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Barry Lane
28 July, 2008  
"Legal work" - a slippery concept

The Law Institute attacks a non-lawyer it falsely claimed was doing legal work. However, as Barry Lane in Melbourne points out, the LIV insists it’s not legal work when a solicitor handles a client’s investment money, and steals the lot


imageFrom the time that former legal secretary and conveyancing clerk Lydia Maric began conducting her own conveyancing business in 2001 she has been advised and assisted by lawyers every inch of the way, if that’s not an oxymoron.

Indeed, she acquired her conveyancing company and business from a firm of solicitors that had incorporated the company and built up the business.

All Ms Maric’s precedents and her company’s computer software had been approved by solicitors.

Before Justice Robert Osborn in the Supreme Court of Victoria, it was Ms Maric’s uncontradicted evidence that in conducting her business she did not purport to act as a solicitor or give legal advice.

She deposed that:

“Her clients were well aware and informed that she is not a solicitor and only operates a conveyancing company. She notified her client in the present case that a legal practitioner was retained to perform legal work in connection with the transaction.”

At the relevant time, namely 2006, Ms Maric could be forgiven for thinking that she was not attempting to storm the good ship SS Lawyers’ Monopoly because the relevant legislation, the Legal Practice Act 1996, actually enacted provisions which, if I’d been a passenger on the Clapham omnibus, I’d have thought exempted her from the heinous crime (punishable by imprisonment for two years) of “engag[ing] in legal practice” without holding a practising certificate.

Predecessors of the Legal Practice Act 1996 used to prohibit, without a PC, the performance of certain things like drawing, filling-up or preparing instruments that created or regulated rights in relation to real or personal property, or undertaking legal proceedings for fee or reward – see s.93 of the Legal Profession Practice Act 1958.

However, with the enactment of the Legal Practice Act 1996 there was a change of heart about the nature of the prohibition – s.314 simply prohibited anyone from “engag(ing) in legal practice” without the necessary ticket.

As Justice Osborn noted from the explanatory memorandum accompanying the legislation:

“The concept of ‘engaging in legal practice’ is used throughout the Bill. This concept is the same as ‘acting or practising as a legal practitioner’ and other similar phrases used in other jurisdictions and is intended to invoke the common law learning on what defines the practice of a lawyer.”

Ah, the genius of the common law.

Although parliament pointedly refrained from defining what “engag(ing) in legal practice” involved, in fact it did so by the back door. It had a bet each way.

It indirectly authorised a “conveyancer”, defined by s.326, to mean a person, other than a lawyer with a practising certificate, to do “conveyancing work” for fee or reward.

“Conveyancing work” was defined to mean “work, other than legal work, carried out in connection with the transfer or conveyance of freehold or leasehold interest in land”.

Finally, “legal work” was defined to mean the “preparation of any document that creates, varies, transfers or extinguishes an interest in land [or the] giving of legal advice”.

Now to the conduct of Ms Maric, which moved the quaintly named Law Institute of Victoria to apply to the Supreme Court for an injunction to restrain her from “engag[ing] in legal practice” without a ticket.

Following a complaint from a country solicitor in September 2004, the institute alleged that in preparing a statement to comply with s.32 of the Sale of Land Act 1962 on behalf of her client Ms Maric was giving legal advice in breach of s.314 of the Legal Practice Act 1996.

A s.32 statement is one where a vendor of real estate is required to detail various bits of information about the property to be sold.

It’s mostly prosaic factual stuff, like particulars of mortgages, planning controls, the services connected to the property, their cost and whether the local council or roads authority has plans to demolish the property or run a four-lane highway past the front door, etc.

Justice Osborn accepted Ms Maric’s evidence, again uncontradicted, that both she and her client prepared the s.32 statement relying on their own knowledge (including information supplied by the client’s son) and from documentary information supplied by a water authority.

Although Osborn also accepted that the preparation of a s.32 statement, which the institute had submitted was the equivalent to the making of a will, might involve the giving of legal advice he dismissed the institute’s application because he was not persuaded that the preparation of such statements would always, or probably always, involve the giving of legal advice.

Notwithstanding that the complaint by the country solicitor had already been referred to the Legal Practice Board (which had the power to prosecute for a breach of s.314 of the Legal Practice Act 1996) and the board had declined to take any action against Ms Maric, the institute appealed Justice Osborn’s decision.

The Court of Appeal unanimously dismissed the institute’s appeal.

The appeal was heard on November 22 last year and judgment delivered on March 19.

By way of footnote, before Justice Osborn gave judgment on October 3, 2006 (he heard the case between November 30, 2005 and September 25, 2006) and well before the Court of Appeal heard the institute’s appeal, a Bill to enact the Conveyancers Act 2006 was read for a second time by the attorney general in the Legislative Assembly on August 10, 2006.

Parliament subsequently enacted the Bill. It received Royal Assent on October 10, 2006 and came into operation on July 1 this year.

By that Act, “conveyancers” could apply for a licence to conduct “conveyancing work”, which was defined to mean:

“Legal work carried out in connection with any transaction that creates, varies, transfers, conveys or extinguishes a legal or equitable interest in any real or personal property … [and] includes legal work involved in preparing any document [such as an agreement, conveyance, transfer, lease or mortgage] that is necessary to give effect to a [conveyancing] transaction … [and] legal work [such as the giving of advice or the preparation, perusal, exchange or registration of documents] that is consequential or ancillary to a [conveyancing] transaction.”

In his second reading speech the attorney general told the house that a recent collapse of a conveyancing company and decisions of the National Competition Council gave rise to the legislation.

I assume all of this would have been well known to the institute while it continued to slug it out with Ms Maric in the Supreme Court.

Whether institute members thought they got value for their dues out of this litigation I don’t know, but if you asked Ms Maric or taxpayers I think they would say they got a raw deal.

* * *

Before leaving the delights and intricacies of “engag[ing] in legal practice” I’d like to mention Vaughan v Legal Service Board, a decision of HH Justice Pagone on June 11.

The facts are relatively straightforward.

On December 12, 2000, a lawyer, Julie Ann Laird, wrote to Mr Vaughan’s accountant, Mr O’Loughlan, informing him that she had an opportunity to place bridging funds for a short period of time.

Mr O’Loughlan passed the letter onto Mr Vaughan, who was then approached directly by Mrs Laird.

Laird wrote to Vaughan telling him that she acted on behalf of a borrower seeking funds on first mortgage security.

It is not apparent from the report how much Vaughan and his mum “invested” with Laird, but soon it became clear that the transaction was a sham and that the lawyer had nicked the lot.

In correspondence with Vaughan, Laird told him that she would prepare all relevant documents and certificates and that the transaction would be carried out “in her business as a solicitor” and that all funds would be negotiated through her trust account.

If those representations gave any comfort to Mr Vaughan that his funds were safe he was sadly mistaken.

In May 2005, Mrs Laird pleaded guilty to embezzling $4.3 million from “clients” and was jailed for seven years with a minimum of three-and-a-half.

Under both the Legal Practice Act 1996 and its successor, the Legal Profession Act 2004, losses to “clients” from transactions such as these, although they clearly result from criminal conduct by a solicitor, are not protected by the “fidelity fund” because they are expressly excluded.

I wonder why?

It’s apparent from HH’s reasons that he had some sympathy for the Vaughans, noting that placing funds with lawyers for investment, particularly those who practice in the country, is a widespread practice because lawyers are regarded by members of the public as trustworthy and competent in the business of investing money.

I suspect there is widespread ignorance in the community of these exclusion provisions and that the trust and confidence in solicitors referred to by Justice Pagone is sometimes misplaced.

Dare I suggest that, under pain of imprisonment, any lawyer soliciting or accepting funds from a “client” like Vaughan include the following warning on all correspondence in relation to such a transaction:

WEALTH HAZARD WARNING

If I act as your agent in a client-lending transaction, it should be understood that if I STEAL or otherwise DISHONESTLY MISAPPROPRIATE your money rather than lend it to a client you will have no claim on the solicitors’ fidelity fund because as far as the law is concerned you are not a “client” and I am not dealing with you as a solicitor.