The NZLS Review Report: time for robust and open debate

The review report titled Regulating Lawyers in Aotearoa New Zealand, Te Pae Whiritahi i te Korowai Rato Ture o Aotearoa represents a watershed moment for the legal profession.

It foreshadows the loss of self-regulation, which the profession fought hard to retain before the 2006 reform was enacted. The momentum this is likely to achieve within and outside of the legal profession makes loss of self-regulation almost inevitable. But it need not. It is a change that ought to give lawyers pause for considerable thought. In this piece, I discuss certain important aspects of the review only, space being too limited for comprehensive comment.

It was inevitable from the terms of reference and the proposals floated by the reviewers last year that the commissioning of this report was an act of self-immolation by the New Zealand Law Society (NZLS). The recommendation to end self-regulation was an inevitable result if one took a casual glance at the backgrounds of the review panel members.

My comments are informed by experience with law society governance, as a former Waikato BOP District President and former New Zealand Vice President and board member at, and following, the time of the last reform. I have also acted as an NZLS prosecutor and as intervening counsel for the NZLS; I now act for many lawyers before the Disciplinary Tribunal and the High Court, and before Standards Committees and the LCRO. I see how the regulatory system works up close. It has faults, but it also has a lot going for it. The review report lacks balance in my opinion and it fails to count the cost of a loss of self-regulation, both to lawyers and the public.

A rising tide of dissatisfaction?

There is no doubt the complaints service has problems. It is not alone. Try making a complaint to the Health and Disability Commission, previously chaired by one of the report writers. The law society’s complaints service in my experience is more responsive to public complaints than many ‘independent’ regulators.

Complainants and lawyers are written to, assisted and engaged by staff and actively included in the process. More trained staff and a power to weed out trivial, meritless or pointless complaints will help: such a power may not be perceived to be “consumer-friendly” but it will get rid of time-wasting complaints that should not make their way to standards committees.

Consumers’ perceptions of lawyers looking after their own were rejected by the authors, and rightly so. Yet, incoherently, the authors conclude that consumer perception was enough to constitute a “fundamental flaw” requiring change (p 152).

The authors would appear to agree with philosopher Francis Bradley: “And reality without appearance would be nothing, for there is nothing outside appearances.” (Francis Bradley Appearance and Reality, George Allen and Unwin Ltd, London, 1893).

Standards committees in my experience hold lawyers’ feet to the fire when it comes to regulatory compliance. They bring to their functions independence, considerable pooled experience, analytical power and good judgment. I reject the proposal that another deliberative body would do a better job. Voluntary service on such committees increases the depth of knowledge and experience available to the regulator. Standards committees should be preserved rather than cast aside in favour of employed specialists, who will have to function and be accountable within a bureaucratic hierarchy (the type that Sir Bob Jones has described as ‘box tickers’).

The report’s authors observe a lack of diversity on the committees. I agree this ought to be addressed because other cultural perspectives can and ought to add to the committees’ pool of experience and wisdom. The solution is to actively recruit a broader range of competent members.

Continued on page 08

Continued from page 07

The staff of NZLS and committee members require to be lifted up, rather than crushed by facing another massive restructuring. As the authors of the report observe, the success of the law society has, over many decades, benefited from a team of highly professional and dedicated staff. Its executive leadership is committed to ensuring NZLS operates as a modern, responsive regulator (p 46 of the report): in my experience, this commitment is long-standing and has not been sufficiently recognised by the profession. There is an incoherence in the report’s recommendations which, on the one hand, recognise this quality of leadership and staffing, yet also recommend they be dismissed from their regulatory role.

The report’s authors say about their recommended new model (p 77):

“Under this model staff are appointed with skills in complaints resolution and adjudication, and many also have legal qualifications and backgrounds. The complaints body would seek external advice from lawyers on professional standards and technical matters as required. A similar model operates effectively with the independent, lay Health and Disability Commissioner in New Zealand, handling complaints against health professionals and seeking expert advice when necessary.”

But in 2021 it was reported that the percentage of complaints investigated by the Health and Disability Commission dropped from 40% in 2001 to 4% in 2019 (The NZ Herald, 15 December 2021).

This year, a woman whose father spent his last days in an aged care facility said communication with the Office of the Health and Disability Commissioner was confusing, slow and arduous (RNZ, 12 March 2023). This is the model being offered to us by Professor Ron Paterson, a former Health and Disability Commissioner and author of the 2009 review of the Health and Disability Commissioner Act and Code of Rights (a report which recommended “recognition of the Treaty of Waitangi in all roles, functions and activities of HDC” and recognition of the Treaty of Waitangi in the code, see report to the Minister of Health, June 2009 at p 43).

Regulatory and representative functions – a conflict or not?

The case for separating the regulatory from representative functions has not been made out in the report.

NZLS is not a union. It may appear to be so doctrinally, or at the surface, but where is the evidence that the NZLS’ performance of certain representative functions is doing any harm?

I can see no evidence in the report that the regulatory functions have been compromised by the advocacy functions of the NZLS; often they are complementary (such as law reform submissions to government, CLE and law libraries). The NZLS branches promote collegiality, which in turn enhances professional compliance. Those who want a more racy representative body or something different have plenty of other options. Moreover, membership is voluntary and free.

The proposal to separate the functions is more about finding an excuse for wresting the regulatory function away from the control of the legal profession. A new ‘independent’ regulator will be unrepresentative of, and unaccountable to, the profession.

Counting the cost

A new state regulator will likely be more bureaucratic and costly to administer. No financial modelling is given by the authors of the report. No future costings are given against historic and current costs. The report mentions alleged “systematic underfunding” (pp 53 and 54) but even if there has been a recent trend to underfund the complaints service, it has not always been so and it need not continue. Capable leadership can solve this problem.

When I was District President, the district law society ran a year-on-year surplus from which it drew when major complaints and inquiries emerged. There was a major inquiry in my first year, so we increased the levy later that year. Contrary to what the authors opine about law society politics, I got re-elected

Continued on page 09

Continued from page 08 notwithstanding an annual levy increase. This was because members were effectively communicated with, and they could see the funds were wisely and necessarily spent and that worse troubles were being averted. This issue is about sound management, not the governance structure per se

As noted in the case of the Health and Disability Commission, other ‘independent’ regulators in New Zealand and abroad are afflicted by escalating costs and inefficiencies. Public sector bureaucracies are hard to cost-control, particularly when they have political causes to promote (it is naive to think any regulator is insulated from political pressures, however notionally independent it may be). Levies on a captive profession by a new regulator may make the current moaners’ eyes water.

Legal Complaints Review Officer

The Legal Complaints Review Officer should be retained. I have not been happy with some decisions from this officer in cases in which I have appeared for clients, but on the other hand I observe some very good work has been done by the review officer.

The review officer plays a very important role by bringing independence and objectivity to matters where standards committees may have become blinkered or applied rules too rigidly. The review officer needs to be properly funded and recruitment needs to be improved, without meaning any criticism of the current LCRO and delegates. A lot of contested matters are resolved by the review officer that otherwise might find their way into another forum, particularly the High Court on judicial review. Squeezing that work out of the review office and into the High Court would not be a welcome addition to that court’s workload.

The power of summary suspension

The authors report:

“Our discussions with Law Society staff highlighted that, even in instances where a lawyer has been convicted of fraud or become bankrupt, the Law Society has no power to act promptly to protect the public. As with all cases the Law Society must either initiate disciplinary proceedings and apply for a suspension or wait until the lawyer seeks to renew their practising certificate.”

NZLS and before it district law societies have been able to access the High Court’s inherent jurisdiction to suspend lawyers where the circumstances warrant it (see this jurisdiction discussed in New Zealand Law Society v Deliu [2014] NZHC 2467; [2015] 2 NZLR 224). This jurisdiction is mentioned only briefly in a footnote in the report (footnote 275 on p 144). The above passage conveys an alarmist and misleading impression, of which the report’s authors appear to be unaware.

It is not correct that the law society has no power to act promptly to protect the public where necessary. Had the report authors conferred more extensively with those involved in past governance of law societies, they would have learned that resort to the High Court’s jurisdiction has occurred from time to time to address this very problem.

Swift steps to suspend such practitioners by applying to the High Court can be taken. It is not a complicated or timeconsuming procedure. My district council took proceedings to suspend a number of solicitors over a week when I first assumed office as a District President 20 years ago.

While it was a distressing thing to have to do, and it needed careful handling, the public was protected from further fraudulent dealings, trust accounts were frozen and documents seized (the process was accompanied by search warrants issued by a High Court judge: I was present with an NZLS inspector when these were executed). I was relieved that a High Court judge had the last say. This should not change. The tribunal is accessible when charges are laid and there is less urgency; the High Court can be resorted to if the regulator thinks suspension from practice is an urgent necessity.

The regulator should not have summary powers to suspend practising certificates. Having to make a case to an independent judicial authority lends discipline and restraint to the use of this draconian power which when exercised can be life- and careerdestroying. The need for resort to such a power is, and should, remain relatively rare.

Te Tiriti o Waitangi as a legal lodestone

I have previously written about incorporation of te Tiriti o Waitangi into our regulatory legislation (in LawNews issue 43, 2022): I will not repeat those arguments here. The authors recommend as follows (p 9):

“A new statute for the regulation of lawyers should include a stand-alone, overarching Te Tiriti clause: ‘All persons exercising powers and performing functions and duties under this Act must give effect to the principles of Te Tiriti o Waitangi.’ This will signal the importance of Te Tiriti to New Zealand’s constitution and legal system and guide how the regulator engages with the profession and the public and fulfils its functions.”

We should also ask what the regulator embracing tikanga as the

Continued on page 21