Franks Stephen: Lawyers and Conveyancers Bill — Instruction to Committee In Committee 
Franks Stephen: Lawyers and Conveyancers Bill — Instruction to Committee In Committee 
[Volume:624;Page:19502] 
STEPHEN FRANKS (ACT) 
: 
 I fear that it must be nauseating for the few who are listening to this debate tonight to hear the lawyers all chummily congratulating each other and apologising mildly for being willing to go along with a disgraceful piece of so-called reform. In the previous stages of this bill some National Party members made quite strong speeches pointing out the reasons why the bill should not go through. We have had the Minister in the chair the Hon Rick Barker say in effect that he did not see any reason why we are doing this except that the Law Society asked us to. That is effectively what Mr Barker said. 
For ACT I can say that we will not go along with legislation that is an embarrassment to everyone. We are not like Phil Goff who came here in 1997 or 1998 and introduced a bill that said: “Let’s increase competition. Let’s deregulate this little cosy conveyancing area.” and who 6 years later has ended up saying limply—with 330 pages of deregulation—“We’ll hand over what the Law Society wants.” 
We are now on Part 1 which alone I think is longer than the entire bill regulating the accounting profession. I am not certain but I think that Part 1 probably has more prescription in its definitions than in the definitions of the last four professional regulation bills that have gone through this House. That is a disgrace. It is a throwback to the days of the two cosy fat old parties deciding that it did not really matter what the quality of the law was but if it was convenient to an interest group they wanted to suck up to or if it was convenient to the Law Society they would push it through even though they thought it was pretty disgraceful—and this bill is. 
I shall read for the Committee a simple summary that relates to Part 1 from a very entrepreneurial and I understand efficient law firm which says it is being inhibited in its operations in New Zealand compared with its operations in Australia. This is Sanderson Weir: “I believe this bill has been drafted as a cop-out to the profession that does not want competition. Many in the profession including all of the law societies have fearlessly engaged in a bit of patch protection. So far they’ve been successful. In Australia that practice was disparagingly called the ‘dingo fence syndrome’. In those days it was to keep the nasty southerners from New South Wales and Victoria from entering the Queensland market. What competition does is force lawyers to look critically at their business processes and the value of what they really deliver to their clients.” 
That firm is saying that the incorporation model set up under Part 1 is a crock of rubbish. That firm came before the Justice and Electoral Committee and asked us to consider that in New South Wales law firms have incorporated for years now without any of the pages of nonsense that go along with incorporation in this bill. In New South Wales apparently without difficulty a law firm was acquired by a public listed company. Attorneys-General in all the Australian states and territories have agreed that the New South Wales model will be adopted and permitted uniformly across Australia in due course. 
I have also had another of the major New Zealand law firms draw to my attention something that I believe the Minister should have drawn to the attention of this Committee which is the UK report on the Regulatory Framework for Legal Services in England and Wales dated 15 September 2004. It has very similar proposals to those we see in Australia. 
Accordingly amongst the many amendments I have proposed in Supplementary Order Paper 339 I have put forward some very simple ones to simplify incorporation. I propose simply to delete subclauses (3) (4) and (5) of clause 7 which state that it is misconduct for one’s lawyer to share with any person other than another lawyer or incorporated law firm the income from a business involving the provision of regulated services to the public. In other words that relates to the multi-disciplinary practice panic and the incorporated law firm panic. 
 Clauses 10A and 10B can be omitted. Those regulate in pages of detail who can be the directors and shareholders of incorporated firms. There is a very simple formula: it is simply that regulation of lawyers should apply to lawyers. Regulating who they work for is the most cumbersome and foolish way of regulating we could conceive. 
The regulations should apply to lawyers in the same way they apply to doctors whether employed by a hospital board a pharmaceutical company a chemist or another practice of doctors or working on their own in their own practice. The ethical obligations and the obligations to protect the public should apply to the lawyer not to the firm. 
So what we have in this piece of nonsense that is Part 1 is an elaborate patch-protection anti-competitive success by the Law Society. And we have had that acknowledged. We have had speaker after speaker from the National Party say: “I don’t like this bill very much but the Law Society wants it so I’ll go along with it.” Dail Jones for New Zealand First said precisely the same thing: “I think it’s grubby; I don’t like it; but it’s the best thing that is there. The Law Society wants it and we’ll go along.” The Labour Minister in the chair the Hon Rick Barker said: “It is very very long and very complicated. There are some things one could have different views on but we will go along with it because the Law Society wants it.” 
I see Mr Robson waving. Do I take it that at least one other lawyer in the Committee is prepared to stand up and say that this should have been a deregulation in the interests of consumers—or a regulation in the interests of consumers—and that this should have been a bill with enough quality in it so that members did not have to get up and excuse themselves by saying that whatever the Law Society wanted they went along with? That is exactly the situation of this bill. 
Let us also look at clause 4 a set of fundamental obligations that are oriented specifically to lawyers in private firms in private practice. What does it mean to impose a legal duty on lawyers for a Government department a company a trade union or Federated Farmers to be independent in providing services to their clients—independent of what? Should they be independent of the interests of the body that employs them? Who is the client? They are employees for goodness’ sake! Those lawyers working for those companies are there to serve the trade union or the company—so they are independent of whom? 
We asked at the select committee what that independence meant. I think the drafters had in mind being without prejudicial conflict of interest. But because the Law Society asked for it they got something else. Because the Law Society Council is pursuing a vision of practice as being practice in private law firms we still have this legislated nonsense of a set of mandatory duties we do not know the meaning of. 
What about the obligation to facilitate the administration of justice in New Zealand? Does that mean that a lawyer should not facilitate pleading not guilty when all that will do is slow things down? Does that mean it is not appropriate to act in the interests of the client in offering tactical obstacles to the other side? No one knows. This set of obligations is aspiration written into law and it can create only problems. 
Under clause 4(c) does “the obligation to act in accordance with all fiduciary duties and duties of care owed by lawyers …”—it begs the question what they are—mean that no one can contract out? When someone rings and says: “I just want a top-of-the-head view; I don’t want a book; I don’t want you to send me a bill for $400 for 2½ hours’ work. Just give me an impression of what you think the law is likely to be even if you’re not an expert.” does clause 4(c) mean that the lawyer is prohibited from doing that and that the lawyer must say: “No I’m sorry; I have to act in accordance with all fiduciary duties and duties of care?” “Duties of care” would suggest an objective standard. 
Does that mean we cannot contract out? No one knows because this legislation was drafted by the dinosaurs of the legal profession in an attempt to hold back the tide. It was drafted by a Government that had given up for a Minister who to his shame had not trusted officials for so long that he had had to let it go ahead despite misgivings.