Lawyers and Conveyancers Bill

This bill is long overdue. In fact, I think it was in 1997 that the Hon Phil Goff moved legislation to deal with conveyancing, and at that time it was referred to the select committee for consideration. What an enormous gestation this bill has had over a long number of years. I guess it says a great deal about the attitude and style of Mr Goff. Mr Goff is a Minister who is prone to making announcement after announcement, announcements of announcements, and announcements to confirm preceding announcements. As a consequence, it takes years and years for his legislation ever to be passed. What, for instance, happened to the legislation on majority verdicts that was announced in about the year 2000? That is nearly 5 years ago, and it is still not in law. What, for instance, happened about the Independent Police Complaints Authority Amendment Bill? I recall that I made comments about that some time ago—probably in the year 2000 also. It just disappeared into the ether. That is the style of this Minister.

The extraordinary thing is this: the genesis of this bill was all about bringing competition into the legal sector. There is almost nothing in there now about it; it is almost irrelevant. In fact—and my colleague Richard Worth will be referring to this during the Committee stage—only eight people are even interested. So we have an enormous bill that has hundreds of pages and hundreds of clauses, and that has come about all because eight people want to practise as conveyancers. Well, if one really wanted to do that, a very simple piece of legislation would suffice. I acknowledge that subsequently an opportunity arose to review the entire scope of the legal profession—allegedly, a less prescriptive approach and, allegedly, a more flexible approach. The only comment I would make about that is that the Law Practitioners Act is only a short piece of legislation, whereas this bill, in the name of deregulation, runs to hundreds of clauses and hundreds of pages.

💬 Stephen Franks: Why are you voting for it?

That is an interesting question. In fact, we are voting for it because the Law Society wants progress. The society has been trapped by the Minister’s delaying tactics, literally for years. It simply wants to be able to make some degree of progress.

💬 Stephen Franks: They’ve got the Minister where they want him.

I’m not sure I’d agree with that last comment.

I refer to some of the bill’s important features amongst its numerous clauses. The first point—and I guess this is a form of deregulation—is that district law societies will become voluntary. It is fair to say that the Law Society did not actually seek that at the outset, but it has acknowledged that that is the right way to deal with the regulation of modern professional bodies. The Law Society itself is retained primarily for disciplinary purposes, although one would wonder why so many pages of legislation are needed for what is, in fact, a relatively straightforward, and for what should be a primarily self-regulating, affair.

The bill has other important features, many of which are driven by this Government’s ideology. I refer to one particular aspect. The bill creates the new office of Senior Counsel. I say “new office”, because this is not just a renaming. The Government would have the nation pretend that it is simply modernising the terminology, bringing it into the 21st century. That is completely false. Firstly, it has fundamentally changed the institution. I know for a fact that the vast majority of the independent bar see it as a fundamental devaluing of the office of Queen’s Counsel—and I use the word “office” advisedly here—to allow Senior Counsel to be drawn from the ranks of firms of solicitors. The very essence of the role of Queen’s Counsel is to be independent, to fiercely advocate the position of their clients in the knowledge that they are not beholden to any particular cause or purpose. That cannot possibly be said of people practising within firms. By and large, firms will have, dare I say it—and hopefully from their point of view—a secure client base, which they service assiduously. That is how they retain their secure client base. By and large, Senior Counsel practising within firms will be providing services to their captive client base.

Nothing could be further distant from the role of Queen’s Counsel as we have understood it over a long number of years. I well know that people who instruct Queen’s Counsel—I have spoken to a large number of them—look to Queen’s Counsel for a special level of independent advice. Furthermore, the bench also looks to them. Whether or not people like it, judges give added respect to submissions made by Queen’s Counsel. There is a very good reason for that: those people are, in a sense, chosen by the profession—endorsed, admittedly, by the Attorney-General—as being the most able counsel in the land. So whilst they remain as an independent bar, they are in fact available to everyone. Cases that not everyone would take—certainly, cases that law firms would not readily take—are nevertheless undertaken by those very senior counsel, and the courts appreciate and understand that their work and the submissions they make are a kind of gold standard, and that they can be trusted and relied upon. To do otherwise would fundamentally devalue the institution. That is the first objection National has to that particular change—taking the role out of the independent bar and putting it into firms.

Our second objection is the question of the title itself. I heard Mr Dail Jones say that the term “Senior Counsel” is easily confused, that the barrister who has been in practice for a number of years is frequently and colloquially called in the courts “senior counsel”. What will judges do now? Will they call those with the formal title Senior Counsel “senior counsel”? I guess that if this legislation is passed that will be the case. What will they call other learned members who have been at the bar for a number of years? It will cause confusion.

It is part of the secret agenda of the Government. The Prime Minister regularly says that she is a constitutional conservative. As a constitutional conservative, this is what she has done so far: she has established the Supreme Court; she is abolishing the rank of Queen’s Counsel; she has her picture, not the Queen’s, in New Zealand embassies and high commissions; many of the monarchical references on the coats of arms of our armed forces have been removed, so to speak; and we have the oath of allegiance of new citizens. In each and every way, this Government is trying to shift New Zealand down the path towards republicanism, except that it does not want to say that.

It is simply false for the Prime Minister to say that she is a constitutional conservative. She is a constitutional radical. She has a clear sense of where she wants to take this country. She wants it to be a republic. She is doing every possible thing to force the pace of change towards that. This legislation is an example, and I am sure that my colleague Lindsay Tisch will give further examples. The dropping of royal honours—the titular honours—is yet another example of republicanism by stealth. I can see that the Government is acknowledging that. It wants republicanism. It wants it by stealth. This bill is part of its secret agenda.

I will deal with the last issue, which Dr Mapp said is so wrong, and that is the abolition of Queen’s Counsel and their replacement with Senior Counsel. At the moment, we have the absurd system whereby someone can be a good enough barrister in court to be appointed a judge of the High Court but cannot be accorded the title of Queen’s Counsel, or, as they are to become, Senior Counsel. What a nonsense that Jock Hodder, senior partner in Chapman Tripp, cannot have a title that recognises the excellence of his advocacy. He is every bit as able as any Queen’s Counsel in New Zealand. There are plenty of other examples, but I need not go into them.

Despite what members have heard from Dr Mapp—they might think that he will vote against the bill—he actually supports the bill. This legislation reforms the law that relates to the control of lawyers. Lawyers do have a monopoly, so it is important that the State regulates that monopoly. But it is also important that protections remain for people who use lawyers. We are introducing a new role for conveyancers so that they can compete for residential conveyancing and the like, but it is important that we maintain some protections for people who use the services of conveyancers. After all, the most important financial transaction that any, or most of us, ever embark upon is the sale or purchase of a house, and it is important that there be some consumer protections in place for people who use either lawyers or conveyancers. I am happy to support this legislation, as does, I note, the Law Society.

It is interesting that the Lawyers and Conveyancers Bill, which my colleague Dr Wayne Mapp mentioned had its genesis many, many years ago, is finally before the House today as we debate its second reading. It does go back a long, long way. I note that the first reading occurred on 29 July 2003, which is nearly 2 years ago. We made some significant points during that first reading and subsequently at the select committee, and those points are still valid today, as they were back in 2003.

💬 Darren Hughes: What were they?

I shall mention some of those significant points to the member, which National has highlighted on page 19 of the commentary, if the member were to know our position, and National did put a minority view into the commentary.

First, I want to look at the provisions of the fidelity fund. It is an arguable proposition, when a number of professions and trades—that is an appropriate distinction to draw between the two of them—have done away with such funds. Yet we see here the need for lawyers to continue with a fidelity fund.

In fact, the first of the bullet points of the minority report makes a very strong point about the fidelity fund—that is: “No significant case has been shown for the continuation of the fidelity fund under Part 10 of the bill. The fund has been abolished for most other occupations including chartered accountants, motor vehicle dealers and sharebrokers. The fidelity fund had a place when lawyers were actively involved in mortgage lending but the current range of banking products has meant that lending by lawyers is rare.”

So the point we make here is that there is no need to retain the fidelity fund when similar requirements for other occupational groups, be they professions or trades, have ceased. That may have been important in those halcyon days when lawyers were involved in lending money, and there are plenty of well-known cases that demonstrate when lawyers were involved in lending money, mainly on contributory mortgages, but there are other schemes. I was involved in earlier days with the Rural Bank, and when we were lending money we often had to concede priority when lawyers wanted to rank their mortgage ahead of ours. They would lend on a first mortgage, and we had to concede priority. However, in those days when the Rural Bank had concessional lending it was a great opportunity for us to change the terms and conditions. In those days we were able to up the interest rate and to reduce the term because some other lender—lawyers or insurance companies—might have wanted to come in ahead of us and we were required to concede priority in that respect. It gave us some flexibility, but I can understand that lawyers of that time thought a fidelity fund was certainly important.

I now want to move to another area—that is, the proposition in the context of engagement between a lawyer and the client. The basis of charging and the charges that will be related and applied during the course of the process need to be fairly well defined at the commencement of the engagement. The lawyer would inform the client of the client’s entitlement to such costs. It is important that that process be continued. It is very important and very necessary to provide an estimate of the time required to carry out whatever the engagement is, and the probable time schedule for the main components within the engagement. So that is normal practice. Keeping the client informed as to the time frame and the costs involved very much forms a part of any occupational or professional grouping.

The other area that I think is significant in the running of a professional legal services firm or, for that matter, any professional firm, is the skill of the owners in managing the risk of the business. Risk management has become an integral part of doing business today. There are choices to be made in managing risk, and that includes the transfer of risk. One of the core elements in transferring risk is the application of insurance. For a law firm and professional services firms, 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 popularly known as the excess.

One of the issues here, which we identified during the select committee process, is that considerable costs will be involved. We want to make sure that those costs are clearly identified, because there is nothing worse than cost overruns when it comes to the client. Those areas need to be clearly defined. We do not want to see any shortcomings and shortcuts, because clients depend very much on the goodwill and professionalism of the legal fraternity.

I want to refer to some of the other issues that have been canvassed by Dr Wayne Mapp, and other speakers prior to the Easter break. They are important key concerns of National. Although we support this bill, these concerns are mentioned in the minority report. I will summarise them very quickly, because they form the basis of National’s position. They are not in any order. I have mentioned the fidelity fund, and we do not believe there is any need to retain that. Another area is the decision to recognise the new group of non-lawyers, to be called conveyancing practitioners. A Government member mentioned this group as being important. Conveyancing practitioners will have a separate regulatory body, to be known as the New Zealand Society of Conveyancers. We say that that is unnecessary. We do not believe that there needs to be a separate role for these people. A key point made at the time was that in the absence of a sufficient number of conveyancing practitioners, the proposals in the bill are unworkable. We still subscribe to that view, and we need to highlight that once again. If the concept of conveyancing practitioners is to be retained, then the bill should be divided. That will not happen, but it was another point that we articulated at the time.

The proposed complaints and disciplinary regime is overly cumbersome, and a more simple structure would protect consumers of legal services. National would implement a structure whereby a first-care complaints system would be funded and operated by the legal profession. The system would include mediation services to encourage the chance of resolution of disputes involving client service. There could also be the establishment of a legal services ombudsman, patterned on the Courts and Legal Services Act of 1990 in the UK. The High Court would assume the responsibility of dealing with activity that amounts to professional misconduct. In circumstances falling short of misconduct, claimants should be limited to pursuing negligence or a breach of duties. The assumption of such powers by the High Court would be consistent with responsibilities as officers of the court to the court.

As I said earlier, we believe that the workability of the indemnity rules relating to compulsory professional indemnity insurance, as under clause 86 and which we mentioned, are very cumbersome, and whether they will work at the end of the day, we do not know. Finally, I refer to the proposal to abolish the rank of Queen’s Counsel and substitute the title “Senior Counsel”, when there is no call for such a change. To summarise our position, we will support this legislation. I have highlighted the salient points that we believe are important, and we have a full minority report on page 19 of the commentary.

As chair of the Justice and Electoral Committee, I am delighted to be, I think, the closing speaker in the second reading debate on the Lawyers and Conveyancers Bill. The select committee went through a fascinating process. If one looks at the statistics at the back of our report, one will see that they give some indication of two particular elements of our consideration of this bill. One was that we heard 54 submissions over 25 hours, which means an average of half an hour a submission, which indicates that the submissions were often more in-depth, more thoughtful, and more lengthy than many that select committees look at. Following that, we spent another 25 hours considering the bill. The effect of that is to point out that this is highly complex legislation, and it was really born, quite rightly, in a situation of close cooperation between the New Zealand Law Society and Ministry of Justice officials. That is a very proper process, as essentially this is the constitution of the legal profession in our nation.

I must admit that the select committee talked long and hard about the particular shape of the legislation. When we look at other regulatory devices passed by this Parliament with broad cross-party support in recent years, I think we could say that this is a lot more complex and prescriptive than many other models. Indeed, there were those on the select committee who, I suspect, would have preferred a much simpler piece of legislation that left a whole lot of the detail to be decided by the Law Society. But having said that, I note that the New Zealand Law Society made the clear decision to go for something that was detailed and complex. Therefore the role of the select committee was not so much to deal with the fundamentals of the legislation but, instead, to make sure that in the course of ministry staff and the Law Society doing a lot of the detailed work, the interests of others were also considered. For example, the accountancy profession made some very powerful points about the extent to which the legislation would impact on them, and as a result of some of the changes they proposed—which will be further refined in the Committee of the whole House—better legislation will emerge, without unintended negative consequences on accountants in New Zealand.

Community law centres were concerned that the legislation could impact negatively on them. They are, in my view, a treasured network of agencies in our nation that look to legislation and Government arrangements to make sure that they provide help to large numbers of people who otherwise lack effective access to justice.

At the same time, we were trying to make sure in the legislation that the policy intent—for example, the avoidance of multidisciplinary practices—was actually delivered by the wording of the legislation, and that led to a whole range of changes, which are laid out in the report back. We looked, for example, at the concerns of patent attorneys. In the process of the legislation being produced, patent attorneys had had their interests maybe rather neglected, so we wrote them back in. We looked at the use of law libraries and decided to make some changes that will make sure that law libraries can take some time to transition to the new environment. On the basis of those changes and others made by the select committee, I am delighted to commend the legislation to the House.