Collins Judith: Lawyers and Conveyancers Bill — Instruction to Committee In Committee 
Collins Judith: Lawyers and Conveyancers Bill — Instruction to Committee In Committee 
[Volume:624;Page:19505] 
JUDITH COLLINS (National—Clevedon) 
: 
 It is with great pleasure that I speak on this bill and in referring to Part 1 I would like to deal with some of the issues so well put by my colleagues Dr Richard Worth Dr Wayne Mapp and the Hon Georgina te Heuheu and also with the comments made by Dail Jones and Stephen Franks. One of the concerns of the legal profession when it was first being mooted that it should be deregulated or that it should have conveyancers as part of the profession at least in a pseudo way was the fact that conveyancers as a profession would not necessarily come under the same rules and conditions and therefore terms of business as lawyers do. That related in particular to the fidelity fund and to the fact that lawyers who had practices were all personally responsible for not only their own actions—because they could not have limited liability companies—but also the actions of their business partners and staff. That was not only in terms of mistakes—and most lawyers would take out insurance for that—but in relation to dishonesty for which lawyers often could not get any insurance. The dishonesty was in relation to the fidelity fund a fund that the legal profession has paid into for years and years ever since the 1930s to cover the cost of theft by lawyers or their staff. 
The conveyancers who were at that stage being championed by the current Minister of Justice the Hon Phil Goff were not expected to have any of the same impediments to business as lawyers did. They were going to set up under completely different rules and of course they did. They were absolutely allowed to act in a manner contrary to the Law Practitioners Act of 1982 which was the law at the time. They were encouraged to do so by the person who is now the Minister of Justice the Hon Phil Goff. They were championed and held up as the little Daniel in the lion’s den or as David fighting against Goliath. What we saw in the legal profession was two sets of rules. Conveyancers were able to undercut the legal profession based on the fact that they did not have to pay into the fidelity fund and on the fact that they did not have to have certain standards about who could work in their offices. In fact they were undercutting lawyers in a very unfair way. So when it was proposed at that stage that conveyancers be allowed a de jure right to practice it was very important to the legal profession that they be able to do so under the same rules as or similar rules to lawyers working in the same sort of practice. 
That is actually one of the good things about Part 1. The good thing is that we can actually get some form of the same rules for the same sort of work. I think that is something we should be positive about because to my way of thinking not everything in the bill is positive. Certainly when we look at some of the structures that are set up we see one of the problems is that the legal profession has spent a huge amount of money over the years through the Law Society on restructuring itself. I remember well the consternation of the legal profession—particularly of the board of the New Zealand Law Society which I think I was on at that stage—when the E-DEC report came out. It was a report written by a bunch of economists who had clearly worked in Treasury and who therefore wanted to slim the regulations down. They thought we could have the same sort of situation as accountants but the legal profession could not cope with the thought of that.In many ways I think that was a shame. In many ways I think that accountants are people who have taken the bull by the horns and done very very well for themselves whereas unfortunately the legal profession has often become somewhat tied by its own need to regulate everything. But that having been said we certainly need to have a modification within the legal profession. One of the areas as I have said that needs to be dealt with is that of conveyancing. 
We in the legal profession thought when the change was being mooted back in the 1990s that there would be conveyancers coming out of our ears. What has happened of course is that with the thought of being sued—lawyers have always been able to be sued certainly in the conveyancing area—and with the thought of having to pay for a fidelity fund for their colleague conveyancers and of having to front up for that it now appears that there is a miniscule number of conveyancers practising. I think the number would be fewer than the fingers on my left hand. One of the things we have seen in the conveyancing area is that once people realised there was not a lot of money to be made in it then of course the interest fell off. 
One of the interesting things was watching the way some of the banks reacted to conveyancers. I remember the ASB at one stage had a problem. The bank was very concerned about being forced into taking on a conveyancer as the bank’s legal adviser on documents. What I mean by that is that nowadays quite often with regard to mortgage documents the bank that is lending the money instructs the lawyer who is acting for the borrower to act on behalf of the bank as well. So there is an inherent conflict of interest although the banks can rely very much on the facts that firstly the lawyer is normally insured—and most of the banks require the lawyer to be insured—and secondly the lawyer is covered by the Law Society’s rules so that if the lawyer does anything wrong he or she will end up losing his or her practising certificate. I can certainly remember the ASB being very concerned that it had one particular conveyancer whom I shall not name hassling it because the bank did not think it should give the same benefits to the client of a conveyancer as it gave to the client of a lawyer. And that was fair enough too. But the bank was being threatened that it would be sued. Of course we do not need that sort of thing. 
One of the interesting things with regard to conveyancing is that we used to have a scale of fees for it; certainly when I first started to practise law we used to have that. Mr Jones remembers that well does he not? 
Dail Jones 
: Those were the days. 
JUDITH COLLINS 
: As Mr Jones says those were the days. That was when the fees made it worthwhile to do conveyancing work. What people forget—and it is quite good to remind the Committee of this—is that those conveyancing fees paid for what is now legal aid. 
Dail Jones 
: That’s right. 
JUDITH COLLINS 
: Mr Jones confirms that. In those days before we had a State-funded legal aid system law firms cross-subsidised legal aid work—pro bono work we used to call it—with that sort of money. That happened all the time. It is an amazing thing that matters were still dealt with in the courts because that is what lawyers did. In those days to be a litigator in a law firm was to be very much a poor cousin because the litigators of criminal matters and family matters within a law firm were seen as handling the charitable cases that did not bring in the fees that the conveyancers working in commercial practice and the commercial litigators brought in. 
Since the freeing up of the conveyancing market and the massive reduction in fees who now picks up the tab for legal aid? The taxpayer does. That is actually what has happened. Instead of lawyers keeping the costs down within their own firms and acting as the gatekeeper towards the fees and the work that is done we now have a very open-ended legal aid system. One of the things that people around the country are concerned about is the complete blowout in legal aid almost every year.That is not to say that we need to return to a fee-scale system but it is good occasionally—Mr Jones says ugh I am being tough but no I do not think we need to do that—to remember that in fact there was justice before there was a legal aid system. 
There was an ability for people to have their time in court. In fact many lawyers and former lawyers would say that in those days there was far more of a professional attitude towards the practice of law than some of us have seen in the not so distant past. 
One of the things we need to be aware of and one of the good things in this part however is the ability of law firms of people who practise law¸ and of conveyancers to set up in a limited liability company. One of the reasons for that is that the practice of law has changed so significantly. We now have very very large law firms. We also have very small law firms and the vast majority of lawyers in this country practise in one or two-partner firms—in other words in sole practice or in two-partner firms. I guess most people in New Zealand would have no idea about that fact. Most people think lawyers are in big firms but they are not.