Worth Richard: Lawyers and Conveyancers Bill — In Committee 
Worth Richard: Lawyers and Conveyancers Bill — In Committee 
[Volume:629;Page:1531] 
Dr RICHARD WORTH (National) 
: 
 Part 6 of the Lawyers and Conveyancers Bill has within it major change and is of major significance. It is headed “Conduct of practice by practitioners” and it has four subparts although they are not strictly subparts. The first relates to practice rules and regulations the second to investigations the third to trust accounts and the fourth to barristers Senior Counsel and Queen’s Counsel. 
For reasons best known to itself this Government as it steadily seeks to erode constitutional positions in New Zealand including the place of the monarchy has decided that it would be a good idea to rename “Queen’s Counsel” as “Senior Counsel”. There is no move from either the profession or the public for that to occur. But the Government has decided in its wisdom that it is timely to continue that erosion of constitutional principle and to produce that outcome. I would like in a later call to deal with the specific amendments on Supplementary Order Paper 272 in my name on that issue. 
Instead in this call I will deal with the issue of practice rules—one set of practice rules in particular which is provided for in clause 86 “Indemnity rules”. There are quite detailed provisions relating to the indemnity rules. The thrust of the clause is that lawyers may be required to hold professional indemnity insurance. There is nothing new in that. I suspect that maybe 80 to 90 percent of law firms in fact carry professional indemnity insurance. But to have a one-size-fits-all practice rule dealing with indemnity insurance portrays an incredible naivety about the insurance market. Members who are lawyers and who have been in practice will know exactly what I speak about. 
There are probably three core elements of a professional indemnity policy. The first core element is the level of cover—the so-called indemnity level. New Zealand law firms have cover between two parameters: $1 million and $100 million. The indemnity level is the first element. How will that be set by practice rules? Is it to be related to the turnover of the business to the number of lawyers in the firm to the number of employees in the firm or to the number of principals in the firm? So the first element—the indemnity level—is not a matter that lends itself to a practice rule. 
Then there is another element: how much the excess should be. Now the jargon word for the excess in broking and in underwriting circles is the “deductible”. How much should the deductible be? Should it be $20000 as it is with regard to some firms or should it be $2 million as it is with regard to some of the bigger firms? How will that issue be addressed? 
The third element relates to the terms of cover. It is commonplace as members of the House will know that professional indemnity insurance is written in a number of markets. Some of the markets are in New Zealand some are in London—Lloyd’s is an illustration of that—and some are in Bermuda. One needs only to look at professional indemnity policies to see that they are widely variable in the terms of cover in the scope of cover and in the wording of cover. It is not a matter that lends itself to the making of practice rules. The terms on which the risk is set are a matter for the particular underwriter. But the issue is actually more subtle and sophisticated than that because in the course of say 90 days underwriters may change their position. New underwriters may come to the market old underwriters may exit and new syndicates of underwriters may be formed. It may be a policy of a syndicate that it will write cover only in a particular way. 
But the situation is worse than all that. Not only is the task of setting the terms of compulsory professional indemnity insurance to be entrusted to the Law Society but the Minister of Justice the Hon Mark Burton with the wisdom of Solomon is to sign off on the issues of the deductible the indemnity level and the policy wording. We have an illustration there of incredible naivety on the part of Government members if they think the Minister of Justice the Hon Mark Burton can grapple with those issues. 
I see sitting in the chair David Parker the newly appointed Attorney-General. He has been a partner in a law firm. The probabilities are that he has had to grapple with those issues. I invite him to take a call to say exactly how the indemnity rules in just the three areas that I have identified can possibly work. That is just one illustration of the naivety the Government shows in this part of the bill but it is a good illustration.