Smith Murray: Questions for Oral Answer — Questions to Ministers Questions to Members Questions to Ministers 
Smith Murray: Questions for Oral Answer — Questions to Ministers Questions to Members Questions to Ministers 
[Volume:618;Page:14474] 
10.  
MURRAY SMITH (United Future) 
 to the  
Minister of Justice 
: Is he satisfied with clause 336 of the Lawyers and Conveyancers Bill that dispenses two-thirds of the remaining assets of the Solicitors’ Fidelity Guarantee Fund to the New Zealand Law Society once the fund is wound up; if so why? 
Hon PHIL GOFF (Minister of Justice) 
: 
 Yes because it is the strong wish of the profession to decide itself at an appropriate time how any remaining funds sourced from its own members should be applied. It is not for the Government to determine how funds that do not belong to it should be disposed of. The New Zealand Law Society is the profession’s elected representative body and its position on this clause was recently supported unanimously by its 30-member council. There may be some individual practitioners who disagree. I note that the select committee received only four submissions on this point. 
Murray Smith 
: Is the Minister aware that in a recent survey of lawyer principals 88 percent said that they did not want the fund to be handed to the Law Society; and in the face of that result will he continue to tell those 88 percent of lawyers that he believes the Law Society’s self-serving assertions of overwhelming consent for the move ahead of the written survey responses? 
Hon PHIL GOFF 
: The member can attack the New Zealand Law Society all he likes but that body is a properly elected democratic body that has decided that the way to dispose of funds provided by its own members is as set out in that clause of the bill. If lawyers as a group were largely overwhelmingly or even in significant minority opposed to that one might have imagined that they would have taken a little bit of time to turn up to the select committee to say that and one might have imagined that the Law Society would not gethave got a unanimous decision from its 30-member council that that is the way to properly dispose of those funds. 
Richard Worth 
: Why when the current range of banking products has meant that lending by lawyers is rare and when most other occupations that had fidelity funds—like chartered accountants motor vehicle dealers after 2003 and stockbrokers—have abolished those funds or had them abolished for them does the Minister apparently still consider that a fund is necessary despite the clear wish of the New Zealand Law Society to scrap it? 
Hon PHIL GOFF 
: Because this Government believes strongly that particularly in areas of the law whereby people should have good cause to have confidence in the honesty of those representing them there should be some collective security for those clients in the event that particular lawyers rip them off—and regrettably they do that to the tune on average of $1.5 million per year. This Government unashamedly stands for the consumer against that sort of theft by lawyers. 
Lianne Dalziel 
: When will the fund be wound up and how much is expected to be in the fund at that time? 
Hon PHIL GOFF 
: The New Zealand Law Society expects to retain the fund for some years to cover the expected tail of residual claims against it. Unfortunately it is impossible to predict accurately what those claims may be but based on the average claim levels over the last 10 years the Law Society does not expect the residual fund to be very significant at all when it is finally wound up. 
Murray Smith 
: If the Minister is not prepared to listen to 88 percent of the lawyer principals who said they did not want the fund handed to the Law Society what percentage of lawyers opposed to the distribution of the Law Society’s $6 million would it take for the Minister to agree to insert in the Lawyers and Conveyancers Bill a requirement for a referendum among lawyers on this issue or does the Minister have a completely closed mind on the issue? 
Hon PHIL GOFF 
: There are two points. Firstly when we negotiate with lawyers we negotiate with their properly and democratically elected representatives. They are elected regularly and there has never been any suggestion to me from the member or anyone else that that body does not fairly and properly represent its members. Secondly in relation to the $6 million fund the member is talking about that is the percentage of the fund that might be used for “representative purposes” if there were no claims on the fund over the next 5 6 7 years. Clearly there will be claims on that fund and the amount of money being talked about is likely to be quite small. 
Peter Brown 
: I raise a point of order Mr Speaker. I am probably raising it at the wrong time but the Minister answered a question and said that lawyers rip the public off to the tune of $1.9 million a year and he seemed to be referring to an official document. Can I ask the Minister to table that document? 
Mr SPEAKER 
: He did not quote from an official document did he? 
Hon PHIL GOFF 
: No. I did not use the figure “1.9”; I said “1.5” which is the estimate from the president of the Law Society of how much has been claimed from the fidelity fund over the last few years. 
Murray Smith 
: Does the Minister recognise that the New Zealand Law Society as trustee of the fund and as the self-advancing proposed beneficiary of $6 million from the fund is in a clear conflict of interest in this matter; and at the very least an independent survey of lawyers on the matter should be an absolute prerequisite? 
Hon PHIL GOFF 
: For a start the survey the member is talking about is about principals of law firms only—if I understood it right. That is not talking about lawyers generally. In terms of conflict of interest the Ministry of Justice sought a legal opinion on this matter right at the beginning and the member will know of that legal opinion because it was provided to the select committee. That legal opinion came to the conclusion that the most practical course is to provide that any surplus should become the beneficial property of the New Zealand Law Society—as was the course adopted on the abolition of the New Zealand Society of Accountants fidelity fund which nobody in this House opposed at the time. 
Murray Smith 
: I seek leave to table a document “Solicitors’ fidelity fund results of opinion survey” dated 27 July 2004. 
Document by leave laid on the Table of the House.