1 Dear Emma Thank you for your response. I will address my response to you in three separate segments. 1. The evidence supporting the claim that there is systemic abuse by the legal profession of Australian consumers in relation to Inheritance matters. 2. The reasons it is in the national and international interest of Australia to prevent this consumer abuse by lawyers of Australian families in regards to inheritance matters. 3. The reasons why the ACCC does not receive complaints about these matters and why Australian consumers are denied their consumer rights when dealing with the legal profession in inheritance matters and the need for the ACCCC to act now in the national interest. One The evidence supporting the claim that there is systemic abuse by the legal profession of Australian consumers in relation to Inheritance matters In your reply you state the following. The ACCC endeavours to focus on systemic or widespread issues rather than trying to resolve all individual consumer complaints. In general, investigations are conducted confidentially and the ACCC does not comment on matters it may or may not be investigating. Is inheritance abuse of families by lawyers, or law firms wide spread and systemic? I would like to point you to three separate documents that suggest the problem is wide spread and systemic in nature. a. Summary of the 2010 Succession Law Round Table convened by the Legal Services Commissioner of Victoria Ref pg 4. (b) Probate and estate law generates a high level of complaints Succession law, involving wills, probate and estate law, consistently attracts a high number of complaints each year. Since the LSC was established, this area of law has attracted high complaint numbers. For the four year period from 1 January 2006 until 31 December 2009, a total of 919 complaints had been received about lawyers relating to probate and estate matters. These complaints contained 1411 separate allegations; some complaints contained more than one allegation. The most common complaints made about lawyers in the area of probate and estate include:
Hello Arthur. I am sending you some information that may be useful to you, The legal system has its own set of rules for dealing with complaints against lawyers which are different to Australian Consumer Law. As these barbarians are the agents of the bankers it is no wonder there are also different consumer rules for our money lenders,
The push is to get the legal industry compliant with Australian Consumer law by first making them accountable when dealing with inheritance matters.
Best regards Diarmuid, www.lawyersorgraverobbers.com
More information posted here: http://loveforlife.com.au/node/8419
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1
Dear Emma
Thank you for your response.
I will address my response to you in three separate segments.
1. The evidence supporting the claim that there is systemic abuse by the legal profession
of Australian consumers in relation to Inheritance matters.
2. The reasons it is in the national and international interest of Australia to prevent this
consumer abuse by lawyers of Australian families in regards to inheritance matters.
3. The reasons why the ACCC does not receive complaints about these matters and why
Australian consumers are denied their consumer rights when dealing with the legal
profession in inheritance matters and the need for the ACCCC to act now in the
national interest.
One
The evidence supporting the claim that there is systemic abuse by the legal profession of
Australian consumers in relation to Inheritance matters
In your reply you state the following.
The ACCC endeavours to focus on systemic or widespread issues rather than trying to
resolve all individual consumer complaints. In general, investigations are conducted
confidentially and the ACCC does not comment on matters it may or may not be
investigating.
Is inheritance abuse of families by lawyers, or law firms wide spread and systemic?
I would like to point you to three separate documents that suggest the problem is wide spread
and systemic in nature.
a. Summary of the 2010 Succession Law Round Table convened by the Legal Services Commissioner of Victoria Ref pg 4.
(b) Probate and estate law generates a high level of complaints Succession law, involving wills, probate and estate law, consistently attracts a high number of complaints each year. Since the LSC was established, this area of law has attracted high complaint numbers. For the four year period from 1 January 2006 until 31 December 2009, a total of 919 complaints had been received about lawyers relating to probate and estate matters. These complaints contained 1411 separate allegations; some complaints contained more than one allegation. The most common complaints made about lawyers in the area of probate and estate include:
2
• overcharging (for work done, not done or for a bill exceeding the quote) • failure to communicate with the client or another solicitor • negligent service (including bad case handling and bad advice) • delays • other professional conduct matters
b. Civil Justice Research Group, Melbourne Law School, University of Melbourne presents: The Impact of Australian Consumer Law on Lawyers Monday 28 May, 2012 6pm – 7.45 Melbourne Law School. Please refer Pg 34
Steve: Again, I don't think you'll get any disagreement on any of that. A couple of points. The first point is we've had unconscionable conduct for a long time and indeed we use it all the time. We just rarely use that terminology. I recently went to senior counsel in New South Wales to try to get a complaint of unconscionable conduct against a particular firm because of a whole range of overcharging. Because again, we're a disciplinary unit, not a compensatory one. The difficulty we often have, and VCAT probably has some of these difficulties too - we certainly have it big in New South Wales, I hope you don't have it as big here - and that is that you get what we call our frequent flyers - the practitioners that are very well known to us that are always doing a little bit wrong. Often not enough in any one of those cases to be wrong enough for us to really get them. We negotiate a lot of complaints, we mediate a lot of complaints, but I'd like to see them depart from the legal profession. The only way that I'm going to be able to do that now is to use unconscionable conduct. I use it under the old Contracts Review Act. Jeannie: Well actually yes, the NSW Contracts Review Act is broader again I think.
Steve:
Exactly. Well that's what I use because again, as a regulator of the profession, I can
do that. But again I have to stress, because this is not based on consumer rights.
What you're talking about is a different thing and they can coexist. I don't think one
has to take over from the other. The issue of coexistence is what's really important.
Because as Michael said, we couldn't - I come from legal service. I couldn't agree
more that that sort of thing which we've all seen a billion times, and we as regulators
see constantly and our staff get immensely frustrated. But our job is to try to shift
that whole regime, not get individual settlements for individual people necessarily.
So when we're talking about what we're trying to do - that's why I talked a bit about purpose. The concept of purpose is to actually make the profession understand this.
3
We have an education role to try to do that and to try to achieve change in the profession to make it more professional and better for consumers. So it's working together that we need to do, it's not one or the other. I think that once we get in the national laws, I’m a big fan of moving to principle base regulation rather than prescriptive. I love unconscionable conduct. I'd love to have just that because that gives me so much more leverage to deal with practitioners but ultimately you're going to have a real problem with proof. In all of your matters - in all the matters when you talk about unconscionable conduct, it is so common to us that you have one person's word against another. The extraneous evidence in the consumer jurisdiction, you might have much more ability to get that evidence in. We don't. So there's, again, congruency here that would be useful, but for us when we get somebody who says I was bullied into signing this contract, then the lawyer comes back and brings forward the interpreter, and brings forward the signed agreement and everything else, that’s the end of it for us. We can't pursue it any further. Even though there might be a smell there. So there are real issues there around proof that are difficult in a disciplinary term.
That's why we try to settle - as Michael said - we try to resolve so many of these
complaints before we get to discipline because disciplines the last gasp and it doesn't
give the consumer usually anything.
Jeannie:
Can I just make a comment there then. It seems then that it's important for regulators to talk to each other a lot. Steve: We do.
Jeannie:
Because your comment about the repeat offenders - the Australian Consumer Law
provisions on unconscionable conduct say - actually specify that engaging in a course
of conduct can be unconscionable. So that repeat offender who you're saying is
offending again, and again, and again, might not be unconscionable conduct in a one
off situation but it might be again, and again, and again. It's quite possible that it
would actually be caught under this legislation.
4
c. Victorian Succession Law Terms of reference.
In summary. We have the Victorian Legal Services Commissioner holding a round table discussion on the issues regarding complaints against lawyers with regards to inheritance matters that amount to at least 900 complaints from the public over a four year period in the state of Victoria alone. We have the N S W Legal Services Commissioner admitting they have serial offenders who remain in the profession and that his staff are continually frustrated. We have the Victorian Attorney General Identifying the issue in his terms of reference to the review of inheritance laws in Victoria. I leave you to make your own assessment!
Two.
The reasons it is in the national and international interest of Australia to prevent this
consumer abuse by lawyers of Australian families in regards to inheritance matters.
In your reply you state the following.
The ACCC cannot pursue all the complaints it receives. While all complaints are carefully
considered, the ACCC must exercise its discretion to direct resources to the investigation and
resolution of matters that provide the greatest overall benefit for consumers and businesses.
The ACCC’s Compliance and Enforcement policy describes in more detail how this
5
discretion is exercised. This policy, which is available on the ACCC’s website
[www.accc.gov.au/policy], lists a number of factors that are weighed including whether
conduct raises national or international issues, involves significant consumer detriment or a
blatant disregard of the law.
In summary.
Approximately 150,000 Australians die every year leaving an estate worth an average of
$500,000 each. The majority of the costs incurred of transferring these assets to the families
of the deceased are legal costs. They amount to somewhere between 5% and 10 % of the
value of deceased estates an amount of between 4 billion to 7.5 billion dollars per year.
A large percentage of this money is wasted due to an inefficient time consuming and
unaccountable legal process. A process designed by lawyers, administered and run by
lawyers for the benefit of lawyers.
If Australian Consumer Law were applied to this process and the industry were cleaned up I
would estimate a saving in the region of 50%, the accumulative effect over a ten year period
being in the order of 30 to 50 billion dollars being held by Australian families instead of
going into the pockets of a few privileged lawyers.
As you can see the scope for an overall benefit for consumers if there were systemic abuse by
the legal profession is significant.
Also if there were systemic abuse by the legal profession in the area of inheritance transfer it
does raise national or international issues and involves significant consumer detriment and
could well be a blatant disregard of the law.
If we as a nation turn a blind eye to a systemic abuse by our legal profession at a time of
family vulnerability within our own community then how will we be regarded by people who
live outside of our community? How will the international community see us as a nation that
permits its legal profession to cannibalise family inheritance, so as to increase their living
standards whilst disregarding the needs of the families of the deceased.
Three
The reasons why the ACCC does not receive complaints about these matters and why
Australian consumers are denied their consumer rights when dealing with the legal
profession in inheritance matters and the need for the ACCCC to act now in the
national interest.
In your reply you state the following.
Your complaint has been recorded by the ACCC and will be used in monitoring whether
there is a level of conduct by Russell Kennedy Solicitors or a pattern within the legal industry
which may raise concerns sufficient to warrant intervention by the ACCC.
However, the Legal Services Commissioner is responsible for the receipt, investigation and resolution of complaints about legal practitioners, which includes the settlement of disputes between legal practitioners and their clients. Where the complaint is about the costs
charged by a legal practitioner or where it is alleged that the legal practitioner’s actions caused financial loss, the Legal Services Commissioner will attempt to resolve the dispute. Further information about how complaints are made and how complaints are dealt with is available on the website of the Legal Services Commissioner.
In summary
Hear lyeth the conundrum. Again I refer you to:
Civil Justice Research Group, Melbourne Law School, University of Melbourne presents: The Impact of Australian Consumer Law on Lawyers Monday 28 May, 2012 6pm – 7.45 Melbourne Law School. Both the N S W and Victorian Legal Services Commissioners have an agreement with their respective fair trading regulators and the ACCC to handle complaints against lawyers. These regulators have a completely different philosophical view of the law in relation to consumer rights. Ref Pg10 Steve Consumer laws give consumer rights. The Legal Profession Act does not give consumer rights, that's not its intention. So we have a completely different philosophical starting point. The next thing I want to say is - and this might sound trite but I think it's really important - the consumer laws deal with consumer rights. The Legal Profession Act deals with client protection. Clients and consumers are different beasts. They have different rights, they have different responsibilities, they have different definitions, they have different philosophical starting points and ending points. So that the legislation that we administer is not designed to give consumers virtually anything. That's not it's point. Its point - the point of the legislation is actually to protect society from unscrupulous lawyers who actually breach their ethical duties to such an extent that they should be struck off, fined, or otherwise dealt with. Again, this is just a skating over the top of so many areas. Pg 11
So the next thing I wanted to talk about is some definitional problems. Those two purposes are so
simplistically stated by me in a very short period of time could give rise to weeks of discussion. It's
really important that we engage in those weeks of discussion and I hope that one of the things that
comes out of this is a desire to actually do a hell of a lot more research and a lot more exploration of
those issues than we have time to do tonight. I was having a discussion with Rod Sims about six
weeks ago about the decisions behind the ACCC, or what they considered their purpose to be. In
part of our discussion he was making the statement that he felt that the ACCC was very good at civil
prosecutions, but absolutely hopeless at criminal prosecution. They were really bad at dealing with
anything to do with crime because they didn't understand it.
I thought that was a very honest and very brave statement, and probably very true. I would say the same thing about us. I mean we are not criminal prosecutors. We are prosecutors to the Briginshaw standard not the criminal standard, and there's a big difference. But what the really interesting thing was is they were defining unconscionable conduct, which is a term that’s very familiar with regulators in the legal role, completely different than the way we would define it. They were using a criminal standard. Now if there are two bodies that are dealing with the same area of law with such fundamentally different definitions - approaches to something as simple as unconscionable conduct, we have problems.
I think that that's going to be one of the major issues here that need to be explored. It's for
one of the reasons that - as Michael said - we have worked in New South Wales, and I know
Victoria is doing that now and Queensland already has, got an memorandum of
understanding (MOU) with the Department of Fair Trading so that all complaints against
lawyers will be referred to us. Now is that good for consumers? Possibly not. Because at the
end of the day what we deal with is disciplinary actions, not benefits to consumers. So we
have these different philosophical approaches that are fundamental and they're not easily
reconciled within our present legislation at all.
Pg 15
Why is a lawyer more protected than a plumber or whatever? The reason is, again, fiduciary
relationship. We are a profession. As a profession we have a responsibility. The primary
responsibility of the profession is to provide a service to the community. That's why this
concept of gross overcharging actually ends up being a disciplinary matter and not a matter
of client rights.
So it's not going to change anything and quite frankly, there's almost no cases before our Fair Trading jurisdiction about lawyers anyway. If you try to do a search for them they just don't exist. Now whether or not that's a good
thing, or a bad thing, or a statement of the problem I can't say. But what we really need to
do is develop guidelines. John Briton's developed some. We need to go much further than
that. We need to start working out a definitional harmonisation between regulators. I
include the ACCC, ASIC, and all the other regulators. We need to be together on this and
we're not. Regulators hardly ever even talk to one another, let alone try to harmonise their
definition. Finished.
Pg 17
So we settle lots of these matters. But it's not a consumer right issue and it never has been
Jeannie
Because the learning in this area is that often consumers will not actually - it's about giving consumers rights but it's also about empowering regulators. Because of the imbalance in information, knowledge, expertise, resources, the learning is that consumers often won't
8
pursue complaints because they don't have the capacity to do that. I would've thought that's particularly pertinent in the relationship of solicitor client. Because if a client comes to a solicitor or a lawyer seeking legal advice, by definition they don't have expertise in that area, so if their relationship with the lawyer goes wrong, they actually probably are unlikely to pursue legal remedies. Hence the role for the regulator.
As a consumer lawyer I'm surprised by your comments on itemised bills being against the
interests of legal service consumers because one of the themes that underlies most
consumer law is information, providing good quality information to consumers so they're in
the position to make good decisions. That disclosure - truth in consumer transaction is one
of the biggest themes and considered consumers fears. So the fact that to ask for an
itemised bill is against the interest of the consumer perhaps illustrates your point I think
about the very different perspectives taken by regulation of profession, professional
standards, and the consumer perspective which is actually information is fundamental.
But if the process is that all complaints against costs are referred to you, rather than dealt
with through Consumer Affairs or its equivalent, then that issue - it's just the point you're
making that that issue is never going to be dealt in…
Pg 34
Steve: Again, I don't think you'll get any disagreement on any of that. A couple of points. The first point is we've had unconscionable conduct for a long time and indeed we use it all the time. We just rarely use that terminology. I recently went to senior counsel in New South Wales to try to get a complaint of unconscionable conduct against a particular firm because of a whole range of overcharging. Because again, we're a disciplinary unit, not a compensatory one. The difficulty we often have, and VCAT probably has some of these difficulties too - we certainly have it big in New South Wales, I hope you don't have it as big here - and that is that you get what we call our frequent flyers - the practitioners that are very well known to us that are always doing a little bit wrong. Often not enough in any one of those cases to be wrong enough for us to really get them. We negotiate a lot of complaints, we mediate a lot of complaints, but I'd like to see them depart from the legal profession. The only way that I'm going to be able to do that now is to use unconscionable conduct. I use it under the old Contracts Review Act. Jeannie: Well actually yes, the NSW Contracts Review Act is broader again I think.
Steve:
Exactly. Well that's what I use because again, as a regulator of the profession, I can do that.
But again I have to stress, because this is not based on consumer rights. What you're talking
9
about is a different thing and they can coexist. I don't think one has to take over from the
other. The issue of coexistence is what's really important. Because as Michael said, we
couldn't - I come from legal service. I couldn't agree more that that sort of thing which
we've all seen a billion times, and we as regulators see constantly and our staff get
immensely frustrated. But our job is to try to shift that whole regime, not get individual
settlements for individual people necessarily.
So when we're talking about what we're trying to do - that's why I talked a bit about purpose. The concept of purpose is to actually make the profession understand this. We have an education role to try to do that and to try to achieve change in the profession to make it more professional and better for consumers. So it's working together that we need to do, it's not one or the other. I think that once we get in the national laws, I’m a big fan of moving to principle base regulation rather than prescriptive. I love unconscionable conduct. I'd love to have just that because that gives me so much more leverage to deal with practitioners but ultimately you're going to have a real problem with proof. In all of your matters - in all the matters when you talk about unconscionable conduct, it is so common to us that you have one person's word against another. The extraneous evidence in the consumer jurisdiction, you might have much more ability to get that evidence in. We don't. So there's, again, congruency here that would be useful, but for us when we get somebody who says I was bullied into signing this contract, then the lawyer comes back and brings forward the interpreter, and brings forward the signed agreement and everything else, that’s the end of it for us. We can't pursue it any further. Even though there might be a smell there. So there are real issues there around proof that are difficult in a disciplinary term. That's
why we try to settle - as Michael said - we try to resolve so many of these complaints before
we get to discipline because disciplines the last gasp and it doesn't give the consumer
usually anything.
Jeannie:
Can I just make a comment there then. It seems then that it's important for regulators to talk to each other a lot. Steve: We do.
Jeannie:
Because your comment about the repeat offenders - the Australian Consumer Law
provisions on unconscionable conduct say - actually specify that engaging in a course of
conduct can be unconscionable. So that repeat offender who you're saying is offending
again, and again, and again, might not be unconscionable conduct in a one off situation but
it might be again, and again, and again. It's quite possible that it would actually be caught
under this legislation.
10
In Conclusion.
The Legal Services Commissioners in each state handle all consumer complaints against
lawyers, as all complaints referred to any of the departments handling consumer law
complaints. refer the complaints against lawyers to the various legal services commissioners,
as you have done with my own complaint, all complaints against lawyers are managed by
legal services commissioners. Legal services commissioners have a completely different
philosophical approach to consumer law. Consumers have no rights; consumers become
clients who are a different animal to consumers. The methods of determining misleading and
deceptive conduct, unconscionable conduct or empowerment in a contract over a consumer
are also different. This is why the ACCC never gets complaints against lawyers and therefore
can say it is not aware of the systemic abuse by them of Australian consumers.
Michael McGarvie the Victorian Legal Services Commissioner has stated that the ACCC and
the various Legal Services Commissioners can exchange information; Steve Mark the N S W
Legal Services Commissioner has admitted that the regulators only communicate on
occasions. The ACCC needs to “Act” and request the relevant information from the various
legal services commissioners. By obtaining those files, the systemic abuse of Australian
Families within Inheritance matters by lawyers would then be exposed and a remedy for this
abuse could be actioned.
This would provide a significant overall benefit for consumers and businesses and would
address conduct by the legal profession that raises national or international issues, involves
significant consumer detriment or a blatant disregard of the law.
I trust you can see the dilemma for Australian consumers and the benefits to our nation that
would flow from an investigation by the ACCC of the legal profession’s systemic abuse of
our families when dealing in inheritance matters and will do everything within your power to
assist.
Yours Sincerely
Diarmuid Hannigan.
11
The Impact of Australian Consumer Law on Lawyers
The following is a transcript of proceedings of a roundtable held at
Melbourne Law School on Monday 28 May 2012 to consider the impact
of the Australian Consumer Law on Australian lawyers.
Linda: Sometimes we come along to these things and it's all very interesting
and then nothing happens so I just suppose I'm interested in where
people feel they would have liked to have more discussion and in
what sort of forum. I would like at least to make sure that we've got
everyone's email addresses and maybe put together some mailing list.
We do have a legal ethic network and we've got the civil justice
research group of course when things are coming up. But did anyone
have any particular issues arising out of the Australian Consumer Law
and its impact on lawyers that you perhaps feel that we haven’t
canvassed tonight? A bit of a blind spot amongst us?
Michael McGarvie: What would probably be good from your point of view is to have a
report back from regulators in six months or a year to let you know
what sort of cases are coming across from Consumer Affairs Victoria
or ACCC or the other consumer regulator, and how they're being dealt
with by the legal regulator.
Linda: But I think certainly on some of these issues, say around costs and
around the mediator, there's some potential topics that we could
explore. So we'll put together some sort of mailing list and keep you
in touch through that.
Facilitator: If you've got any other areas that you think we should have covered,
there's lots more, for another session or a similar kind of session,
there's certainly many things that we could be exploring in this area.
Thank you for coming along. Thank you very much and thank you to
all of the speakers.
End of Transcript
Level 25 307 Queen Street, Brisbane Qld 4000 PO Box 10310 Brisbane, Adelaide Street Qld 4000 T (07) 3406 7737 (Brisbane) or 1300 655 754 F (07 3406 7749 E [email protected]
THE APPLICATION OF THE AUSTRALIAN CONSUMER LAW TO LAWYERS
Regulatory Guide 2-2012
March 2012
W www.lsc.qld.gov.au
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 2
About this guide The Legal Services Commission (LSC) publishes Regulatory Guides to help lawyers and users of legal services better understand a lawyer’s professional obligations in grey areas where they are not always clear.1 You can use this guide to find out about the obligations the Australian Consumer Law places on lawyers and the rights it gives to consumers.2
This guide covers 1. What is the Australian Consumer Law?
2. Does the Australian Consumer Law apply to lawyers?
3. How does the Australian Consumer Law relate to the Legal Profession Act 2007 (Qld)?
4. What provisions of the Australian Consumer Law are relevant to lawyers?
5. Does a breach of the Australian Consumer Law come within the jurisdiction of the Legal Services Commission?
6. Who regulates the Australian Consumer Law as it applies to lawyers?
7. How the Australian Consumer Law applies to lawyers – in summary.
1. WHAT IS THE AUSTRALIAN CONSUMER LAW?
The Australian Consumer Law (ACL) is consumer protection law that applies Australia-wide. The majority of provisions commenced on 1 January 2011. Before this, there were different consumer protection laws in each state and territory,3 and the Commonwealth 4 also had consumer protection laws.
1 Please refer to Regulatory Guides: An Overview for further information about the regulatory guides and what we hope to
achieve by publishing the guides, how we propose to go about developing them and, importantly, their status. The Overview is
published on the Commission’s website at www.lsc.qld.gov.au. We emphasize as we explain in the Overview that ‘the guides will
be persuasive but they are not, nor could they ever be binding. The Commission is responsible for promoting, monitoring and
enforcing appropriate standards of conduct in the provision of legal services, not for setting them. The standards are set by
legislation, by the professional bodies and by the disciplinary bodies and the courts. The guides simply articulate for the benefit
of lawyers and users of legal services alike the factors we will take into account in exercising our responsibilities, most relevantly
our responsibilities to settle consumer disputes including costs disputes between lawyers and their clients and to decide after
investigating a lawyer’s conduct if it is inconsistent with the lawyer’s professional responsibilities and whether to commence
disciplinary proceedings.’
2 We have prepared the guide having regard to the submissions we received in response to the consultation draft of the guide
we published with our E-Newsletter 3 of 2011 on 5 December 2011. The consultation draft and the submissions we received in
response can also be accessed on the Consultations page of our website. We are very grateful to the practitioners and others
who made submissions. The guide is a much better document for their contribution. We are especially grateful to Elizabeth
Shearer for her invaluable assistance in helping prepare this shorter, “plain English” version of a much longer and more detailed
legal advice. The LSC accepts full responsibility however for any errors or ommissions.
The guide addresses how the ACL applies to the provision of legal services. There is a range of very helpful information about
how the ACL applies to the provision of goods and services more generally which can be accessed on the ACL website
(www.consumerlaw.gov.au) or the website of the Queensland Office of Fair Trading (www.fairtrading.qld.gov.au).
3 In Queensland, general consumer protection laws are found in the Fair Trading Act 1989 as amended to incorporate the ACL.
4 The Commonwealth consumer protection laws were found in the Trade Practices Act 1974. This Act has now been renamed
the Competition and Consumer Act 2010. Schedule 2 is known as the Australian Consumer Law.
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 3
Many of the familiar consumer protections from the old laws have been retained, for example the law that bans “misleading or deceptive conduct”. There are also new protections, like the law against unfair terms in contracts.
2. DOES THE AUSTRALIAN CONSUMER LAW APPLY TO LAWYERS?
Although there has been some doubt in the past about whether consumer protection laws applied to professions, the ACL is clear that it covers “any business or professional activity”. In our view, this puts it beyond doubt that the ACL applies to lawyers.5 The ACL applies to barristers and solicitors, although some aspects will impact differently because of the different ways in which barristers and solicitors contract to provide services. The ACL applies to all legal practices, whether they are: – Incorporated Legal Practices
– Partnerships or
– Sole Practices. The ACL applies to all stages of providing legal services, including: – advertising, promotion and negotiations about providing legal services
– the client agreement or contract to provide legal services
– the actual provision of the services, and
– billing.
3. HOW DOES THE AUSTRALIAN CONSUMER LAW RELATE TO THE LEGAL PROFESSION ACT 2007 (QLD)?
The ACL is ‘generic’ consumer protection legislation. The Legal Profession Act 2007 (LPA) is specialist consumer protection legislation directed solely to the regulation of lawyers and the provision of legal services and related matters. The ACL complements and sits side by side with the LPA, both governing the conduct of lawyers. The ACL applies as a law of Queensland and as a law of the Commonwealth of Australia. Where remedies are available under the LPA and the ACL it is necessary to think about whether the ACL applies as a law of Queensland or a law of the Commonwealth. We discuss how the ACL and the LPA intersect in more detail under headings 5 and 6, below, but the following table summarises the situation for lawyers operating in Queensland:
5 The definition of “trade or commerce” in section 2 of the Australian Consumer Law has been expanded from that contained in
the Trade Practices Act and explicitly includes “any business or professional activity”. In our view this settles any residual doubt
there may have been about the applicability of the Australian Consumer Law to the activities of lawyers. The Australian
Competition and Consumer Commission clearly believes this to be the case as is evident from its publication Professions and
the Competition and Consumer Act which is published at http://www.accc.gov.au/content/index.phtml/itemId/926503.
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 4
LPA applies ACL applies as law of Queensland
ACL applies as law of Commonwealth
Barristers
Yes Yes
Sole practitioners
Yes Yes
Partnerships Yes Yes
Only in limited circumstances 6
Incorporated Legal Practices
Yes Yes Yes
4. WHAT PROVISIONS OF THE AUSTRALIAN CONSUMER LAW ARE RELEVANT TO LAWYERS?
4.1 Consumer guarantees The ACL contains consumer guarantees.7 This means that lawyers guarantee to consumers (that is to say, either individuals who are acquiring the lawyers’ services wholly or predominantly for personal, domestic or household use or consumption8 or businesses that are purchasing services for a value of $40,000 or less) that they will provide legal services: – with due care and skill
– that are fit for the purpose
– within a reasonable time. These guarantees may form the basis of a consumer complaint about a lawyer’s competence and diligence or quality of service.
4.2 Component Pricing Section 48 of the ACL prohibits a person who makes a representation about the price of a good or service from representing a component of the price without also and at the same time prominently specifying the total, single figure price someone must pay to obtain the good or service (to the extent that the single figure price is quantifiable at the time the representation is made). Section 48 is similar (but not identical) to section 53C of the former Trade Practices Act. It does not prohibit component pricing. Rather, it requires someone who advertises a component price of a good or a service (such as the cost of his or her professional services) to clearly and unambiguously spell out the total price someone has to pay to buy the good or service.9 Thus lawyers who provide legal services to which the ACL applies must ensure that their advertising (on websites, for example) and any other representations they make about their costs include their
6 The application of the ACL as a law of the Commonwealth extends beyond corporations to individuals in some limited
circumstances by virtue of section 6 Competition and Consumer Act 2010 (CCA).
7 Sections 60-62 ACL.
8 The term “consumer” is defined at section 3 of the ACL.
9 Section 48(7) provides that the single price is the “minimum quantifiable consideration for the supply of…services at the time of
the representation” and includes (wherever it is quantifiable) “a charge of any description payable to the person making the
representation by another person (other than a charge payable at the option of the other person).”
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 5
single figure ‘all up’ GST inclusive costs including any compulsory fees and charges. More information about the component pricing provisions under the ACL is available at www.consumerlaw.gov.au.
4.3 Misleading and deceptive conduct Section 18 of the ACL is headed "Misleading or deceptive conduct" and says at subsection (1) that "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." The section is the keystone of the ACL. It is similar to section 52 of the former Trade Practices Act but extends its application to include natural persons. It applies generally to lawyers at all stages of the lawyer-client relationship, whether or not the client fits the definition of “consumer”. The prohibition has wide impact, and the term “misleading or deceptive” is given its ordinary meaning. Conduct is misleading or deceptive if it leads, or is capable of leading, a person into error.10 It is irrelevant whether there was an intention to mislead or deceive. Section 18 is not limited to misrepresentations. Other conduct (including silence) may amount to misleading or deceptive conduct.11 The application of section 18 to lawyers is potentially very wide: – advertising or promotion of a lawyer’s services can be misleading or deceptive 12
– it applies not just to dealings between lawyers and their clients, but to dealings between lawyers and other people 13
– a lawyer need not be directly responsible for the misleading or deceptive conduct, but may also be exposed to a claim if he or she was a “person involved in the contravention” 14
– it applies to a lawyer’s pro bono activity because of the extension of the definition of “trade or commerce” to “business or professional activity (whether or not carried on for profit)”.15
The courts have rarely had cause to consider whether conduct by a lawyer amounts to misleading or deceptive conduct but, notably, a solicitor was found in one recent matter to have made misleading or deceptive representations in four debt collection letters and notices.16 There is a wide range of other conduct however that could form that basis of an action under section 18 including:
10
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.
11 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357.
12 See Nixon v Slater & Gordon (2000) 175 ALR 15.
13 See Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112. Similarly, a lawyer who endorsed a client’s
representation knowing it to be false would likely be in contravention of s18: see Wheeler Grace & Pierucci Pty Ltd v Wright
(1989) ATPR 40-940 and Heydon v NRMA Ltd (2000) 51 NSWLR 1 at [336].
14 Section 236 ACL. A person “involved in a contravention” includes a person who has “aided, abetted, counselled or procured
the contravention” or “has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention” (s75B
CCA): see Yorke v Lucas (1985) 158 CLR 661.
15 However it is not clear if it applies to government, legal aid, or community legal centre lawyers who, pursuant to those
particular legal practices, never charge clients for their legal services.
16 ACCC v Sampson [2011] FCA 1165. See also Liu v Barakat (unreported, District Court of NSW, Curtis J, 8/11/11); Baker
Johnson Lawyers v Narelle Karen Jorgensen [2002] QDC 205. McGill DCJ noted at [24] in that matter, in reference to the term
“no win - no fee”, that “If the appellant’s true intention was that the retainer be on the terms of the Authority to Act, to describe
that as a retainer on a “no win - no fee” basis was misleading and deceptive …”.
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 6
– misrepresentations to a client about the nature or effect of the contract between the lawyer and the client
– misrepresentations by a lawyer about his or her experience or expertise
– misrepresentations about fees payable (in Disclosure Notices or otherwise), and in what circumstances those fees are payable
– misleading advertising about costs
– deliberate or reckless overcharging 17
– charging more than one client for the same work 18
– misrepresentations about a client’s rights in a billing dispute, including the complaint processes.19
4.4 Unconscionable conduct Part 2-2 of the ACL deals with unconscionable conduct. The term “unconscionable conduct” is not defined in the ACL, but the term has been considered in a number of cases. Based on the case law,20 the type of conduct by lawyers that would be caught by this part of the ACL is “something clearly unfair or unreasonable” or that is “irreconcilable with what is right or reasonable”. The relationship between lawyer and client is a fiduciary one, which means that a lawyer has a higher duty to protect a client’s interests than in an ordinary contract for services. A lawyer who acts unconscionably will also likely be in breach of his or her fiduciary duties to the client. There is also an overlap with section 328(2) of the LPA which provides that a costs agreement between a lawyer and a client can be set aside if it is not “fair and reasonable”. The matters set out in s328(2) are similar to those a court would look at when deciding if a fee agreement could be set aside for unconscionable conduct.
4.5 Unfair terms Sections 23 to 28 of the ACL provide consumers with new protections against unfair terms in standard form contracts. Previously the focus was on the process for entering into the contract. The new unfair terms law looks at whether the substance of the contract is unfair. The unfair contract law applies to the contract between the lawyer and a client, including the costs agreement, if: – it is a consumer contract, and
– the contract is a standard form contract. Whether a contract is a consumer contract will depend on the particular circumstances. A consumer contract “is a contract for goods or services… to an individual… wholly or predominantly for personal, domestic or household use or consumption”.21
17
Council of Queensland Law Society v Roche [2004] 2 Qd R 574.
18 Bechara v Legal Services Commissioner [2010] NSWCA 369.
19 See also s29(1)(m) ACL which prohibits the making of a false or misleading representation concerning the existence,
exclusion, or effect or any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2).
20 A useful summary of the nature of the conduct likely to be regarded as unconscionable is found in Hurley v McDonald’s
Australia Ltd (2000) 22 ATPR 41-741.
21 Section 23 ACL
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Our view is that the following legal services provided to an individual client are likely to be regarded as consumer contracts: – personal injury matters
– family law matters
– criminal law matters
– conveyances in relation to the family home
– wills and the administration of estates. This list is not intended to be complete, and contracts for other types of legal services may also be consumer contracts. When a solicitor engages a barrister, this is unlikely to be regarded as a consumer contract. However if an individual client engages a barrister directly for personal matters, then this is likely to be a consumer contract. Having established that there is a consumer contract, the second question is whether it is a standard form contract.22 This will depend on the circumstances. A lawyer might draft a fresh costs agreement for each new client, tailoring the agreement to the specific needs of the client after discussing and negotiating each of the terms of the contract with the client. In that case, the costs agreement is unlikely to be a standard form contract. However, many lawyers use a standard form costs agreement that is only changed by adding the name of the client, the legal services to be provided to and the cost of those services to a template form. Such a costs agreement is likely to be regarded as a standard form contract. If there is a standard consumer contract, the question must then be asked “is this term unfair for the purposes of the ACL?” 23 A contract term is unfair if it:
– causes a significant imbalance in the rights and obligations between the lawyer and the client
– is not reasonably necessary in order to protect the proper interests of the lawyer, and
– would cause detriment (whether financial or otherwise) to the client if it were relied upon. It is unclear how this will operate in practice.24 The precise words and effect of any term will require careful consideration. However, it may be that the unfair contracts laws could be used to challenge terms that:
– allow the lawyer to end the contract without good reason before the work is complete 25
22
Section 27(2) of the ACL sets out matters a court must take into account in deciding whether a particular contract is a
standard form contract for the purposes of Part 2-3.
23 See sections 24-26 ACL
24 It is difficult given the limited number of decided cases under the similar Victorian and UK legislation to predict with any great
certainty how courts will approach the application of these provisions. The ACCC says the following in its “Guide to the Unfair
Contract Terms Law”: “This limb requires that the party advantaged by the term provide evidence to the court to demonstrate
why it is necessary for the contract to include the term. Such evidence might include material relating to the business’s costs
and business structure, the need for the mitigation of the risks or particular industry practices to the extent that such material is
relevant.” In light of the reference to “particular industry practices”, it is our view that a term in a retainer that is an industry
“outlier” in the sense that it is significantly at odds with common practice, will be more at risk of being struck down under Part 2-3.
25 See the recent discussion of termination of retainer in Ireland v Trilby Misso Lawyers [2011] QSC 127.
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 8
– allow the lawyer to claim a lien over the client’s file or any money or property the lawyer holds for the client, where that lien is not otherwise justified at law
– allow the lawyer to take a security over the client’s assets or property where that goes beyond what is reasonable 26
– allow the lawyer to change the contract, but do not give the client the same right
– allow the lawyer to issue a lump sum bill with a “reservation of rights” to issue a bill for a higher amount if the client requests an itemised bill.27
This list is not intended to be complete and other terms may potentially be subject to challenge. When considering whether a term is unfair, the court can look at how transparent and easy to understand the terms of the contract are, and can look at the contract as a whole.28 A contract will be less likely to be transparent if it: – uses legal jargon rather than plain English, or
– is poorly organised, so that a client cannot easily understand how the terms relate to each other. The price for the services is not covered by unfair terms.29 However this relates only to the upfront price,30 so other charges like administrative fees or penalty like fees may be subject to a claim that they are unfair. This is separate from any remedy a client may have under the LPA, to set aside a costs agreement that is not “fair and reasonable”.31 Charging excessive legal costs may also amount to unsatisfactory professional conduct or professional misconduct.32
4.6 Undue harassment and coercion Section 50 ACL provides that a person must not use physical force or undue harassment or coercion in relation to the supply of goods or services, or the payment for goods and services. This applies to actions by lawyers to collect outstanding fees.33 It may also have a wider application for clients (such as litigants) who complain about being “forced” – or coerced – to take a step in a dispute (such as settling litigation) upon pressure from their lawyer.
26
Note section 320 LPA that provides that a lawyer may take “reasonable” security for costs.
27 We have published a regulatory guide dealing with this issue on our website at www.lsc.qld.gov.au on the Publications page.
28 A court may have regard to the transparency or otherwise of the term (s24(2)(a)) ACL and the contract as a whole (s24(2)(b)).
Section 24(3) sets out matters that give guidance as to whether the term being considered is transparent.
29 The Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 Explanatory Memorandum notes the following
about s26(2): “Consideration includes any amount or thing provided as consideration for the supply of a … service … The
exclusion of upfront price means that a term concerning the upfront price cannot be challenged on the basis that it is unfair.
Having agreed to provide a particular amount of consideration when the contract was made, which was disclosed at or before
the time the contract was entered into, a person cannot then argue that that consideration is unfair at a later time. The upfront
price is a matter about which the person has a choice and, in many cases, may negotiate The upfront price covers the cash price
payable for a … service … at the time the contract is made. It also covers a future payment or a series of future payments.”
30 The upfront price “does not include any other consideration that is contingent on the occurrence or non-occurrence of a
particular event.” The Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 Explanatory Memorandum
notes that “Terms that require further payments levied as a consequence of something happening or not happening at some
point in the duration of the contract are covered … Such payments are additional to the upfront price, and are not necessary for
the provision of the basic supply, sale or grant under the contract.”
31 LPA section 328.
32 LPA section 420(b). See also Council of the Queensland Law Society v Roche [2004] 2 Qd R 574.
33 The prohibition has received some, though not extensive, judicial attention. See ACCC v Maritime Union of Australia (2001)
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 9
4.7 The impact on bills The ACL includes a number of provisions relating to invoices and bills. The effect of section 100 is that a lawyer must provide his or her client with a proof of transaction. A tax invoice will satisfy this requirement. The ACL, like the LPA deals with itemised bills. Both laws require a legal practice to issue an itemised bill if the client requests it. However the time allowed for issuing a bill is different. – Section 332 of the LPA allows for 28 days
– Section 101 of the ACL allows only 7 days.
It is important to note that the LPA applies to all lawyers’ bills. The ACL only applies to bills for clients who fit the definition of “consumer”.34 The inconsistency in relation to consumer bills is partly resolved by section 55 of the Fair Trading Act 1989 (Qld). This confirms that a legal practice has 28 days to provide an itemised bill. However, this applies only to legal practices that are subject to the operation of the ACL as a law of Queensland, and not as a law of the Commonwealth. For legal practices that are subject to the ACL as a law of the Commonwealth, section 55 of the Fair Trading Act has no effect and the inconsistency remains. Under section 109 of the Australian Constitution, laws of the Commonwealth prevail over laws of the States. This means that incorporated law practices, and others covered by the extended operation of the ACL as a law of the Commonwealth, are required to provide an itemised bill to consumers within 7 days of request. The inconsistency in the treatment of incorporated as opposed to unincorporated legal practices in this respect is anomalous and arguably requires rectification. The question arises then of how the LSC proposes to deal with incorporated legal practices which fail to comply with their obligation under the ACL to provide an itemised bill on request within 7 days. It is important to remember in this context that the LSC is responsible for monitoring and enforcing lawyers' obligations under the LPA, not the ACL. Generally they overlap (see headings 5 and 6, below) but in this case they don't. The usual considerations under the LSC's Discipline Applications Guidelines35 apply but it is difficult to imagine the LSC initiating disciplinary proceedings against lawyers in these circumstances. This does not mean however that the agencies responsible for monitoring and enforcing the ACL (such as the Australian Competition and Consumer Commission - the ACCC) will not take enforcement action. That is a matter for them.
5. DOES A BREACH OF THE AUSTRALIAN CONSUMER LAW COME WITHIN THE JURISDICTION OF THE LEGAL SERVICES COMMISSION?
The ACL is ‘generic’ consumer protection legislation that applies to the provision of goods and services generally. The LPA is ‘specialist’ legislation that applies specifically to the provision of legal services. The two pieces of legislation sit side by side and overlap.
The ACL uses different language, and brings a lawyer’s ‘customer service’ obligations into sharper focus, but in our view imposes few if any new or additional professional or service obligations on lawyers. It has never been acceptable, for example, for lawyers to engage in misleading, deceptive or
34 As defined in the ACL, that is, where the amount of the service is less than $40,000 or is for personal, domestic or household
purposes. 35 The Guidelines are published on the Policies and Guidelines page at www.lsc.qld.gov.au
Legal Services Commission: Regulatory Guide 2-2012: The Application of the ACL to Lawyers 10
unconscionable conduct, or to enter into unfair contracts with their clients or to use undue harassment or coercion in recovery of their fees.
It follows that the LSC has jurisdiction to deal with complaints about lawyers which involve alleged contraventions of the ACL, not because the LSC has jurisdiction to deal with complaints under the ACL – it doesn’t – but because the conduct of a lawyer which contravenes the ACL will more often than not also contravene his or her professional or service obligations under the LPA. The very same conduct that gives rise to a complaint under the ACL will typically involve either a disciplinary issue or a ‘consumer dispute’ under the LPA and can be dealt with accordingly.
6. WHO REGULATES THE AUSTRALIAN CONSUMER LAW AS IT APPLIES TO LAWYERS?
The Australian Competition and Consumer Commission (ACCC) and the Queensland Office of Fair Trading (OFT), as marketplace regulators, are responsible for monitoring and enforcing the ACL including receiving and dealing with complaints.36 The LSC is responsible for monitoring and enforcing the professional and service standards of lawyers under the LPA including receiving and dealing with complaints. All of us as regulators have an interest in: – the application of the ACL to the practice of lawyers
– any practical problems faced by lawyers in complying with the ACL
– the extent of compliance by lawyers with the ACL, and
– enforcement of the ACL against lawyers. Importantly, the LSC and the OFT have entered into a memorandum of understanding (MOU) about our respective roles. 37 We have agreed (subject to our respective statutory obligations in relation to privacy and non-disclosure) that: – the OFT will refer any inquiries and complaints about lawyers and the provision of legal services to
the LSC for mediation and / or investigation and enforcement under the LPA as appropriate
– the OFT will share with the LSC any information it obtains about lawyers during OFT investigations and enforcement action
– the LSC will share with the OFT information about any matters which the OFT refers to the LSC for investigation under the LPA and any other matters which arise in the exercise of the LSC’s responsibilities under the LPA which:
o appear to involve a contravention of the ACL and cannot be satisfactorily resolved under the LPA
o appear to raise issues of a ‘test case’ nature about the application of the ACL to lawyers and the provision of legal services, or
o demonstrate systemic conduct by lawyers which appears to contravene the ACL.
36 The Australian Competition and Consumer Commission (ACCC), the Australian Securities and Investment Commission
(ASIC) and the state and territory fair trading agencies entered into a memorandum of understanding (MOU) which sets out how
they work together to administer the ACL: www.consumerlaw.gov.au/content/Content.aspx?doc=the_acl/enforcement.htm
37 The MOU is published on the Commission’s website, under Publications.