned that is great. If I look back at, say, 1984 when I was out of Parliament and starting up a law practice, if there had been a community law centre in Kūmeu I probably could not have started a practice. But there was not one, and I went ahead and formed my own practice myself. I did not need any support from the State. Nowadays one disadvantage of the community law centres—which I set up in the 1982 legislation; that is where they were all started—is that, with so many of them, they now hinder the establishment of law practices. Greater consideration must be given to the way in which they operate.

I am surprised that I am not following the honourable Lianne Dalziel, but—never mind! This bill is very interesting if one is a lawyer. It is probably hard to get a lot of interest if one is not, but it is a really—

💬 Simon Power: It’s hard enough if you are!

No, no. It is quite easy to get interested if one is a lawyer when one realises what a mark this is on the Hon Phil Goff’s career. I think he is one of the few Ministers who the Prime Minister can correctly describe as “hard-working and conscientious”. His reputation for diligence extends to doing the sort of staff work that means he can do the things he has done very well—the rescue he made of the Prime Minister after 9/11’s terrorist attack in New York, and other things.

But occasionally, of course, Atlas shrugs. In this case, the bill started as a campaign—a crusade—in the interests of all those poor suffering clients of conveyancing practitioners. I think that that was in 1998, and in that year it was relatively straightforward—[Interruption]—or was it in 1997? We needed to reform the legal profession with a deregulatory opportunity for greater competition.

As I said, this bill might be one of those blights that I am sure many hard-working and conscientious Ministers fear, and it is the reason why they do their homework late at night. I suspect that the reason we did not see the bill in its second reading until 2005 is that the Minister is deeply ashamed of it. It achieves virtually none of the objectives he would set for himself, or the standards he would have for the legislation he wants to see in his name. It achieves nothing for New Zealand. It does not even achieve much for the Law Society, except a set of own goals.

This bill will probably go down as being one of the low-water marks of legal drafting, not in terms of the draftsman’s technical competence but in terms of the ability to take a set of principles and a set of objectives, to walk them past the interest group, and to get them translated into a structure that achieves all of the slogans originally claimed for it. The original driver of the bill may have been the need to reflect changes in the market and in legal practice, and to create a more flexible regulatory regime, but what we actually have is an incredibly prescriptive edifice—360 pages in this case—that we could compare with the very successful regime for accountants.

I think that the accountants’ bill, at a similar stage, was about 40 pages. It was a good bill, and it is working. There is no significant difference between the role lawyers perform in maintaining confidence in the integrity of the justice system and the role auditors perform in maintaining confidence in the integrity of financial reporting—not in terms of the stresses, the conflicts of interest, and the pressures. There is virtually nothing that can seriously distinguish one from the other.

We know that those who are in the small subset of the profession in the Law Society are proud of this bill. We know it from the submissions from the Law Society, and from the process whereby every time the Justice and Electoral Committee or anyone else seemed to make a comment, the Minister’s officials trotted back to get their instructions from that major interest group. We were told that the provisions of the bill reflect in general terms a model unanimously agreed upon by the New Zealand Law Society Council and all the district law societies in 1998. That is what was said. We were told that last year.

So this bill is the achievement of the dream of the body the Minister wanted to deregulate. It is pretty hard to imagine that it actually does anything that seriously threatens those residual monopoly powers that the generally smaller practitioners in the Law Society were so desperately keen to preserve. We have own goals right at the start. We have a statement of fundamental obligations that very few country practitioners could live up to. How can the smaller communities in this country require that their lawyers have no conflict of interest, when in fact they are always involved in transactions with the clients of their own clients on the other side? They are relied on for having the integrity to transcend their conflicts of interest, not to make sure they do not have them.

Right at the beginning of this bill’s process we see that it was captured by people with very little conceptual framework. Had the Minister waited long enough, he could have drawn on some very recent stuff. On 24 February 2005, the Irish Competition Authority came out with a massive study of competition in legal services. The Minister could have used some principles from that.

It would have saved this country an awful lot of wasted money and time if this bill had been quietly dropped. No one would have complained except the Law Society, and who would have cared if it were the society? Of course, National cares because National kicked this off. The Hon Tony Ryall kicked off this whole process just before the 1999 election, when I think he succumbed to Law Society pressure and promised it something, probably feeling that he would sort it out when he got back into Government. But, of course, National did not return to Government.

The Minister wanted his conveyancing bill to go ahead but found foreign affairs to be much more interesting, much more pressing, and much more important. So he left the bill to his officials who, in turn, left it to the Law Society, and we ended up with his little bill, ambitious but reasonably simple in concept, transformed into this doorstop bill.

The Minister could have looked at, say, the UK Office of Fair Trading reports on the future of Queen’s Counsels for a way of analysing things in principle, at the UK Office of Fair Trading report on competition and professions or, maybe, at the report that was commissioned by the New Zealand Law Society when it got a firm of economists to do a grassroots, ground-up evaluation of the law profession in the future—multidisciplinary practices, all the hard issues—but the Law Society Council panicked, and then suppressed that report in the mid-1990s. I think Judith Collins might have been involved at that stage. The society flatly panicked. It suppressed four chapters in case the report saw the light of day and gave any momentum towards a genuine deregulation. But that report would have been around somewhere if the Minister’s officials had just thought to ask, and the Minister might have had—

💬 Judith Collins: I have it at home.

The member still has the suppressed document at home—the secret codicils to the report that the society never wanted people to see. I wonder if the society paid for it. Does the member know whether it paid?

💬 Judith Collins: I think it was about $50,000.

Those were very well-spent dollars. The report was very well conceived, but the society panicked and would not allow even its own members to see it.

Yet this is the society that the Minister has now got into bed with and that is now going to push this bill through with the assistance of National, because who wants to be against the powerful interest groups when one is a member of New Zealand First or of the National Party. Even if members think this is a crock they will vote for it, because, well, the Law Society says it wants it.

At least the Minister will not be alone in his embarrassment over this bill, as the future unwinds in the disciplinary process. Here is the proud Law Society, the self-governing profession, that bulwark of the citizen against the State, now handing over the control of its rule book to the Minister. It has handed over the disciplinary authority to people appointed by the State. What does the society have left? What brand control does it have?

It has the lowest common denominator—the same structure, essentially, that has governed schoolteachers. Why are schoolteachers so universally underpaid? The reason is that they are in a least common-denominator system whereby the State exercises all the control. What do we have ahead for the law profession? We have precisely the same structure—a monopolistic, representation body endorsed by statute.

Just that small change would have made a change. The possibility of a challenge to the Law Society by a competing Law Society would have transformed this bill—absolutely—as it has in many other countries, including the United States, and as it is for accountants. Accountants do not have a monopoly. They have to live, compete, and make rules, and they uphold those rules knowing that if they do not, anyone can establish another New Zealand society of accountants in competition—but not the Law Society! It has managed to roll the Minister so that there is no room for competition even among societies—not even for the emergence of something like the family law section.

The Greens do support this bill, and I have to say, as a member of the Justice and Electoral Committee, that I was somewhat disadvantaged in considering it by never having practised as a lawyer. I guess that meant I was far more reliant on what submitters said to the committee and the advice that we received, in order to determine the Greens’ view. On that basis we have taken the decision that we should support the bill because, with the exception of certain specific areas, many of which were addressed by the select committee, the submitters were largely in favour of the bill. I think it is important that select committees be guided by the submissions presented to them. There were criticisms that the bill is overly prescriptive and detailed, and that may well be the case, but my sense was that there was a clear view that this Parliament should progress the bill and get on with it. As a non-lawyer, I take cognisance of that.

Not being a lawyer, I was also interested to listen to the debate in the select committee, and to look at the issues that excited the lawyers on the committee. Of course, one of them was the need for a purpose clause. There was a great deal of concern to make sure that the purpose clause included a provision that recognised the status of the legal profession. Having so many lawyers on the committee ensured that that provision got into the purpose clause. But I think it is good that we have a proper purpose clause to the bill now: to maintain public confidence in the provision of legal and conveyancing services, to protect the consumers of legal and conveyancing services and, as I said, to recognise the status of the legal profession and to establish the new profession of conveyancing practitioner. I thank Mr Fairbrother for his contribution to the debate because, as Mr Jones acknowledged, he gave a very genuine, heartfelt, and useful contribution to the House in outlining some of the roles and responsibilities of lawyers. It was useful for us to hear that.

There are a few provisions that are probably of most interest to the Green Party in this bill. One of them is around the provisions relating to community law centres, and there was some discussion around the definition of those centres. Originally, such a centre simply had the meaning given to the term by section 85 of the Legal Services Act, but community law centre representatives came to the committee and made a very strong submission that that was an inadequate definition. In particular, they asked us to replace that definition with one that recognised what they considered to be the things at the heart of the community law centre network—what it was that drove the development and setting up of community law centres in the first place, and what actually drove people to continue to contribute their work, often in very low-paid or in unpaid situations, in order to keep those law centres going and to make sure that legal services were available to members of the community who just do not have access to them in any other way.

I think it is unfortunate that the committee more or less ignored that request. It has now put in the definition that a community law centre “means a community law centre within the meaning of section 85 of the Legal Services Act 2000 that is providing community legal services under a contract entered into by the Legal Services Agency pursuant to section 87 of that Act”. So the committee has not replaced the definition; it has simply tacked on that the centre should also be one that is being funded by the Legal Services Agency. I think that that is a shame, because of the funding constraints that community law centres face, and in particular, the difficulty in securing funding for new community law centres given the enormous strains on the special fund that funds community law centres. So I think it is unfortunate that the funding is being restricted to people who are being funded by the Legal Services Agency, an agency that as I say simply cannot afford to fund new law centres. Basically, that denies the possibility of a community law centre setting itself up with alternative funding sources. That is not inconceivable—in fact, the committee was told that at Wanganui that is exactly what had happened—but the definition in the bill denies the possibility for such a centre to set itself up as a community law centre with alternative sources of funding and to still receive the coverage of this legislation as a community law centre. I think that the committee made a mistake in doing that.

The other issue about community law centres was around their funding, because of course they are funded through the Legal Services Agency from the interest on the special fund. Over the years, as a result of a number of pressures—faster transactions, more demand for money, and a lower interest rate—that funding has become tighter and tighter. In fact, in previous years the Green Party has been responsible for securing extra funding as a Budget initiative with the Government, when we had that kind of arrangement, to provide extra money for community law centres. I acknowledge that the Hon Phil Goff has made that part of the baseline funding, and that is appreciated, but clearly the funding of community law centres is an ongoing problem. This bill, as originally introduced, increased the proportion of the interest that would go to community law centres. It had been the situation that 50 percent went to the banks as their fee, and the bill made that 45 percent. It has always seemed to be exorbitant that the banks would take 50 percent of the interest as their fee. [Interruption] I thank Mr Jones; I appreciate the point.

The banks came to the committee and said that they could not afford the change, and that they would lose money if the amount of money they were taking from interest was changed. When the committee was given evidence from a different source that, in fact, the banks were being a little disingenuous with regard to how they had presented that information and we offered the banks an opportunity to further clarify or substantiate their claim, they simply chose to ignore the committee. The banks ignored requests to present information, and they actually treated the select committee with a great deal of contempt. I think that is quite shameful, and I am pleased that the select committee chose to challenge that figure and has now recommended a 60:40 split in favour of community law centres.

The last point I would make is around the issue of Senior Counsel/Queen’s Counsel. I think, as Mr Jones said, that more than a simple name-change is envisioned here. By extending the grade of Senior Counsel to solicitors working in firms, it does change the nature of the grade. The committee heard quite strong submissions from people that it was important to retain the exclusivity of that grade for the retention of the independent bar, and that it was quite a substantial incentive for people to leave firms and operate as barristers sole in terms of the status that it brought and also the possibility of earning increased money by it, because Queen’s Counsel, or in this case, Senior Counsel can obviously charge more for their services. I was persuaded by that argument, but I was also persuaded by the argument that the current system is unfair and politically biased in some cases. That is not to say that people who attain the grade of Queen’s Counsel should not get it or that they are undeserving or unmeritorious, but the comment was made quite strongly that some people who should get it, do not—that people who certainly do show merit do not get that grade or get it only after an unjustifiable delay, because they can offend the powers that be.

I am convinced that it should not be a matter of Crown prerogative and should not be for the State to determine who gets such a grade. If it is important to recognise a senior grade of lawyer, it should be up to the profession to determine who attains it, and to regulate that. Accordingly, I intend to put forward a Supplementary Order Paper to amend this bill so that it becomes the job of the Law Society to regulate that.

Mr Fairbrother said he thought the legal profession was one of the last true professions. I will not comment on what he thought the other one was, in case of accusations of self-interest. Whilst a lot of lawyers whom I know act without self-interest and do a very good job, I must say I have been extremely disappointed with some of the actions and attitudes of the New Zealand Law Society in respect of this matter, and particularly with the way the Government and the Law Society have colluded to misappropriate $6 million of fidelity fund moneys—that is, moneys that are part of a public insurance scheme—and give it to the New Zealand Law Society, which will become a voluntary organisation under this bill. The way that that has been gone about, and the effect of that, is something that I, as a lawyer and a member of the society, am ashamed of. I will speak more about that later.

This bill is a dog’s breakfast. In fact, it seems that everybody admits that this bill is a dog’s breakfast—the Government, the New Zealand Law Society, and practitioners. As I will also demonstrate, practitioners do not want this bill. The New Zealand Law Society, however, wants to continue with the bill because it has been around for the best part of 10 years—and probably longer in terms of the drafting of it. The society’s attitude is that it wants something rather than nothing. The fear is that it would much rather accept extremely poor and ponderous legislation in order to achieve some of the things it wants to achieve, and would rather give up a lot of its rights and put them in the hands and control of the Government for the time being, than have no change at all. I think that that is a terrible way of approaching legislation. I would much rather we had a situation whereby we tell the Law Society that we will go back to square one and draft a bill that is far more appropriate, on the promise that, effectively, we will move it through quickly. That would be much, much better. It is in the capacity of the Government, particularly if National were to support it, to do that and make that promise to the society.

Of course, the Government is really pushing this bill through just because the bill has been sitting around for so long and the Government wants to get it off its books. Yes, the Government is under pressure from the Law Society, because the Law Society wants to see this new scheme in place. That in itself is also a bad way of approaching legislation. The bill is far too prescriptive, and that can easily be demonstrated when we compare it with legislation that has gone through in relation to other professions. The Architects Act has 58 sections, and the new Architects Bill that has been drafted has only 45 clauses. The Chartered Professional Engineers of New Zealand Act has 77 sections, and the Institute of Chartered Accountants of New Zealand Act has a mere 24 sections. Even the Health Practitioners Competence Assurance Act, which covers a myriad of different forms of health practitioner, has 227 sections. The current Law Practitioners Act has 193 sections, and I have calculated that this bill is 390 clauses long—it is almost double the size of the Health Practitioners Competence Assurance Act.

It is very, very prescriptive. It is also very outdated, and certainly demonstrates the fact that it was a creation of a decade ago. The setting up of conveyancers for competition is no longer a real issue. The level of competition within the conveyancing regime since the abolition of the scale many years ago—and I can testify to that because I have been around, experienced that, and done a lot of conveyancing—is huge. In fact, lawyers are often accused of effectively competing below cost, because they very often lack the wisdom and marketing insight to see that if they do it for less than a certain figure, they will actually lose money on it. They tend to be extremely competitive. The idea of lawyers selling real estate is also something that has been tried and has failed. Now most law firms say that really they do not want to get into the real estate business.

As I said before, the vast majority of lawyers do not want this bill. The New Zealand Law Society, in thinking that it is representing the interests of practitioners, is simply wrong. It is out of touch, particularly with small to medium sized law firms—

💬 Stephen Franks: And big ones.

MURRAY SMITH:—and big ones. I know that the Waikato Bay of Plenty District Law Society was one society that opposed the bill, but it was pulled into line by the hierarchy of the New Zealand Law Society. The editor of the magazine who spoke against it was sacked. Since then, I have seen emails—misleading, at best, and deceptive, at worst—coming out of Law Society circles trying to argue some of the points. I did a survey. Because the Law Society was not prepared to hear what its average members think of this bill, I thought I would do a poll myself. I prepared a Supplementary Order Paper, which I will be tabling in the House for debate during the Committee stage, that provides that $6 million—two-thirds of the current trust fund—be held by the Law Society and applied by that society as stipulated by the majority of respondents to a referendum to be held among all persons who were liable contributors to the fund at the date of winding up. Therefore, lawyers themselves could determine what should happen with regard to the fund, given that they had put the money in for that specific purpose.

I did a survey of lawyers, asking whether they agreed with that amendment. Eighty-one percent said yes. I asked them whether they supported what the Law Society wanted to do. Only 10 percent said yes; 61 percent said no. I asked whether the moneys should be added to the new fidelity fund. Forty-six percent said they did not want that to happen, and 26 percent said they did. I asked whether it should be returned to current contributors to the fund. Twenty-two percent answered yes; 35 percent said no. I asked whether it should go to contributors to the Renshaw Edwards special levy, and 68 percent of the lawyers felt that that was what should happen to the fund.

There was some logic in that argument, because all the contributors—all Law Society members who were principals in firms—had to cough up $10,000 to bail out the losses that were incurred by the public in the collapse of the law firm Renshaw Edwards. They had to cough up $10,000 over a relatively short period of time, and many of them suffered a great deal of hardship in doing so. It was only reasonable, in the view of some, that when it seems that the Law Society will have a surplus of funds, the Law Society should say that it really appreciates what they did then and, as a result, is prepared to look at giving some money back to those who contributed. But I was not even asking for that response; I simply thought the lawyers should make the decision.

Some of the comments that I got back from my survey were interesting, as well. One was: “The New Zealand Law Society proposal is nothing short of theft. I have no faith in the New Zealand Law Society and do not consent to my share of these funds being applied to the New Zealand Law Society’s general purposes. It is tantamount to a fraud on the contributors.” Another was: “The New Zealand Law Society has a palpable and serious conflict of interest in this matter. I fear, however, as a humble urban/suburban general sole practitioner that such as I have been able to contribute to the debate on this subject so far to the New Zealand Law Society and the Auckland District Law Society has amounted to no more than ‘farting against thunder’.”

And so it went on. I did a second survey. I went back to the respondents and asked them whether they supported the passing of the Lawyers and Conveyancers Bill in its current format, and 74.5 percent said no. I asked them whether they would support the bill if my amendment were passed by Parliament, and 80 percent said yes. So there is a lot of dissatisfaction among them.

The Institute of Patent Attorneys is also upset about the situation, because basically the bill provides that the Law Society will determine to what extent patent attorneys can operate in their specialist partnership with lawyers, engineers, and scientists. They tell me that they have tried to meet the Minister to talk about that but that he has refused to meet them.

A lot of other things are wrong with this bill. The whole conveyancers thing is out of whack. I have mentioned real estate sales. I am also concerned about the amount of money the banks are getting, instead of the community law centres, and that is something else on which I will be putting forward a Supplementary Order Paper. I will also be putting forward a Supplementary Order Paper about patent attorneys to try to rectify their situation in a way that is fairly low-key and reasonable.

United Future will support the second reading of this bill. We will support its being reported back. But I will be tabling those Supplementary Order Papers, and unless we can get a change to the fidelity fund, in particular, United Future will not support this bill any further.

I did not want the call now! I just want to make a brief contribution to the debate as one of the members who have a particular interest in this bill as members of the legal profession. I am an associate member of the Canterbury District Law Society. This is not a declaration of a conflict of interest, because there is no conflict. There is no pecuniary benefit to me and I accept that, if I return to the legal profession when I leave this place, it will impose obligations on me. I accept that. It is a privilege, not a right, to be a member of a profession. If the provisions of the bill that certain Opposition members wanted to amend had been amended—and Murray Smith certainly identified those—then there would have been a pecuniary benefit to them, but I am sure that the disappointed failed candidate for the presidency of the New Zealand Law Society will talk about that in her contribution to the debate.

I note the Minister’s acceptance of the Justice and Electoral Committee’s recommendations in all but one respect. I am pleased that the Minister is introducing a Supplementary Order Paper to resolve this matter.

Debate interrupted.

The House adjourned at 10 p.m.