Worth Richard: Lawyers and Conveyancers Bill — First Reading 
Worth Richard: Lawyers and Conveyancers Bill — First Reading 
[Volume:610;Page:7392] 
RICHARD WORTH (NZ National—Epsom) 
: 
 Was that not a helpful contribution that we just heard from the senior Government whip? He gave no reasons for the views he offered yet he gave a clear statement of support for legislation for which we have waited a substantial period of time. It is important legislation because there are some key issues of principle that will clearly challenge the intellect of the Justice and Electoral Committee. 
Members before me have spoken about key aspects of the bill and I will not cover that ground again. I want to focus on a specific area touching client care and also on an issue that relates to the professional indemnity obligations that sit on lawyers. Before I do that I will just highlight the main changes in the bill. They are quite clearly to end the exclusive right of lawyers to provide conveyancing services and to restructure the New Zealand Law Society and abolish district law societies. 
There are a number of district law societies throughout the country of varying effectiveness and efficiency and some of those law societies with small numbers and in quite remote areas clearly find it difficult to discharge their obligations under the Law Practitioners Act. Allied to that is the plan to establish a new complaints and discipline regime. In a small district law society area where there are say 10 members and where members are constantly sitting in judgment on their peers it is difficult to run an effective system of sanctions that will provide quality legal peer review in cases where errors occur. 
There is a plan to enable lawyers to incorporate their practices. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
RICHARD WORTH 
: My recollection is that before the break I was talking in a general way about what the main changes to the bill were and I would just like to conclude by noting that a significant provision is to continue a fidelity fund. It is an arguable proposition when a number of professions and trades—if that is an appropriate distinction to draw—have done away with such funds and I question the need for lawyers to continue with a fidelity fund. But that is certainly the way this legislation is structured. 
In the remaining time I would just like to talk about two aspects of the bill that are not given great flesh in the introductory state in which it is currently drafted. They deal with the ability of the Law Society to make rules and it is very much part of the plan that the New Zealand Law Society is to be the dominant animal in all of these events and that the district law societies will fade into desuetude. What I would like to talk about are rules that the Law Society may make under these enabling provisions in respect of client care. I hope that something perhaps not far short of a clients charter of rights may emerge from the rules that the Law Society is given power to make in terms of this legislation. I would like to touch on what lawyers can legitimately be asked to do and what can be required of them from the client perspective and I would put it first under the heading of “engagement”. 
The first proposition is that at the commencement of an engagement the lawyer must agree with the client the objective and intended outcome of the engagement—in other words the service to be provided. Second there needs to be a discussion between the lawyer and the client as to the events that are likely to occur the processes to be gone through the actions to be taken and the best estimate that the lawyer can give as to the likely outcome of that engagement. That was a truly difficult proposition in the good old days of a judicially active Court of Appeal where the best one could say might be: “Well it depends what the Court of Appeal thinks is fair on the particular day.” 
The third proposition I would advance in the context of engagement is that the lawyer defines for the client at the commencement of the engagement the basis of the charging and the charges that will be applied during the course of that process. Of course the lawyer will inform the client of the client’s entitlement to that cost estimate. I think it is also very necessary to provide an estimate of the time required to carry out the engagement and the probable time schedule for the main components within that engagement. 
The second broad heading would be “performance”. That is the obligation to respond in a timely manner to client requests for information and also to proactively keep the client informed when the main components of the transaction are achieved. Then of course there are the obligations of due care and skill which are now put in the context of the provision of professional services by a provider to a consumer. 
Finally in the context of the relationship consideration needs to be given to the aspect of complaints. The lawyer needs to document processes that will enable the validity of a complaint to be determined. That documentation should be made available to the client on request and in the event of the client expressing a complaint in respect of which judgment is to be made as to the lawyer’s performance. 
Those are aspects relating to client service. I guess if I have a reservation about the power that exists in the legislation to make rules it is in respect of compulsory professional indemnity insurance. Lord Levene the chairman of Lloyd’s has just visited New Zealand and he made some comments about professional indemnity and the obligations that sit on professionals to provide professional indemnity cover. In looking at the materials that are currently in the bill I see that it is proposed that there be a fair degree of specificity as to the terms of any policy of professional indemnity insurance that should be arranged. I simply note that with the rise in premium costs in Lloyd’s and other markets competent lawyers might find themselves rated out of the market. 
I suggest that one of the key aspects in running a professional legal services firm or any professional firm is the skill of the owners in managing the risk of the business. There are choices to be made in managing risk which include the transfer of risk. One of the core elements in transferring risk is the application of insurance. For the law firm and the professional services firm judgments have to be made as to how much cover should be secured what the upper indemnity level should be and what should be deductible or the amount that the law firm in the first instance meets—what is more popularly known as the excess. In respect of the Law Society and particularly with rules to be made with the concurrence of the Minister of Justice a non-worldly view might be taken to the setting of such terms with the outcome that either the cost of cover will become prohibitive or alternatively lawyers will seek to take short cuts in the context of that aspect of risk management known as risk transfer. 
Sure there are other issues that the select committee will have to consider. One of those issues—as a member of the committee I am conscious that there are other members present in the House who will also be on that committee—relates to the issue of reservation of work. What work is it appropriate for lawyers to do on an exclusive basis? What work is appropriately no longer the domain of lawyers? We all know the story that just as there are good doctors and bad doctors so there are good lawyers and bad lawyers.