Lawyers and Conveyancers Bill

Part 6 provides for the development of practice rules by the respective societies, the New Zealand Law Society and the New Zealand Society of Conveyancers, which we have just dealt with during Parts 4 and 5. Those rules cover matters such as conduct, trust accounts, and indemnity insurance—and trust as well, I would imagine. The rules must be the subject of consultation with the relevant professions, and they also require approval by the Minister.

This part also contains provisions based on the existing Law Practitioners Act and Solicitors’ Trust Account Regulations relating to the trust accounts that must be kept by practitioners who receive money for, or on behalf of, others. It also provides that regulations may be made relating to the rank of Senior Counsel, which will rename the office of Queen’s Counsel. I note that my colleague Mr Worth has put forward Supplementary Order Paper 272, which seeks to replace the words “Senior Counsel” with “Queen’s Counsel”. It will come as no surprise to him, of course, that the Government will oppose that Supplementary Order Paper—

💬 Dr Richard Worth: Will oppose it?

Indeed, it will. There is also a Government Supplementary Order Paper—Supplementary Order Paper 289 in the name of the Hon Phil Goff—that extends eligibility to employee lawyers to be appointed as Senior Counsel.

Part 6 of the Lawyers and Conveyancers Bill has within it major change and is of major significance. It is headed “Conduct of practice by practitioners” and it has four subparts, although they are not strictly subparts. The first relates to practice rules and regulations, the second to investigations, the third to trust accounts, and the fourth to barristers, Senior Counsel, and Queen’s Counsel.

For reasons best known to itself, this Government, as it steadily seeks to erode constitutional positions in New Zealand, including the place of the monarchy, has decided that it would be a good idea to rename “Queen’s Counsel” as “Senior Counsel”. There is no move from either the profession or the public for that to occur. But the Government has decided, in its wisdom, that it is timely to continue that erosion of constitutional principle and to produce that outcome. I would like, in a later call, to deal with the specific amendments on Supplementary Order Paper 272 in my name on that issue.

Instead, in this call, I will deal with the issue of practice rules—one set of practice rules in particular, which is provided for in clause 86, “Indemnity rules”. There are quite detailed provisions relating to the indemnity rules. The thrust of the clause is that lawyers may be required to hold professional indemnity insurance. There is nothing new in that. I suspect that maybe 80 to 90 percent of law firms, in fact, carry professional indemnity insurance. But to have a one-size-fits-all practice rule dealing with indemnity insurance portrays an incredible naivety about the insurance market. Members who are lawyers and who have been in practice will know exactly what I speak about.

There are probably three core elements of a professional indemnity policy. The first core element is the level of cover—the so-called indemnity level. New Zealand law firms have cover between two parameters: $1 million and $100 million. The indemnity level is the first element. How will that be set by practice rules? Is it to be related to the turnover of the business, to the number of lawyers in the firm, to the number of employees in the firm, or to the number of principals in the firm? So the first element—the indemnity level—is not a matter that lends itself to a practice rule.

Then there is another element: how much the excess should be. Now the jargon word for the excess in broking and in underwriting circles is the “deductible”. How much should the deductible be? Should it be $20,000, as it is with regard to some firms, or should it be $2 million, as it is with regard to some of the bigger firms? How will that issue be addressed?

The third element relates to the terms of cover. It is commonplace, as members of the House will know, that professional indemnity insurance is written in a number of markets. Some of the markets are in New Zealand, some are in London—Lloyd’s is an illustration of that—and some are in Bermuda. One needs only to look at professional indemnity policies to see that they are widely variable in the terms of cover, in the scope of cover, and in the wording of cover. It is not a matter that lends itself to the making of practice rules. The terms on which the risk is set are a matter for the particular underwriter. But the issue is actually more subtle and sophisticated than that, because in the course of, say, 90 days, underwriters may change their position. New underwriters may come to the market, old underwriters may exit, and new syndicates of underwriters may be formed. It may be a policy of a syndicate that it will write cover only in a particular way.

But the situation is worse than all that. Not only is the task of setting the terms of compulsory professional indemnity insurance to be entrusted to the Law Society but the Minister of Justice, the Hon Mark Burton, with the wisdom of Solomon, is to sign off on the issues of the deductible, the indemnity level, and the policy wording. We have an illustration there of incredible naivety on the part of Government members, if they think the Minister of Justice, the Hon Mark Burton, can grapple with those issues.

I see sitting in the chair David Parker, the newly appointed Attorney-General. He has been a partner in a law firm. The probabilities are that he has had to grapple with those issues. I invite him to take a call to say exactly how the indemnity rules, in just the three areas that I have identified, can possibly work. That is just one illustration of the naivety the Government shows in this part of the bill, but it is a good illustration.

There are three parts of Part 6 that I wish to address. The first is to note with pleasure the re-enactment, in clause 84(1)(b), of rules that “may require lawyers, or any class of lawyers, to undertake ongoing legal education relating to the law or the practice of law:”. In my opinion we are fast approaching the time when continuing legal education needs to be mandatory. I acknowledge immediately the great job done by the New Zealand Law Society’s Continuing Legal Education department over many years, in providing seminars for practitioners. I acknowledge the huge contribution made to the law by Mrs Annette Black in her over 20 years as head of that department of the Law Society, and the work of people like Dick Edwards. But I think that mandatory continuing legal education is appropriate. In the old days people would go into law firms and would receive legal education as part of their training within the firm as law clerks or staff solicitors, but increasingly large numbers of lawyers, when they come out of law school, for example, commence practice as barristers sole and have no experience. They are left to their own wits, to their own skills, and, in my opinion, these people are a menace. So something needs to be done about it, and I express my hope that the Bar Association and the Law Society will address those matters in the very near future.

The second clause that I wish to address is clause 104, which provides that barristers of the High Court have all the powers, privileges, duties, and responsibilities that barristers have at law. In my opinion, that is a garbage clause. It simply means nothing; it is circular. The note below it asks us to compare it with section 61 of the 1982 Act, which provides that barristers of the court shall have all the powers, privileges, duties, and responsibilities that barristers have in England. That provision has been the subject of a lot of litigation over the years. I have been involved in cases concerning whether the High Court has the jurisdiction to prevent barristers from acting in a conflict of interest, and reference was made to that section. I have also been involved in cases concerning whether the court has an inherent jurisdiction to make barristers personally liable for costs. Again, section 61 was referred to.

It is important that we get clause 104 right. As it is expressed in the bill, it simply does not mean anything. That is why I have proposed an amendment to omit the words “have at law”, and substitute the words “have in the Commonwealth of Australia”. There are a number of reasons why I have done that. It is appropriate that we cease to look north to England, particularly given that the Privy Council has now gone. It is appropriate that we look west to the Commonwealth of Australia, because more and more New Zealand practitioners are admitted both in New Zealand and in Australia. I think this is a practical way of giving some meaning to clause 104, because there is no meaning in it at the present time. It is appropriate if one is practising as a barrister on both sides of the Tasman—as I said, many people are—that the same rules in relation to barristers apply in New Zealand as in Australia.

The third point I wish to address deals with Queen’s Counsel and Senior Counsel. The term Queen’s Counsel is very well known throughout the world. In fact, it is sometimes a term of various insurance policies that certain advice must be obtained from a Queen’s Counsel, because that term instantly recognises that a certain standard of legal advice will be provided. I do not think it is a particularly good idea to move away from that term and move towards Senior Counsel.

But of greater moment are the various parts of clause 105 to which I take objection. The first is subclause (2)(a), which deems that it is lawful for a lawyer who practises either alone or in partnership with any other lawyer to be appointed to the rank of Senior Counsel or Queen’s Counsel. Subclause (2)(b) states that it will be lawful for a person who holds the rank of Queen’s Counsel or Senior Counsel to practise in partnership with another lawyer. The essence of the rank of Queen’s Counsel, to be appointed as a member of the inner bar, is independence.

I would like to take issue with several of the matters addressed by the last speaker, and also by Dr Richard Worth.

First of all, I refer to clause 104, which relates to barristers. Given that the member has practised at the Bar, I find incredible his argument that he does not know what the term “barristers have at law” may mean. The clause equates it to the High Court, which, of course, has an inherent jurisdiction. That means one cannot prescribe it by statute but it has the jurisdiction to do what is right. Barristers have a unique role in being officers of the High Court, and their responsibilities must coincide with the inherent jurisdiction of the court. The relationship of a barrister to the High Court is inherent in the way our common law and, in fact, our statute law have developed. It is inherent in the way in which our courts operate. It is inherent in the responsibilities that fall upon the shoulders of barristers, and those responsibilities can, in fact, be onerous. One needs only to peruse the findings of the New Zealand Law Society or the Law Practitioners Disciplinary Tribunal to understand how the tribunal has dealt with that inherent relationship between obligations to the court and barristers. If my friend who has just spoken does not understand that term, then he alienates himself from the movement of responsibilities of barristers in Britain and in Australia, and the emerging jurisprudence and development of the role of barrister.

On the one hand, my friend minimises the role of barrister; on the other hand, he laments the loss of the status of Queen’s Counsel. The reform of Queen’s Counsel to a Senior Counsel description is long overdue. Queen’s Counsel originated in Britain. They were obliged to accept the instruction of the monarch who, of course, no longer instructs counsel in New Zealand. As we move to competent and experienced litigators who prefer to spend most of their lives practising in the larger firms, it is totally artificial to try to identify leaders at the Bar and separate them from leaders at the Bar who remain in our law firms. Long gone is the distinction between barristers and solicitors. The more accurate distinction is litigators. Thus moving to Senior Counsel, which applies to litigators no matter in what form they practice, is the way to go. In fact, I foresee in the not too distant future—when the Law Society grapples with the realities—an amendment to this legislation that will remove the fused Bar. Then the contradiction that my friend from the National Party just sought to argue will no longer even appear on paper.

Finally, the clauses in this part of the bill that really stand proud are those relating to indemnity. Dr Richard Worth attempted to tackle this argument, but of course the practice rules on indemnity really provide a form of group insurance. It also provides a further form of discipline to practitioners. The cost of insurance may be met across the Bar and across lawyers because of the low standards of some of the members. So there is a further incentive on all lawyers to act in a collegial way to ensure that all perform to the highest and safest standards.

💬 Dr Richard Worth: That’s naive.

Dr Worth may feel that is naive, but the reality is that it is a collegial Bar still. It is still a Bar where, as Mr Finalyson lamented, the senior practitioners are duty-bound to assist junior practitioners in order to help them to gain the experience that is so often not passed down because of the pressures of time recording.

This is a bill that recognises the evolving legal profession in New Zealand. It recognises that barristers have a unique relationship with the High Court, and it recognises that the collegiality of the Bar is one of the important characteristics of that relationship. I support this part of the bill.

New Zealand First intends to support this bill. We take issue with only one part of it. We have an amendment in the name of Peter Brown on an issue that was followed through by Mr Dail Jones in the previous Parliament, who spoke with some heat on the matter, if his Hansard is a true and correct record—and I am sure it is. We believe that the changing of Queen’s Counsel to Senior Counsel is, along the lines of Mr Finlayson’s and Mr Worth’s contributions, more of a politically correct statement than anything else. We believe that the term Queen’s Counsel has long been recognised and should be retained. We feel so strongly about it that we are proposing an amendment to that effect.

I have been asked—and I cannot see for myself whether he is in the gallery now—to recognise the President of the New Zealand Law Society, Mr Chris Darlow, who is here, or has been here, taking a vital interest in this bill.

Apart from clauses 105 and 106 in this part, concerning Senior Counsel and Queen’s Counsel, New Zealand First will support the bill. However, we will be supporting the amendment in the name of Mr Peter Brown to those clauses.

I am most grateful to my friend Mr Fairbrother for his explanation of clause 104. Unfortunately, however, I remain unconvinced that there is any meaning to the clause as it is currently drafted. If it refers simply to the powers, privileges, duties, and responsibilities that barristers have at common law, then why have it? Why not simply dispense with it? It is an otiose clause as drafted; it makes no sense. The way that I have suggested it be redrafted reflects the fact that New Zealand and Australia are really part of one legal market now. We should be looking west, as I see it, not north.

I will come back to clause 105. In an earlier call I addressed the fundamental need for Queen’s Counsel to be independent of any firm so as to be able to give impartial, independent—sometimes brutally so—legal advice to keep law firms and their clients on the straight and narrow. I have a real concern that if Senior Counsel or Queen’s Counsel are able to be partners in law firms, that rigorous independence will go. I believe that that is the fundamental flaw with this new procedure that is proposed to be adopted.

The other aspect of the clause that really gives me concern is that large law firms, in particular, as Mr Parker would know from his days at Anderson Lloyd Caudwell, are very competitive organisations. I can see situations whereby partnerships will find themselves in a lot of strife. The first point is that the Chapman Tripps, the Bell Gullys, the Minter Ellisons, and the Russell McVeaghs will want their quota of Senior Counsel.

💬 Dr Richard Worth: Simpson Grierson.

And Simpson Grierson—I apologise to Dr Worth for omitting his firm. They will all want their quota. I can see a situation developing whereby a junior partner who is perhaps known to the Attorney-General and who is perhaps active in the Labour Party gets the nod ahead of a more senior person who is a member of the National Party or who is independent. I can tell members now that that will be a recipe for strife. In my respectful submission, I maintain that the independence of Senior Counsel is what gives them value. It is not some kind of bauble or prize to be awarded to the most senior person or the most favoured person in a law firm; it is a mark of someone’s independence and strength as a practitioner. That independent element is to be very closely safeguarded.

The second point about the appointment of Queen’s Counsel or Senior Counsel relates to the amendment in the name of Mr Peter Brown. I will have a good look at it over the dinner adjournment. I must say that I am quite attracted to the concept of the name being retained, as I have said. I am also attracted to the idea, as raised by Mr Tanczos in relation to an earlier part, that Queen’s Counsel should be appointed after consideration between judges, the Law Society, and the Bar Association. I do not see any reason why the State should be seen to confer some kind of monopoly privilege on people; I think it is time the State stepped back from it.

I know that Mr Parker will find that applications for this year’s Queen’s Counsel round close today, and he will have to deal with that over the next few months, in reliance on the advice of the Solicitor-General and having consulted with the Chief Justice and taken soundings from throughout the Law Society, and so on. I am sure this Attorney-General will do his job in an honourable and decent manner, but whether one could say that about others is a matter for debate. The fact of the matter is that I cannot see any reason why Queen’s Counsel need to be appointed by the Attorney-General. I think it is a better approach for the State to step back from the appointments process and leave it to the judges, the Law Society, and the Bar Association. I am sure they will come up with a perfectly acceptable list of Queen’s Counsel.

In conclusion, I emphasise the need for independence from the law firm. We need truly independent minds to be able to give the kind of advice that often needs to be given to law firms and their clients. I really do worry in these competitive times that if we allow Queen’s Counsel to be partners in law firms, it will be a cause of internal jealousy and nastiness within firms, and that that very important element of independence will not be there for partners in law firms.

I will just respond briefly on the Senior Counsel replacement for Queen’s Counsel point. I disagree with the points made by the last speaker, Chris Finlayson. I know that they are held not just by him but also by a number of members of the Bar, but I hold the contrary view that was espoused by Mr Fairbrother—that Senior Counsel are as likely to be found in a law firm as they are at the separate Bar. I do not agree that they have lower standards of independence. They owe the same duties to the court as lawyers practising at the Bar. They owe the same duties of care to their clients—indeed, the duties of care of solicitors in some instances are broader than those of barristers.

In terms of some concern that we will see an undermining of the standard of representation of clients, we need only look at what was the status quo some 20 or 30 years ago before the separate Bar proliferated. Many of the senior practitioners in the times of personal injury litigation actually sat within firms of solicitors and not at the separate Bar. They were unable to have the title of Queen’s Counsel but they did the work of senior practitioners. Some of the most senior practitioners in this land, such as Mr Jack Hodder, who is editor of The Capital Letter and a very, very senior practitioner, sit within a law firm—in Mr Hodder’s case, Chapman Tripp. I have no doubt that he, and people like him, would be suitable candidates for the position of Senior Counsel. I think it is unfair that we keep that privilege from them.

In terms of concerns about whether this bill doles out monopoly privileges, I think there are concerns that if we have too few Queen’s Counsel, we elevate their value in a way that is inappropriate and actually confer upon Queen’s Counsel close to monopoly or oligopoly privileges. One way we can ameliorate that concern is by having recourse to some of the very able and senior counsel who sit in law firms.

I raise a point of order, Mr Chairperson. The Attorney-General has resumed his seat too quickly. I invite him to make comment on the issues relating to professional indemnity.

The CHAIRPERSON (H V Ross Robertson): The member has been here for a considerable amount of time. He knows that that is not a point of order and that he is actually trifling.

I rise in support of the Lawyers and Conveyancers Bill, but I do have some reservations about Part 6, for the reason that it makes professionals—professional lawyers and the profession—look incompetent. The Minister seems to retain the right to determine practice rules, and it seems to me that that will encourage the Law Society to engage in political toadying instead of a force for an independent profession to protect individuals against the State. I think that is really important. I am also fearful that disciplinary procedures will make people vulnerable to legal ambush.

Clause 85(1)(a) requires conveyancers to provide educational criteria, and it gives no further guidance. That seems to me to be an example of over-regulation of our industry, and seems to set up the potential to establish a cabal or anti-competitive behaviour.

But clause 85(1)(b) sets up a requirement to recognise foreign qualifications. I commend the Minister for that provision, because so many New Zealanders—660—are leaving this country every week to go to Australia. No New Zealanders will be left to engage in this work—we will have to rely on foreigners and their qualifications to come here to help us with our conveyancing.

I would like now to go to clause 96. I notice that the Law Society—and I speak as a non-lawyer; just a Joe Blow citizen—is allowed to appoint someone to look at irregularities, for example, high fees and accounts. Surely, this is a faulted concept. Why should the poacher also be the gamekeeper? When I go on to read clause 101, it seems to me that a duty is put on practitioners of the law to ensure that funds earn interest. This is yet another example of what I was trying to say in an earlier call: we are writing legislation to give the pretence that people are being protected. There is no mention here of anything about market rates. Provided someone paid 0.25 percent or 0.5 percent interest, I would presume that person is in keeping with the law, even if he or she is ripping off people. I would like these elements to be considered in this legislation.

In rising to speak to Part 6 of the Lawyers and Conveyancers Bill relating to the conduct of practice by practitioners, I refer to my short address on Part 5. Whilst both lawyers and conveyancers are to have their own respective practice rules or codes of conduct, it is vital that they dovetail together to ensure consistency of standards. The standards of professional conduct and client care must be upheld and maintained if this dual profession is to have any integrity, if it is to be held in any respect, and if it is to enjoy the total confidence of the clients. In this regard the maintenance of a properly managed trust account is critical. Lawyers receive clients’ funds—their hard-earned savings—in trust in order to purchase that iconic Kiwi home. That money is sacrosanct. It must be protected; there must be no defalcations. That is the responsibility and the trust currently enjoyed by lawyers, and that will be the responsibility to be had and the trust to be earned by conveyancers.

This part of the bill also provides for the rules relating to trust accounts and the management of such trust accounts, and I would just like to indulge members and step them through a typical conveyancing transaction in relation to the financial aspects. At the commencement of a transaction a deposit is often paid to the solicitor’s trust account to be held on trust until any conditions contained in an agreement for sale and purchase are fulfilled. Prior to settlement, if mortgage moneys are required, once the documentation has been duly signed the solicitor then signs a certificate to the bank, certifying that all those documents have been properly signed and that, on receipt of the mortgage funds, the solicitor, in effect, guarantees that the bank will get its mortgage security. The client’s personal contribution is also paid to the solicitor’s trust account. All those funds are then paid over to complete the purchase transaction. So money is flowing in and out of the trust account for any number of different clients at the same time and for any number of different purposes. It is absolutely vital when dealing with other people’s money that the proper accounting practices are in place and are complied with at all times. That money does not belong, and never belongs, to the solicitor or—when this legislation is passed—to the licensed conveyancer. It belongs to the client, to be held exclusively for that client and to be paid as that client directs.

There must be the ability for an independent auditor or person to examine from time to time the accounts of conveyancing practitioners. Such examinations and investigations give integrity to the whole system, and they are preserved in clause 96 of this bill. There must be regulations relating to the use and audit of trust accounts. There are provisions for many of those regulations to be provided, prohibiting, for example, the collection of a client’s money by a lawyer, regulating the lending of a client’s money by a practitioner, and prohibiting the borrowing of a client’s money by a practitioner. Those guidelines are firm and they must be obeyed. Members will also see that trust account management is vital, and having the training for that is vital. There is provision for such training for those intending to set up their own trust accounts. It is interesting that there is also provision for those intending to be directors. I wonder whether there is an omission in this bill, as it does not address the situation of existing partners who have already undergone such training and who want to avail themselves of incorporation. Will they have to be retrained? Those existing partners already have to undergo retraining under the trust account partners scheme. If they have to have new training as well as the retraining, it might be a wee bit of overkill for those who are already experienced in the running of a trust account.

Those existing partners have been managing their trust account for years. The situation is not like that of the conveyancers, who are suddenly coming to this afresh and who have had no training, whatsoever, and no experience in running trust accounts. Do existing trust account partners really have to undergo the new training just because they now want to incorporate?

It is a pleasure to be addressing Part 6. I do so not as a member of the legal profession, and I will not be engaging in any of the legal sophistry that some of the Government members have engaged in, in justifying some of their approaches to this bill. But I do think that there is indeed a need for a conduct of practice by legal practitioners to be set down in legislation, because there is no question that the public expects and deserves such protection. Speaking as a layperson, the part of Part 6 that really concerns me is clause 105, which refers to the removal of references to Queen’s Counsel and King’s Counsel. We could engage in various legal arguments as to why this should be so, but as a layperson the thing that immediately strikes me—as Mr Woolerton has pointed out—is that this seems to be just an exercise in political correctness.

R Doug Woolerton: Republicanism.

It is republicanism by stealth, and I think it is really part of a wider agenda. If one removes enough of the trappings of the monarchy, little by little one erodes the public support for it, and there is no question that members of the Government would very much like to see the monarchy done away with and republicanism instituted at the earliest possible opportunity. I put it to members that there are people in the Government who find that the use of the title King’s Counsel or, currently, Queen’s Counsel in New Zealand is a real offence to them. I can tell those Government members that most New Zealanders do not want to have republicanism by stealth. They want to have a proper debate on these issues. It annoys people in this country—the public—when we do not have proper consultation, and when they wake up tomorrow and read in the Dominion Post or the New Zealand Herald that in Parliament, at 9 o’clock at night, a handful of people just suddenly decided to do away with the title Queen’s Counsel or King’s Counsel.

💬 Hon Pete Hodgson: Why King’s Counsel?

Well, when we have a king again, we will once again have the title King’s Counsel.

I think that there is also the issue of talking down the profession and trying to remove some of its aspirational nature. The one thing Labour members hate is for people to have something to aspire to, and there is nothing that those members hate more than to see lawyers have something like the title Queen’s Counsel—or King’s Counsel—to aspire to. They would rather that we were all dumbed down.

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

I wish to resume talking on Part 6 of the Lawyers and Conveyancers Bill. As members know, Part 6 deals with the conduct of practice by practitioners. Prior to the dinner break I spoke about clauses 105 and 106, which deal specifically with the removal of the title Queen’s Counsel and, when appropriate at a later time, eventually the title King’s Counsel, and their replacement with the title Senior Counsel. I was making the point that this is in fact republicanism by stealth, and that really there is no public appetite for this change. We do not hear anyone talking about the need to remove the title Queen’s Counsel, or we did not used to hear about the need to remove the title King’s Counsel. As my colleague Mr Worth noted, there is no appetite within the legal profession for this change. In fact, in surveys of the legal profession up to 90 percent of company lawyers—those who would be engaging the services of a Queen’s Counsel—say that they do not wish to see a change. One of the reasons for that is that the title Queen’s Counsel signals a very important piece of information to the market for legal services. The title signals that when we have a Queen’s Counsel before us we have someone who is at the very apex of his or her profession. So if we do not have a legal degree ourselves, or if we do not know the local legal personnel, we can be assured that we are retaining the services of someone who is at the very top of his or her profession. That is called transparency in the market for legal services. If we changed that title to Senior Counsel, it would effectively be a dumbing down at the highest rank of the legal profession.

There are about 8,000 barristers in New Zealand, but only about 80 of them are Queen’s Counsel. I cannot see why we would want to tamper with that. We have an excellent legal system based on British law, and it has served this country well since its inception. The roots of that legal system go back centuries, and it is a legal system that is the envy of many countries in the world. I put it to the Committee that there would be few other places in the world that would want to start tampering around the margins of their legal system in the way that we are seeking to do here.

When I get back to this point of republicanism by stealth, I think it is important that in this Committee we listen to what people want. The people of New Zealand woke up to find that they no longer had the right of appeal to the Privy Council. That was decided here. It did not go out for public consultation—

💬 Hon Lianne Dalziel: No select committee hearing!

It went through a select committee but it was not something that met with a great deal of approval in the public domain, and I do not think there will be any appetite for this change, either.

But there is another part of Part 6 that really concerns me. If I refer back to Part 5, when we talked about the National Party being opposed to the establishment of a New Zealand Society of Conveyancers and I went through in detail why were opposing that, I see that clause 85 is headed: “Certain practice rules in relation to conveyancing practitioners”, and I think that serves to illustrate the points I was making in talking on Part 5. Clause 85(1) states: “The rules made under section 83 by the New Zealand Society of Conveyancers—(a) must provide educational criteria to be met by candidates for practising certificates as conveyancing practitioners:”. I think the point is very much that if one is going to establish a profession, one has to provide a facility for continuing education. As I think has been pointed out, if we are going to have seven, or we said maybe nine but certainly not even 10, new practitioners of conveyancing, how on earth will they provide the facilities and the structure for continuing legal education and continuing conveyancing education? It really makes a farce of the notion of a new profession and a new society.

Clause 85(1)(b) states—and if there is a laugh in this bill maybe it is this or maybe it is not—that the rules of the New Zealand Society of Conveyancers “must provide for, or include mechanisms providing for, the recognition of foreign qualifications, registration, and experience:”. I think that shows what a load of nonsense having a New Zealand Society of Conveyancers would be. How on earth would we recognise foreign qualifications when, frankly, there are none to recognise? Furthermore, who will administer this system and say who is fit to be a conveyancer coming from overseas with these foreign qualifications? The answer is that if we have only nine people, at most, practising this, they will all be out trying to make money, trying to take income away from qualified solicitors by practising conveyancing themselves. So there will be no mechanism for that.

Finally, clause 85(1)(c) states that these rules in relation to the New Zealand Society of Conveyancers “may require conveyancing practitioners, or any class of conveyancing practitioners, to undertake ongoing education relating to the law or the practice of conveyancing.” It is really hard to say which comes first, the chicken or the egg. If there is no Society of Conveyancers and we think that is right, and if we then talk about establishing the practice and the profession of conveyancing, one cannot follow without the other. We would be quite happy that the practice of conveyancing, as envisaged under this new structure, does not come to pass. But it also goes on about ongoing education relating to the law to do with conveyancing. As I think has been illustrated, this will not be able to be carried out by those nine or so conveyancers because they will not be in a position to legally educate their peers. There will be a situation where there are nine people around the table, each taking turns.

I would like to pick up an issue that has been fleetingly referred to and which is enshrined in an amendment I am proposing that I hope New Zealand First will support. It is numbered 272, and it relates to clauses 105 and 106. As has been said, National supports this bill although we have some reservations about some of the parts. Sadly, we think that the New Zealand Law Society should have pushed the Government harder than it did and that the Law Society has been too quick to yield.

Mr Finlayson has spoken about clause 104 and how, as drafted, it is meaningless. Clause 104 states: “Subject to this Act, barristers of the High Court have all the powers, privileges, duties, and responsibilities that barristers have at law.” It is meaningless, but the good point that Mr Finlayson made is that if we look at the 1982 legislation—which we are asked, by way of footnote, to compare with clause 104—we will see that it was meaningful, but by deletion it has become meaningless. If we look at the roles that barristers have across a range of common law jurisdictions—Canada, Australia, and the UK, to name three—we can see that each one of those countries has slightly different rules. He has explained that.

My amendment to clauses 105 and 106 is quite simple. First, it proposes the deletion of clause 105. I guess the crunch point about clause 105 is that it contemplates that there will be Queen’s Counsel within firms. We went through that in a period at the close of the 19th and the beginning of the 20th centuries. I had a great-grandfather who was a Queen’s Counsel in a law firm.

That experiment—if I can call it that—ran for about 8 years and was then scrapped. I think there was good reason for making that change, and now the Government is seeking to creep back to what was a discredited plan.

That is not the main point, though; the main point is probably in clause 106, and that is the issue of Senior Counsel and Queen’s Counsel. This bill proposes that those who to date have been Queen’s Counsel—and, when we had a king, King’s Counsel—would now become Senior Counsel. We had a debate within the Justice and Electoral Committee, to which the bill was referred—and what clever people there were on the committee, I say, gazing for a moment at the Minister currently occupying the chair, the Hon Lianne Dalziel—as to how appropriate that change is. The point is that the term Senior Counsel is used loosely to describe senior lawyers who are not, in fact, Queen’s Counsel. It is commonplace in the courts to talk about someone being senior counsel, but that person is not armed with the letters of patent that have come from the Queen. So we will have senior counsel who are not Senior Counsel, because they are not Queen’s Counsel, and we will have senior counsel who are Senior Counsel by dint of their seniority.

One of the earlier speakers—I think it was Mr Coleman, who has made a hugely promising start in his venture into the legal arena, despite his very substantive medical qualifications—made the point that what we are really looking at here is the creeping advance towards a republic. And he was right, because one can look at a whole lot of illustrations of how this Government, since 1999, has embarked on that particular path. I will mention the abolition of the Privy Council and the fact that the honours system has utterly changed. If one asks a person on the street or in this Parliament, for example, what the difference is between ONZ and ONZM—

💬 Dr Jonathan Coleman: What is the difference?

Well, that is a very good question. Here is a member right alongside me who is not completely sure of the difference. But when we degraded the honours system, we produced an outcome whereby we crept towards republicanism. The Oaths Modernisation Bill is another illustration of what we are doing. That is why I say that we should stay with the title Queen’s Counsel.

I rise to talk to Part 6 of the Lawyers and Conveyancers Bill. It is a major change and is of major significance. There are some areas that I would really like to highlight, particularly around the rules. The rules around eligibility for a practising certificate; payment of the practising fees, levies, and subs; and a register of practitioners all seem to me to be of extreme significance and paramount importance. Also, having read through Part 6, I feel it is appropriate to mention the professional conduct that is required, whether from a sole practitioner, someone in partnership, or otherwise.

There are certain practice rules. We heard earlier this afternoon about some of the people from Australia who could be interested in coming here and getting into conveyancing in this country. We need to be mindful of the foreign qualifications and education of those people.

Another significant point around Part 6 relates to indemnity insurance, which needs to be approved by the New Zealand Law Society and the New Zealand Society of Conveyancers. That is extremely important.

Another important point to pick up on is the consultation that is required under clause 87. The rules can be made with the approval of the Minister, and that seems extremely logical to me. Of course, the rules have to be consistent with the international rules that apply to New Zealand. The Minister may amend those rules in consultation with the New Zealand Law Society and the New Zealand Society of Conveyancers, which seems very appropriate.

We also need to look at the investigation of affairs and practices, as they need to be examined, as well. Of particular concern—and this has been highlighted by the previous two speakers, Dr Worth and Dr Coleman—is the whole change of Queen’s Counsel to Senior Counsel. I have QC, KC, SC—

💬 Dr Richard Worth: It’s a shambles!

You are right, Dr Worth. You talked about just how loose—

The CHAIRPERSON (H V Ross Robertson): The member cannot bring the Chairperson into the debate.

Dr Worth talked about how Senior Counsel is a very loose term.

💬 Moana Mackey: Dr Worth?

Is the member a doctor?

💬 Dr Richard Worth: I am!

He is—brilliant! I thought he was. I think it is extremely important that we do not lose sight of our ties to Britain. We need to be very mindful of just how important—Mr Finlayson talked about this earlier on—the brand and the mana around the term Queen’s Counsel is. We need to have a serious look at that provision, in particular. Otherwise, National is supportive of Part 6.

It is my privilege to rise in support of the Lawyers and Conveyancers Bill. I find it quite ironic that I would speak in favour of the legislation, which will broaden the scope of legal practice and the practice of law in New Zealand.

When I went from being a policeman to a lawyer I was told by my former colleagues that I had gone over to the dark side, and my new colleagues convinced me that I had come into the light. I guess it is obvious that I am more of an ex-cop than an ex-lawyer, but I am pleased to note, and to speak in support of, Part 6, because it imposes a bit of regulation, monitoring, and accountability on the profession, and allows others to be involved in conveyancing and some other legal matters.

As a detective in the 1980s and 1990s, the most attractive prospect was of turning the key on an errant lawyer. One can look around at some of the lawyers in the Chamber and see where I was coming from. Of course, I do not refer to the paragons of virtue on this side of the Chamber; all the others to whom I am referring are not so easily visible here this evening.

It was the crash in 1987 that proved too much of a temptation for a lot of lawyers—far too many lawyers—in this country, and a lot of people suffered as a result of it. Under clause 96(1), the New Zealand Law Society may, from time to time, investigate the accounts of lawyers, firms of lawyers, or incorporated law firms, and it can look into and investigate any other aspects of practice, as well.

I recall investigating the activities of a lawyer whom I eventually managed to arrest for the theft of over half a million dollars. The person who brought him down was a little old lady with an exercise book that she kept all her accounts in. When she and dad were farming and did not have much to come and go on, all the accounts were kept in a little exercise book. Every little penny and then every little cent was accounted for, and when they sold the farm and had over a million bucks to their name, she still kept her little exercise book. She had written in there everything that was supposed to be invested, and a copy of every letter she had sent to her lawyer was pasted in the back. The book became a mine of evidence, and it was eventually what brought the guy down.

When there were no share certificates and no replies to her letters, she went to the New Zealand Law Society, and that forced the investigation. An unusual point was, though, that the investigating accountant from the Law Society had no idea of the extent of the criminal liability. He did not have it together in his head that because money had been stolen and applied to some other purpose that did not directly affect him—in other words, to pay staff wages or office rent, or applied to the mortgage of a mate—it was theft. We have a bit of a problem here, because if the lookers do not understand entirely what is going on, then how do they know what they are looking at? They do not know what they do not know.

That problem is compounded by the attrition over time of fraud squads within the police. Around the country those squads have been taken away, whereas when those investigations took off and people worked hand in hand with detectives, fraud squad officers, and forensic accountants as part of the police, they were able to add to the mix. But it is increasingly common for there not to be any fraud squads around the country or in various cities. It is not long ago, when I was in practice, that I rang the Wellington police station and asked to be put through to its fraud squad. I was given the local duty squad, because there was no fraud squad. I think we have something to fear from that, as it applies to this part: it is all very well to have legislation, but if we are looking at people who are dealing with the assets of vulnerable people, and if the legislation is not backed up with some institutional or forensic knowledge, then those vulnerable people can be placed even further at risk. Those investigating need to have the support of the police and other agencies to be able to follow through, and to be able to keep safe the assets of those vulnerable people that I mentioned earlier.

Something that three other speakers have mentioned earlier is the removal of the title of Queen’s Counsel. That seems to me to be a move that sets us up for the execution of the will of this Government to move towards republicanism. I think there is another flaw in the plan as well, which is that lay people are aware of there being senior counsel.

This is, I think, my third intervention on this part, and thus I will be brief. I really want to respond to something the Attorney-General said before the dinner adjournment. He gave the impression, which I think is incorrect, that large numbers of people are eligible within law firms for the rank of Senior Counsel. I think he fails to understand that the nature of the profession has changed since he and I were law clerks in the early 1980s. When I first joined a law firm in the early 1980s there were very few people who practised as barristers sole—who practised at the independent Bar. In the space of the last 25 years the situation has changed dramatically. There are now far more barristers sole than there have been at any other time in the country’s history, and it is the exception rather than the rule for people to practise within law firms. When I first joined the partnership of Bell Gully in Wellington there were 10 litigation partners in the Wellington office. When I left to go to the Bar, following all the others who had gone to the Bar, there were four litigation partners.

The nature of the profession has changed dramatically, and that is why the chances of anyone being of adequate standard to be appointed as Senior Counsel or Queen’s Counsel within firms will be few and far between. That is not to say that there are not good people within law firms who should go to the Bar and become eligible to apply to take silk, but the reality of the matter is that the profession has changed and what clients value more than anything is the independence that comes from the opinion of a Queen’s Counsel. Sometimes clients desperately need independent legal advice, but they will not necessarily obtain it from a partnership that is dependent on that client for large fees; sometimes the partnership itself will want the independence that comes from obtaining an opinion from a Queen’s Counsel.

So in two respects I am afraid that the Attorney-General got it wrong. The nature of the profession has changed dramatically. The independent Bar—or the separate Bar, as some people like to call it—is very much stronger than it was when he and I were law clerks, he in Dunedin and I in Wellington. The second point that needs to be made is to emphasise and emphasise again the important role the Queen’s Counsel plays in giving utterly objective, independent advice. That independence, which is the cornerstone of those who are called to the inner Bar, will be compromised if those people are partners within law firms. I say that from experience in both a medium-sized partnership and a large partnership, and putting aside questions of competition for the rank.

As for the suggestion that employed solicitors and barristers within law firms would be eligible for the rank, I say quite frankly that that is madness. I cannot think of anyone who would qualify for the rank who is an employed person. It is simply an unacceptable suggestion that further diminishes the independence of the rank. That is all I want to say about clause 105; I hope that the Government reflects on it very closely, because these are important matters.

Following on from what my learned colleague Mr Finlayson has said, and bearing in mind that I come from the other end of the spectrum—being a mere conveyancer and certainly not being someone who is ever likely to take silk—

💬 Simon Power: Oh, steady on.

💬 Dr Richard Worth: Oh, you’re too quick to deny your skill.

I may wear silk, I tell members, but the chances of me taking silk are, I think, very remote. I will concentrate on one clause of Part 6 that, as a past conveyancing lawyer, I find is of the utmost importance. It is clause 102, which relates to the control of trust accounts.

Again, my learned colleague Mr Finlayson has commented on the changing nature of the profession, and I certainly agree wholeheartedly with that. I also suggest that in some cases it is changing because the onerous obligations of running a trust account should not be underestimated. Having said that, on the other side of the coin I appreciate and accept that it is absolutely vital that when we are dealing with other people’s money, the correct rules and procedures are in place for that. That is perhaps reflected in clause 102, which has 25 separate purposes for which the Governor-General may make regulations. Those purposes are all in relation to the use, auditing, and regulation of trust accounts. I am not decrying that at all; I think it is great that it should be emphasised like that.

I have a couple of queries, perhaps, for the Minister. One of the requirements under those regulations is that a firm keep a register of properties. I am not sure exactly what that means, because if conveyancing firms had to keep a register of all the properties they ever dealt with, that might create its own bureaucracy by itself. Subclause (f) states in full: “requiring the keeping of registers of properties, authorities, and appointments held by practitioners and related persons or entities and incorporated firms:”. If I go back to my former career, if you like, I can perhaps compare that only to what we used to call the register of trust securities. That was a very important register that we all learnt about in our first year of law, never having heard about it before, which basically meant that if a firm had control, say with a power of attorney without an independent attorney or the like, then that firm had to fill in the register of trust securities. So I wonder whether the keeping of a register of properties is meant in some way to relate to that register of trust securities. Perhaps when I have finished my call, the Minister may like to clarify that for me.

I will move on to consider the regulations themselves. They regulate “the use and audit of trust accounts of practitioners …”, which is very vital, and prohibit or regulate “the collection of money of a client by a lawyer …”. Again, we are dealing with other people’s money; we are not dealing with lawyers’ money. It is important that those regulations are strict. There are provisions for “regulating the lending of money of a client by a practitioner …”, and “the borrowing of money of a client by a practitioner …”. We do not have to look very far in the newspapers to see a recent incident of a practitioner who may perhaps have borrowed money from his client, using an enduring power of attorney. Certainly, in my 26 years as a conveyancing lawyer, that was not a practice to be encouraged—whatsoever.

The payment, investment, and recording of money and other valuable property entrusted to practitioners is vital in the regulations, as well. It is important that the checks and balances are put in place. The money belongs to other people; it does not belong to the practitioner. Therefore, the regulations should be very strict and very robust.

In my earlier call in relation to Part 6, I mentioned the training in relation to trust account management, and I certainly do not intend to repeat myself. Suffice it to say to the Minister that I would like to know whether the old trust account partner training is to be incorporated into the trust account management training, rather than doubling up the training. I would appreciate some clarification on that point. There are regulations to prescribe the duties of persons appointed to conduct examinations of accounts, and prescribing the duties of practitioners. In relation to conducting the examination of accounts, one may find, anecdotally, that many of the defalcations have been discovered and revealed not by persons examining the accounts but by the partners of the defalcating person. Although I endorse the robust examination of accounts, I think it should be done by somebody who is suitably qualified to be able to understand the vagaries of any legal system and of the conveyancing systems.

I would, perhaps, offer caution at this stage, especially in relation to the Landonline dealings. As I understand it, Landonline electronic dealings will soon become compulsory for all law firms and conveyancing firms. Although I accept that that is a very efficient way to conduct conveyancing, I also wonder whether there will be enough checks and balances to ensure that skulduggery does not happen. To give an example—not to give away any trade secrets, of course—it is very easy for a solicitor to sign a document and have it witnessed, when the signature is not that of the client. So it is actually very, very easy for such misdeeds to occur, and the protections in place have to be somewhat robust.

The regulations further provide for “a scheme for the protection of money entrusted to practitioners …”. I am not quite sure exactly what is meant by that—whether there is to be a separate layer of bureaucracy in relation to that, or whether it is just a catch-all phrase relating to trust accounts in general. There are further provisions for “the establishment of an inspectorate by the New Zealand Law Society or the New Zealand Society of Conveyancers or by both …”. I mentioned before that I am concerned that we do not build up conveyancers by bringing down law practitioners, in the sense that the standards must dovetail in order to ensure that the integrity of both professions is suitably maintained. Again, I urge that some cognisance be taken of that.

There are quite a few provisions for regulations. One of them, clause 102(o) authorises any auditor or the Law Society “to communicate directly, for the purpose of establishing whether the regulations have been complied with,—(i) with clients of lawyers and with related persons or entities; and (ii) with clients of incorporated law firms; and (iii) with clients of conveyancing practitioners and with related persons or entities; and (iv) with clients of incorporated conveyancing firms; and (v) with other persons:”. Again, I seek clarification from the Minister that that regulation is intended to be subject, at all times, to professional privilege, and that that certainly is not intended to be breached pursuant to clause 102(o) of the bill.

There are other regulations that will obviously prescribe the fees and costs. We all know that the fees and costs of running a trust account are not insignificant. Having said that, I think the current system, in which people do not get audited regularly—it is more of a spot audit—is certainly adequate and suitable, and it seems that that is prescribed again in this bill.

In conclusion, subject to clarification on those two points, I certainly endorse the strict and robust provisions for regulations relating to trust accounts. Obviously, that will be dependent on the regulations themselves, but judging from the intent in the bill it is certainly clear that the maintenance of a trust account is an issue that is taken very seriously—and it should be taken very seriously. I endorse the robustness of clause 102.

The CHAIRPERSON (H V Ross Robertson): We now move to the voting on Part 6.

I seek leave that the amendments to the following clauses on Supplementary Order Paper 344 in the name of Dr Richard Worth be aggregated and taken together: clauses 83 and 83A, 86, 87, 94, 96, 102, and 106.

The CHAIRPERSON (H V Ross Robertson): Leave is sought. Is there any objection to that course of action? There is none.

The question was put that the amendments set out on Supplementary Order Paper 344 in the name of Dr Richard Worth to clauses 83 and 83A be agreed to.

Amendments not agreed to.

The question was put that the amendment set out on Supplementary Order Paper 344 in the name of Dr Richard Worth to omit clause 85 be agreed to.