Franks Stephen: Lawyers and Conveyancers Bill — Second Reading 
Franks Stephen: Lawyers and Conveyancers Bill — Second Reading 
[Volume:624;Page:19025] 
STEPHEN FRANKS (ACT) 
: 
 I am surprised that I am not following the honourable Lianne Dalziel but—never mind! This bill is very interesting if one is a lawyer. It is probably hard to get a lot of interest if one is not but it is a really— 
Simon Power 
: It’s hard enough if you are! 
STEPHEN FRANKS 
: No no. It is quite easy to get interested if one is a lawyer when one realises what a mark this is on the Hon Phil Goff’s career. I think he is one of the few Ministers who the Prime Minister can correctly describe as “hard-working and conscientious”. His reputation for diligence extends to doing the sort of staff work that means he can do the things he has done very well—the rescue he made of the Prime Minister after 9/11’s terrorist attack in New York and other things. 
 But occasionally of course Atlas shrugs. In this case the bill started as a campaign—a crusade—in the interests of all those poor suffering clients of conveyancing practitioners. I think that that was in 1998 and in that year it was relatively straightforward—[ 
Interruption 
]—or was it in 1997? We needed to reform the legal profession with a deregulatory opportunity for greater competition. 
As I said this bill might be one of those blights that I am sure many hard-working and conscientious Ministers fear and it is the reason why they do their homework late at night. I suspect that the reason we did not see the bill in its second reading until 2005 is that the Minister is deeply ashamed of it. It achieves virtually none of the objectives he would set for himself or the standards he would have for the legislation he wants to see in his name. It achieves nothing for New Zealand. It does not even achieve much for the Law Society except a set of own goals. 
This bill will probably go down as being one of the low-water marks of legal drafting not in terms of the draftsman’s technical competence but in terms of the ability to take a set of principles and a set of objectives to walk them past the interest group and to get them translated into a structure that achieves all of the slogans originally claimed for it. The original driver of the bill may have been the need to reflect changes in the market and in legal practice and to create a more flexible regulatory regime but what we actually have is an incredibly prescriptive edifice—360 pages in this case—that we could compare with the very successful regime for accountants. 
I think that the accountants’ bill at a similar stage was about 40 pages. It was a good bill and it is working. There is no significant difference between the role lawyers perform in maintaining confidence in the integrity of the justice system and the role auditors perform in maintaining confidence in the integrity of financial reporting—not in terms of the stresses the conflicts of interest and the pressures. There is virtually nothing that can seriously distinguish one from the other. 
We know that those who are in the small subset of the profession in the Law Society are proud of this bill. We know it from the submissions from the Law Society and from the process whereby every time the Justice and Electoral Committee or anyone else seemed to make a comment the Minister’s officials trotted back to get their instructions from that major interest group. We were told that the provisions of the bill reflect in general terms a model unanimously agreed upon by the New Zealand Law Society Council and all the district law societies in 1998. That is what was said. We were told that last year. 
So this bill is the achievement of the dream of the body the Minister wanted to deregulate. It is pretty hard to imagine that it actually does anything that seriously threatens those residual monopoly powers that the generally smaller practitioners in the Law Society were so desperately keen to preserve. We have own goals right at the start. We have a statement of fundamental obligations that very few country practitioners could live up to. How can the smaller communities in this country require that their lawyers have no conflict of interest when in fact they are always involved in transactions with the clients of their own clients on the other side? They are relied on for having the integrity to transcend their conflicts of interest not to make sure they do not have them. 
Right at the beginning of this bill’s process we see that it was captured by people with very little conceptual framework. Had the Minister waited long enough he could have drawn on some very recent stuff. On 24 February 2005 the Irish Competition Authority came out with a massive study of competition in legal services. The Minister could have used some principles from that. 
It would have saved this country an awful lot of wasted money and time if this bill had been quietly dropped. No one would have complained except the Law Society and who would have cared if it were the society? Of course National cares because National kicked this off. The Hon Tony Ryall kicked off this whole process just before the 1999 election when I think he succumbed to Law Society pressure and promised it something probably feeling that he would sort it out when he got back into Government. But of course National did not return to Government. 
The Minister wanted his conveyancing bill to go ahead but found foreign affairs to be much more interesting much more pressing and much more important. So he left the bill to his officials who in turn left it to the Law Society and we ended up with his little bill ambitious but reasonably simple in concept transformed into this doorstop bill. 
The Minister could have looked at say the UK Office of Fair Trading reports on the future of Queen’s Counsels for a way of analysing things in principle at the UK Office of Fair Trading report on competition and professions or maybe at the report that was commissioned by the New Zealand Law Society when it got a firm of economists to do a grassroots ground-up evaluation of the law profession in the future—multidisciplinary practices all the hard issues—but the Law Society Council panicked and then suppressed that report in the mid-1990s. I think Judith Collins might have been involved at that stage. The society flatly panicked. It suppressed four chapters in case the report saw the light of day and gave any momentum towards a genuine deregulation. But that report would have been around somewhere if the Minister’s officials had just thought to ask and the Minister might have had— 
Judith Collins 
: I have it at home. 
STEPHEN FRANKS 
: The member still has the suppressed document at home—the secret codicils to the report that the society never wanted people to see. I wonder if the society paid for it. Does the member know whether it paid? 
Judith Collins 
: I think it was about $50000. 
STEPHEN FRANKS 
: Those were very well-spent dollars. The report was very well conceived but the society panicked and would not allow even its own members to see it. 
Yet this is the society that the Minister has now got into bed with and that is now going to push this bill through with the assistance of National because who wants to be against the powerful interest groups when one is a member of New Zealand First or of the National Party. Even if members think this is a crock they will vote for it because well the Law Society says it wants it. 
At least the Minister will not be alone in his embarrassment over this bill as the future unwinds in the disciplinary process. Here is the proud Law Society the self-governing profession that bulwark of the citizen against the State now handing over the control of its rule book to the Minister. It has handed over the disciplinary authority to people appointed by the State. What does the society have left? What brand control does it have? 
It has the lowest common denominator—the same structure essentially that has governed schoolteachers. Why are schoolteachers so universally underpaid? The reason is that they are in a least common-denominator system whereby the State exercises all the control. What do we have ahead for the law profession? We have precisely the same structure—a monopolistic representation body endorsed by statute. 
Just that small change would have made a change. The possibility of a challenge to the Law Society by a competing Law Society would have transformed this bill—absolutely—as it has in many other countries including the United States and as it is for accountants. Accountants do not have a monopoly. They have to live compete and make rules and they uphold those rules knowing that if they do not anyone can establish another New Zealand society of accountants in competition—but not the Law Society! It has managed to roll the Minister so that there is no room for competition even among societies—not even for the emergence of something like the family law section.