Worth Richard: Lawyers and Conveyancers Bill — In Committee 
Worth Richard: Lawyers and Conveyancers Bill — In Committee 
[Volume:629;Page:1558] 
Dr RICHARD WORTH (National) 
: 
 Part 10 of the Lawyers and Conveyancers Bill is also an issue that National has some difficulties with. Part 10 in itself constitutes a code and it continues forward provisions that were broadly similar in the Law Practitioners Act of 1982. National’s perspective on this issue is set out in the commentary as the bill was reported back from the Justice and Electoral Committee. It is one of our primary reservations and it is seen by this party as a principled reservation. 
I note that it seems to be the case that the Law Society is keen to continue with the fidelity fund. But I question that and we say that no sufficient case has been shown for the continuation of the fidelity fund under the bill. Interestingly the fund has been abolished for most other occupations including I would assert occupations where there is a greater risk of loss. I refer to occupations such as chartered accountants motor vehicle dealers and sharebrokers. So National says that 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 now rare. 
A few years ago when I first commenced in practice it was very much part of the business of the legal profession to be involved in moneylending. That was a direct result of the shortage of money in the market and the niche opportunity that lawyers had traditionally seen to take money from clients for investment and lend it out generally on mortgages that were flat mortgages not involving principal repayments for relatively short terms. It is right to say as Dr Mapp has said that it was generally second-mortgage money—maybe third-mortgage or fourth-mortgage money. But that was at a time when the banking profession in New Zealand had not developed to any extent the sophistication that it now has. Although some law firms still lend money that activity is in the descendent. For example the middle-sized and the larger-sized firms have pretty much moved out of that market. 
The reason for having a fidelity fund one supposes is to provide a safety net in a setting where risk of loss is real not where risk of loss is illusory. So there has to be real risk. There has to be a real mischief to be resolved. I would say that in the case of the law profession that risk is no longer there and the range of professional indemnity insurance covers including fidelity extensions that can be purchased for a reasonable price—certainly the fidelity extensions—makes it completely unnecessary for the fidelity fund to continue in its current form. 
As a matter of philosophy in a highly competitive environment it is an interesting perspective that one should be asked to subsidise one’s fraudulent competitors in business. Yet that is basically what the fidelity fund is about. 
Hon Lianne Dalziel 
: It’s a profession. 
Dr RICHARD WORTH 
: The Minister makes the comment that the legal business is a profession. She is right to say that if she is comparing the concept of a profession and a trade but let us not be blinded to the fact that law is a business just as much as medicine is a business.