Smith Murray: Lawyers and Conveyancers Bill — Second Reading 
Smith Murray: Lawyers and Conveyancers Bill — Second Reading 
[Volume:624;Page:19029] 
MURRAY SMITH (United Future) 
: 
 Mr Fairbrother said he thought the legal profession was one of the last true professions. I will not comment on what he thought the other one was in case of accusations of self-interest. Whilst a lot of lawyers whom I know act without self-interest and do a very good job I must say I have been extremely disappointed with some of the actions and attitudes of the New Zealand Law Society in respect of this matter and particularly with the way the Government and the Law Society have colluded to misappropriate $6 million of fidelity fund moneys—that is moneys that are part of a public insurance scheme—and give it to the New Zealand Law Society which will become a voluntary organisation under this bill. The way that that has been gone about and the effect of that is something that I as a lawyer and a member of the society am ashamed of. I will speak more about that later. 
This bill is a dog’s breakfast. In fact it seems that everybody admits that this bill is a dog’s breakfast—the Government the New Zealand Law Society and practitioners. As I will also demonstrate practitioners do not want this bill. The New Zealand Law Society however wants to continue with the bill because it has been around for the best part of 10 years—and probably longer in terms of the drafting of it. The society’s attitude is that it wants something rather than nothing. The fear is that it would much rather accept extremely poor and ponderous legislation in order to achieve some of the things it wants to achieve and would rather give up a lot of its rights and put them in the hands and control of the Government for the time being than have no change at all. I think that that is a terrible way of approaching legislation. I would much rather we had a situation whereby we tell the Law Society that we will go back to square one and draft a bill that is far more appropriate on the promise that effectively we will move it through quickly. That would be much much better. It is in the capacity of the Government particularly if National were to support it to do that and make that promise to the society. 
Of course the Government is really pushing this bill through just because the bill has been sitting around for so long and the Government wants to get it off its books. Yes the Government is under pressure from the Law Society because the Law Society wants to see this new scheme in place. That in itself is also a bad way of approaching legislation. The bill is far too prescriptive and that can easily be demonstrated when we compare it with legislation that has gone through in relation to other professions. The Architects Act has 58 sections and the new Architects Bill that has been drafted has only 45 clauses. The Chartered Professional Engineers of New Zealand Act has 77 sections and the Institute of Chartered Accountants of New Zealand Act has a mere 24 sections. Even the Health Practitioners Competence Assurance Act which covers a myriad of different forms of health practitioner has 227 sections. The current Law Practitioners Act has 193 sections and I have calculated that this bill is 390 clauses long—it is almost double the size of the Health Practitioners Competence Assurance Act. 
It is very very prescriptive. It is also very outdated and certainly demonstrates the fact that it was a creation of a decade ago. The setting up of conveyancers for competition is no longer a real issue. The level of competition within the conveyancing regime since the abolition of the scale many years ago—and I can testify to that because I have been around experienced that and done a lot of conveyancing—is huge. In fact lawyers are often accused of effectively competing below cost because they very often lack the wisdom and marketing insight to see that if they do it for less than a certain figure they will actually lose money on it. They tend to be extremely competitive. The idea of lawyers selling real estate is also something that has been tried and has failed. Now most law firms say that really they do not want to get into the real estate business. 
As I said before the vast majority of lawyers do not want this bill. The New Zealand Law Society in thinking that it is representing the interests of practitioners is simply wrong. It is out of touch particularly with small to medium sized law firms— 
Stephen Franks 
: And big ones. 
MURRAY SMITH 
:—and big ones. I know that the Waikato Bay of Plenty District Law Society was one society that opposed the bill but it was pulled into line by the hierarchy of the New Zealand Law Society. The editor of the magazine who spoke against it was sacked. Since then I have seen emails—misleading at best and deceptive at worst—coming out of Law Society circles trying to argue some of the points. I did a survey. Because the Law Society was not prepared to hear what its average members think of this bill I thought I would do a poll myself. I prepared a Supplementary Order Paper which I will be tabling in the House for debate during the Committee stage that provides that $6 million—two-thirds of the current trust fund—be held by the Law Society and applied by that society as stipulated by the majority of respondents to a referendum to be held among all persons who were liable contributors to the fund at the date of winding up. Therefore lawyers themselves could determine what should happen with regard to the fund given that they had put the money in for that specific purpose. 
 I did a survey of lawyers asking whether they agreed with that amendment. Eighty-one percent said yes. I asked them whether they supported what the Law Society wanted to do. Only 10 percent said yes; 61 percent said no. I asked whether the moneys should be added to the new fidelity fund. Forty-six percent said they did not want that to happen and 26 percent said they did. I asked whether it should be returned to current contributors to the fund. Twenty-two percent answered yes; 35 percent said no. I asked whether it should go to contributors to the Renshaw Edwards special levy and 68 percent of the lawyers felt that that was what should happen to the fund. 
There was some logic in that argument because all the contributors—all Law Society members who were principals in firms—had to cough up $10000 to bail out the losses that were incurred by the public in the collapse of the law firm Renshaw Edwards. They had to cough up $10000 over a relatively short period of time and many of them suffered a great deal of hardship in doing so. It was only reasonable in the view of some that when it seems that the Law Society will have a surplus of funds the Law Society should say that it really appreciates what they did then and as a result is prepared to look at giving some money back to those who contributed. But I was not even asking for that response; I simply thought the lawyers should make the decision. 
Some of the comments that I got back from my survey were interesting as well. One was: “The New Zealand Law Society proposal is nothing short of theft. I have no faith in the New Zealand Law Society and do not consent to my share of these funds being applied to the New Zealand Law Society’s general purposes. It is tantamount to a fraud on the contributors.” Another was: “The New Zealand Law Society has a palpable and serious conflict of interest in this matter. I fear however as a humble urban/suburban general sole practitioner that such as I have been able to contribute to the debate on this subject so far to the New Zealand Law Society and the Auckland District Law Society has amounted to no more than ‘farting against thunder’.” 
And so it went on. I did a second survey. I went back to the respondents and asked them whether they supported the passing of the Lawyers and Conveyancers Bill in its current format and 74.5 percent said no. I asked them whether they would support the bill if my amendment were passed by Parliament and 80 percent said yes. So there is a lot of dissatisfaction among them. 
The Institute of Patent Attorneys is also upset about the situation because basically the bill provides that the Law Society will determine to what extent patent attorneys can operate in their specialist partnership with lawyers engineers and scientists. They tell me that they have tried to meet the Minister to talk about that but that he has refused to meet them. 
A lot of other things are wrong with this bill. The whole conveyancers thing is out of whack. I have mentioned real estate sales. I am also concerned about the amount of money the banks are getting instead of the community law centres and that is something else on which I will be putting forward a Supplementary Order Paper. I will also be putting forward a Supplementary Order Paper about patent attorneys to try to rectify their situation in a way that is fairly low-key and reasonable. 
United Future will support the second reading of this bill. We will support its being reported back. But I will be tabling those Supplementary Order Papers and unless we can get a change to the fidelity fund in particular United Future will not support this bill any further.