On 1 July 2015, the Legal Profession Uniform Rules take effect, introducing a range of new and modified practice norms and altering the way firms do business. How will the new rules impact your legal business? What are the key reforms and how can you prepare to ensure a smooth transition?
Over 10 years ago, the National Model Bill was introduced in an attempt to align legal-profession regulation across Australia. However, divergences still occurred from jurisdiction to jurisdiction. On 1 July 2015, New South Wales and Victoria will move one step closer to uniformity as the first states to come under a single national framework for legal regulation developed by the Council of Australian Governments.
The national framework embodies a package of rules that have been designed to harmonise the regulatory obligations of legal practitioners across jurisdictions, while retaining state-based administration. They incorporate a range of new regulations relating to admissions, practising certificates, continuing professional development, complaints handling, practice accounting and disciplinary procedures.
How will things change?
A number of new provisions introduced by the regulatory framework will affect the way firms do business and the way practitioners carry out their work. Here are a few to look out for:
- Increased onus on practitioners: New obligations require that no more than fair and reasonable costs may be charged by lawyers, and reasonable steps must be taken to ensure a client understands and consents to the costs estimate and plan of action provided for each matter.
- Introduction of non-trust receipts: Special receipts must be issued for any non-trust money held or received by firms (except fee remittance) stating that the funds will not be treated as trust monies and do not entitle the payer to claim against the fidelity fund.
- Greater protection for firms: The new rules introduce a threshold test, which must be satisfied before a compliance audit is conducted on a firm and formal complaints about practitioners must pass a preliminary assessment before they will be escalated. The time period for clients to make a costs complaint has also been reduced to 60 days after the costs are payable, or 30 days after receipt of an itemised bill.
- Reduced disclosure requirements: Matters attracting fees of up to $750 and any matters for government and commercial clients remain exempt from fee disclosure requirements. Matters below $3000 will now only require short-form disclosure.
- Freedom to advertise: The advertising of personal injury legal services is no longer outlawed in New South Wales and efforts are being made to have prohibitions in the Workers Compensation Regulations 2010 repealed.
- Enhanced dispute resolution: A new consumer dispute resolution process has been established, enabling the Legal Services Commissioner to award an expanded range of remedies including up to $25,000 and make determinations on costs under $10,000.
- Uniform practising certificate regulations: New rules will enhance the ability of practitioners to move between jurisdictions and enable foreign lawyers to practice without meeting rigorous requirements. Government lawyers will now also be required to hold practising certificates like their private-sector counterparts (subject to transitional exemptions).
How can you prepare?
1 July will come quickly and firms should make preparations to ensure their transition to the new regulations is seamless.
- Arrange formal training for all employees on the new rules and administrative requirements relevant to their job. In particular, make sure your professional staff are clear on their new obligations to clients.
- Set up forms, protocols and procedures that your firm will need to meet new disclosure, costing and trust-accounting requirements.
- Make a date with your human resources manager to discuss applicable practising certificate and admission requirements, taking into account the transitional provisions.
- Elect a few firm members to be your uniform regulations task force, which oversees training and compliance with the new regulations and assists with any staff queries.
- Talk with your clients about the upcoming changes and how it may affect the way legal services are delivered.
While New South Wales and Victoria are presently the only participating states, the benefits of having a uniform regime will no doubt encourage other jurisdictions to jump on board in the coming years and enhance the scheme’s scope and effect.
For a more detailed overview of the legislative changes written by Liz Harris, author of Quick on Costs, click here.