> LEGAL PROFESSION ACT 2004

> LEGAL PROFESSION ACT 2004

Welcome... to the Legal Profession Act 2004 The fast-approaching new financial year heralds the arrival of the new Legal Profession Act 2004 and with it a raft of changes to the way Victorian lawyers are defined, regulated and expected to manage their affairs. The new Act, which at the time of writing was expected to come into effect in early July, replaces the Legal Practice Act 1996. The Attorney-General is to be congratulated for this initiative, which follows an exhaustive process of review and extensive consultation which began with Crown Counsel Peter Sallmann s report into the regulation of the legal profession in 1999. The major reforms under the new Act introduce a changed regulatory system for lawyers and pave the way towards a unified, national profession. A significant development will be the provision for local practising certificates to be valid in jurisdictions across Australia, easing the administrative burden for solicitors practising across state and territory borders. However, the new Act has important implications for all areas of practice, including: regulation via the new Legal Services Board and Legal Services Commissioner; trust money; costs agreements; fidelity cover; incorporated legal practice; multi-disciplinary partnerships; practising certificates; and changes in terminology. Members are strongly encouraged to familiarise themselves with the new Act and it is with this end in mind that the Law Institute of Victoria (LIV) has developed this booklet. Goodbye Legal Practice Act 1996 Hello Legal Profession Act 2004 focuses on the key changes in the new Act, using a question and answer format. To ensure that all member queries are addressed, the LIV has also created an interactive section of its website at www.liv.asn.au/regulation/arf, complete with updates and the capacity for members to post questions (which will be answered by LIV staff). PDF versions of this booklet can be downloaded from the site. Members can also have their queries answered by contacting the LIV s dedicated Legal Profession Act call line on ph (03) 9607 9423. In addition, the LIV will keep members up-to-date via publications including the LIJ (Law Institute Journal), Friday Facts, briefings at suburban and regional law associations and workshops. Victoria Strong LIV PRESIDENT

Contents Introductory terms and definitions 2 The new Legal Services Board 3 The new Legal Services Commissioner 4 Who can undertake legal work? 5 Practising certificates 6 Incorporated legal practice and multi-disciplinary partnerships 8 Community legal centres 10 Practice rules 11 Trust money, trust accounts and investigations 12 Costs agreements 14 Fidelity cover 16 Complaints and discipline 17 External intervention receivers and others 19

Introductory terms and definitions (Chapter 1 - Part 1.2) With the move towards a national legal profession, many of the terms used to describe legal practitioners and legal practice have changed in the new Act. 1. Q. What is an Australian legal practitioner? A. An Australian legal practitioner is a lawyer who holds a current local practising certificate or a current interstate practising certificate. (s1.2.1) 2. Q. What is an Australian lawyer? A. An Australian lawyer is a person who is admitted to practice but does not hold a practising certificate. (s1.2.1) 5. Q. What is the home jurisdiction for an Australian legal practitioner? A. The home jurisdiction for an Australian legal practitioner is the jurisdiction in which the practitioner's only or most recent current Australian practising certificate was granted. (s1.2.1) 6. Q. What is a law practice? A. A law practice is a sole practice, a firm, a multi-disciplinary partnership, an incorporated legal practice or a community legal centre. (s1.2.1) 3. Q. What is an interstate legal practitioner? A. An interstate legal practitioner is an Australian lawyer who holds a current interstate practising certificate but not a local practising certificate. (s1.2.1) 4. Q. What is a local legal practitioner? A. A local legal practitioner is an Australian lawyer who holds a current local practising certificate. (s1.2.1) 2 www.liv.asn.au/regulation/arf/

The new Legal Services Board (Chapter 6 - Part 2) Under the new Act, the Legal Services Board (LSB) replaces the Legal Practice Board (LPB) and will undertake those roles previously performed by the LPB as well as general regulation of the profession. The new LSB will be the peak regulatory body for Victorian lawyers. 1. Q. What is the Legal Services Board? A. The Legal Services Board will be the peak regulatory body under the new Act. (s6.2.3) 3. Q. How will the Legal Services Board be constituted? A. The Legal Services Board will have a chairperson who is an eminent person who may or may not be a lawyer, a judge or a retired judge. The rest of the LSB will consist of three elected representatives and three members appointed by the Attorney-General. (s6.2.5) 4. Q. Does the Legal Services Board have the power to delegate its functions? A. Yes, it may delegate most of its functions. Exceptions are set out in the Act. (s6.2.19) 2. Q. What functions will the Legal Services Board undertake? A. The Legal Services Board will be responsible for the administration of the funding for the regulatory system, policy setting and all nondisciplinary functions in the system including approval of practice rules, trust account administration and claims against the Fidelity Fund. (s6.2.3) www.liv.asn.au/regulation/arf/ 3

The new Legal Services Commissioner (Chapter 6 - Part 3) The role of Legal Services Commissioner (LSC) is a new position primarily responsible for the investigation and prosecution of complaints and the resolution of disputes against solicitors and barristers. The LSC is also the Chief Executive Officer of the Legal Services Board. 1. Q. What are the main functions of the Legal Services Commissioner? A. The main functions of the Legal Services Commissioner are to: be responsible for the administration of the Legal Services Board as its Chief Executive Officer (s6.3.4); and receive and deal with complaints against Australian legal practitioners and disputes between Australian legal practitioners and clients. (s6.3.2) 2. Q. Does the Legal Services Commissioner have power to delegate its functions? A. Yes, the Legal Services Commissioner may delegate most of its functions to prescribed persons or bodies. Exceptions are set out in the Act. (s6.3.12) 3. Q. In particular, can the Legal Services Commissioner delegate its disciplinary, investigatory or prosecutor's role? A. No, the Legal Services Commissioner may not delegate these roles but may refer an individual disciplinary complaint to a prescribed investigatory body (including the Law Institute of Victoria or the Victorian Bar) for investigation. (s6.3.12 and s4.4.9) 4. Q. Who can dismiss or make a finding against a legal practitioner following an investigation? A. Only the Legal Services Commissioner may dismiss a complaint or make a finding against a practitioner. (s4.4.13) 5. Q. Can the Legal Services Board override the Legal Services Commissioner in regard to the conduct of complaints investigations? A. No, the Legal Services Board has no role in the investigation and prosecution of complaints. 6. Q. What has happened to the role of the Office of the Legal Ombudsman? A. The office will cease to exist from the commencement date of the new Act, with its powers distributed between the Legal Services Board and Legal Services Commissioner. 4 www.liv.asn.au/regulation/arf/

Who can undertake legal work? (Chapter 2 - Part 2) The provisions relating to who can undertake legal work are generally consistent with the old Act save for the inclusion of the ability to share receipts from practice with non-qualified persons in incorporated legal practices and multi-disciplinary partnerships. (See page 8.) 3. Q. Does the new Act define what constitutes legal practice? A. No. The common law definition continues to apply in Victoria. 1. Q. Does the new Act ban unqualified persons from engaging in legal practice? A. Yes, the new Act prohibits unqualified persons from engaging in legal practice and persons advertising or representing that they are entitled to engage in legal practice. (ss2.2.2 and 2.2.3) 2. Q. Can an Australian legal practitioner share income with unqualified persons? A. Not unless the unqualified person is a director or shareholder of an incorporated legal practice or a partner of a multi-disciplinary partnership. Other exceptions, including family members and retired partners, are set out in the new Act. (s2.2.9) www.liv.asn.au/regulation/arf/ 5

Practising certificates (Chapter 2 - Part 4) The procedure for the obtaining and renewing of practising certificates for the year 2005-2006 will be the same as in previous years in that it will be handled by the Law Institute of Victoria. The issuing or renewing of subsequent practising certificates will become the responsibility of the Legal Services Board. This role may be delegated back to the Law Institute of Victoria in the future but is yet undetermined. 1. Q. Who will issue practising certificates? A. The Legal Services Board will have power to grant practising certificates but this power may be delegated to the professional associations. (s2.4.3 and s6.2.19) 2. Q. Who can apply for a Victorian practising certificate? A. An Australian lawyer is eligible to apply for a Victorian practising certificate if: their principal place of residence in Australia is in Victoria; or they reasonably expect to engage in legal practice principally in Victoria during the currency of the certificate for which they have applied; or they do not have a place of residence in Australia. (s2.4.8) In addition, an Australian lawyer who is also an Australian legal practitioner is eligible to apply for a Victorian practising certificate if: the jurisdiction in which they principally engage in legal practice is Victoria; or they hold a current local practising certificate and engage in legal practice in another jurisdiction under a temporary arrangement. (s2.4.8) 3. Q. What are the different practising certificates? A. Practising certificates remain essentially the same, except that there will be a new type of practising certificate for volunteers at community legal centres, and there will no longer be an incorporated practising certificate. There will still be incorporated practices, but they will not be required to hold a practising certificate in the name of the corporation. The types of practising certificates are: principal (with or without authorisation to hold trust money) employee corporate volunteer for community legal centres. (s2.4.3) 6 www.liv.asn.au/regulation/arf/

4. Q. What are the new requirements for newly admitted practitioners? A. All practitioners who take out their first practising certificate after the commencement of the Act will be subject to a supervised practice requirement, regardless of when they were admitted to practice. The periods of supervision are: 18 months for practitioners who gain admission through articles of clerkship; and 24 months for practitioners who gain admission through an approved Practical Legal Training course. Supervised practice requires the practitioner to work under the supervision of another legal practitioner for the specified period. Practitioners may hold a principal practising certificate as a partner during this time as long as they are supervised by a co-partner who holds an Australian practising certificate. (s2.4.18) Practitioners cannot practise as a sole practitioner until they have completed the appropriate period of supervision. 5. Q. Do I still have to make Fidelity Fund contributions? A. Yes, the Legal Services Board will manage the Fidelity Fund and Fidelity Fund contributions will continue to be made at the time of renewal of a practising certificate. (s2.4.9) www.liv.asn.au/regulation/arf/ 7

Incorporated legal practice and multi-disciplinary partnerships (Chapter 2 - Part 7) The introduction of incorporated legal practice and multidisciplinary partnerships in the new Act is a significant change enabling practitioners to share income with unqualified persons. 1. Q. What is an incorporated legal practice? A. An incorporated legal practice is a corporation that is permitted to engage in legal practice and may also provide non-legal services. (s2.7.4) 2. Q. Does a previously incorporated legal practice continue to be an incorporated legal practice under the new Act? A. Yes, the transitional provisions enable an incorporated legal practice incorporated prior to the commencement day to be an incorporated legal practice under the new Act. (Sch 2 cl 2.4) 3. Q. Who can be a director of an incorporated legal practice? A. An incorporated legal practice must have at least one legal practitioner director. Otherwise, any person can be a director. (s2.7.10) 4. Q. Who conducts legal work on behalf of the incorporated legal practice? A. The legal practitioner director is responsible for the provision of legal services. (s2.7.10) 5. Q. Can an incorporated legal practice practise without a legal practitioner director? A. An incorporated legal practice cannot be without a legal practitioner director for more than seven days. If the legal practitioner director resigns, then he/she must be replaced within seven days or the incorporated legal practice must cease to provide legal services. (s2.7.12) 6. Q. Who may share income from the provision of legal services in an incorporated legal practice? A. Income may be shared between legal practitioner directors and non-legal practitioner directors and shareholders of an incorporated legal practice. (s2.7.20) 7. Q. What is a multi-disciplinary partnership? A. A multi-disciplinary partnership is a partnership between one or more legal practitioners and one or more persons who are not legal practitioners. (s2.7.36) 8 www.liv.asn.au/regulation/arf/

8. Q. Who is responsible for the provision of legal services in a multi-disciplinary partnership? A. Legal practitioner partners are responsible for the provision of legal services and for any Australian legal practitioners employed. (s2.7.39) 9. Q. Who may share income from the provision of legal work in a multi-disciplinary partnership? A. Income may be shared between legal practitioner partners and nonlegal practitioner partners. (s2.7.48) www.liv.asn.au/regulation/arf/ 9

Community legal centres (Chapter 2 - Part 9) The new Act addresses much of the uncertainty as to who should be responsible for the undertaking of legal work in community legal centres and the type of practising certificate required for such work. 1. Q. Who is responsible for the provision of legal services in a community legal centre (CLC)? A. The new Act clarifies confusion as to who is responsible for the management of CLCs. Each CLC must employ one or more supervising legal practitioners to be responsible for the provision of legal services. (s2.9.2) 4. Q. What type of practising certificate must a volunteer practitioner at a CLC hold? A. Either a principal or employee or a volunteer practising certificate. 5. Q. Is the category of volunteer practising certificate a new category? A. Yes. 2. Q. What type of practising certificate must a supervising legal practitioner hold? A. The supervising legal practitioner must hold a principal practising certificate. (s2.9.2) 3. Q. What type of practising certificate must an employee practitioner of a CLC hold? A. Practitioners employed by CLCs must have either an employee or a principal practising certificate. 10 www.liv.asn.au/regulation/arf/

Practice rules (Chapter 3 - Part 2) Under the new Act, the professional associations (the Law Institute of Victoria and the Victorian Bar) retain their power to make rules for engaging in legal practice, subject to the powers of the Legal Services Board. 1. Q. Who may make rules relating to legal practice in Victoria under the new Act? A. The professional associations (the Law Institute of Victoria for solicitors and the Victorian Bar for barristers). The Legal Services Board may also make rules relating to legal practice. (s3.2.9) 2. Q. If there is any inconsistency between rules made by the Legal Services Board and those made by the professional association/s, which rules prevail? A. The rules of the Legal Services Board prevail. (s3.2.9) 3. Q. What happens to the existing rules under the new Act? A. The transitional provisions provide for the current rules to continue as rules under the new Act until new rules are made. (Sch 2 cl 2.5) www.liv.asn.au/regulation/arf/ 11

Trust money, trust accounts and investigations (Chapter 3 - Part 3) While the majority of the powers and procedures in regard to the regulation of trust money remain the same, there is some new terminology. The responsibility of maintaining a client's trust when holding client money is reinforced in the new Act. 1. Q. What constitutes trust money under the new Act? A. Trust money means money received in the course of or in connection with the provision of legal services by the law practice for and on behalf of another person and specifically includes: money received on account of legal costs in advance of providing services; transit money; money controlled by a law practice pursuant to a power to deal with money for and on behalf of another person that is exercisable alone or with others; and controlled money a new term describing trust money received by a law practice with a written direction to deposit the money in an approved deposit-taking institution (ADI) account. This is an account other than the general trust account and over which the practice has exclusive control. (s3.3.2) 2. Q. What is not trust money? A. Trust money excludes money that is left for investment purposes, subject to specified exceptions. (s3.3.2(1)) 3. Q. In the event of a dispute, who determines whether money is or is not trust money? A. The Legal Services Board. (s3.3.4) 4. Q. Do additional records need to be kept for controlled money? A. Yes, transactions must be recorded in a controlled money register. In addition: money kept in a controlled money account is to be received with a written direction for its deposit into, or withdrawal from, the account; a single receipt system, separate from trust receipts for the general trust account, is required for controlled money; and a list of controlled money is required as part of the monthly reconciliation of trust money. (s3.3.15) 5. Q. What happens to the existing Trust Account Practice Rules? A. The existing rules will continue to apply until further official notice. 12 www.liv.asn.au/regulation/arf/

6. Q. Is it necessary for practitioners to change their trust account bank? A. No, arrangements in place immediately before the commencement of the new Act continue to apply after that date. (Sch 2 cl 4.1) 7. Q. Is there any change to the trust account opening notification requirements? A. No, within 14 days after establishing a trust account a law practice must notify the Legal Services Board of the number of the account and the name and address of the branch of the ADI at which the account is maintained. (Sch 2 cl 4.1) 8. Q. Do I have to reappoint my auditor? A. No, but auditors will now be known as external examiners. (Sch 2 cl 4.3) 9. Q. Are there any changes to the requirement to lodge a trust account audit report? A. No, a law practice must lodge with the Legal Services Board by 28 February each year a report of the examination of its records for the audit year ending on the previous 31 October. 11.Q. Will the annual Statement of Trust Moneys change and when will I get a copy? A. Yes, changes to reflect the new Act will be made and advice provided to legal practitioners prior to the audit year ending 31 October 2005. 12.Q. Is there any change to the offence of having a deficiency in a trust account? A. Yes, there has been a clarification of the existing position. The former provision may not have covered a situation where a practitioner was obliged to, but did not, place the money into trust or pay as directed. It was arguable that there was no deficiency in any trust account where the money was not actually deposited into the trust account. The new provision provides that there can be a deficiency in the trust account notwithstanding that the relevant money was not deposited into the trust account or paid as directed. (s3.3.21) www.liv.asn.au/regulation/arf/ 13

Costs agreements (Chapter 3 - Part 4) A stricter regime now surrounds the area of costs. In addition, the Taxing Master assumes greater powers. 1. Q. Are practitioners still required to provide an estimate of costs and other information to clients? A. Yes, and the consequences for failure to do so are more severe, including the right of the client not to pay costs. Also, the costs agreement may be set aside if the practitioner fails to provide the information. (s3.4.17) 2. Q. Can practitioners enter conditional costs agreements? A. Yes, a costs agreement may be conditional upon a successful outcome in any matter except criminal or family law matters. (s3.4.27) 3. Q. Are there any additional requirements or issues? A. Yes, in a conditional costs agreement the client must be informed that he/she has a right to independent legal advice before entering into the agreement and there is a 5 day cooling off period. (s3.4.27) 4. Q. Can practitioners charge uplift fees in conditional costs agreements? A. Yes, practitioners can uplift fees up to 25 per cent in litigation matters but no uplift is allowed on unpaid disbursements. Practitioners are not limited to 25 per cent in nonlitigious matters as long as the uplift is reasonable. (s3.4.28) 5. Q. What if a client believes a conditional costs agreement is not fair, just or reasonable? A. It can be set aside on application by the client to the Victorian Civil and Administrative Tribunal (VCAT). (s3.4.32) 6. Q. When can proceedings to recover costs be commenced? A. Proceedings to recover costs cannot be commenced until at least 65 days after a bill has been provided to the client. Currently it is 30 days. 7. Q. What if an itemised bill has been requested following the issue of a lump sum bill? A. If a lump sum bill was provided and the client requests an itemised bill, proceedings to recover costs cannot be commenced until at least 35 days after the itemised bill has been provided, notwithstanding 65 days has not run. (s3.4.36) 14 www.liv.asn.au/regulation/arf/

8. Q. What advice must be given to clients as to the avenues open to them regarding costs disputes? A. (a) A law practice must disclose certain information (s3.4.9) before or as soon as practicable after being retained in a matter. (s3.4.11) (b) The bill must include a statement setting out the avenues of recourse, including the right to complain to the Legal Services Commissioner. (s3.4.35) 9. Q. Can clients apply to the Taxing Master? A. A client and specified third persons may apply to the Taxing Master for a review of the whole or any part of a bill. (s3.4.38) 10.Q. What if an application is out of time? A. Previously the Supreme Court would deal with applications, but under the new Act the Taxing Master will deal with them. (s3.4.38) 11.Q. What if the Taxing Master considers the costs grossly excessive? A. The Taxing Master must refer the matter to the Legal Services Commissioner for investigation. (s3.4.46) www.liv.asn.au/regulation/arf/ 15

Fidelity cover (Chapter 3 - Part 6) The new Act aims to clarify what claims can be made against the Fidelity Fund and introduces procedural changes. 1. Q. Has there been any change to the circumstances that give rise to an exclusion of a claim by a client against the Fidelity Fund? A. Yes, trust money held by a legal practitioner for the purpose of investment is excluded from coverage where default occurs with money held in connection with: a financial service provided where the practitioner is required to hold an Australian financial services licence; money or property entrusted to or held by the practitioner in connection with a managed investment or mortgage finance. An exception is unless the money or property was held by the practice in the ordinary course of legal practice and primarily in connection with the provision of legal services. (s3.6.6) 2. Q. What gives rise to a claim against the Fidelity Fund? A. Under the old Act, a claim was triggered by a defalcation. It is now triggered by what is described as a default, which is a dishonest failure to pay or deliver or fraudulent dealing with trust property. (s3.6.1) On its face, this is merely a change in terminology. 3. Q. When does the default provision commence? A. Any default after the commencement day of the new Act and any default prior to that day in respect of which a claim has not been made under the old Act. (Sch 2 cl 5.3) 4. Q. Can the Legal Services Board reduce a claim? A. Yes, where the claimant has contributed to the loss. (s3.6.14(1)) 5. Q. Is interest still payable on a successful claim? A. Yes, but only from the date the claim is made not from the date of the default. (s3.6.17) 16 www.liv.asn.au/regulation/arf/

Complaints and discipline (Chapter 4 - Parts 2, 3 and 4) There have been significant changes to the complaints and discipline process with authority vesting with the newly created position of Legal Services Commissioner. 1. Q. Where are complaints lodged? A. All complaints, including civil disputes, are to be lodged with the Legal Services Commissioner. (s4.2.5) 2. Q. What constitutes a civil dispute? A. Civil disputes are the same as under the old Act. They include cost disputes, pecuniary loss or any other genuine dispute. (s4.2.2) 3. Q. Who can resolve a civil dispute? A. The Legal Services Commissioner may attempt to resolve a dispute. Part of the process may be to refer disputes for mediation. If the attempt to resolve the dispute is unsuccessful the parties will be advised that they have the right to lodge the dispute with the Victorian Civil and Administrative Tribunal (VCAT) for determination. (s4.3.5) 4. Q. Why VCAT? A. The Legal Profession Tribunal now forms a division of VCAT. (Sch 2 cl 8.2) 5. Q. Is the jurisdiction for disputes still $15,000? A. No, the jurisdiction for disputes has been increased to $25,000. (s4.2.2) 6. Q. What else constitutes a complaint? A. Misconduct or unsatisfactory conduct is the basis of other complaints. 7. Q. Has there been a change to the definition of misconduct? A. The primary definition of misconduct is essentially the same as under the old Act and includes: continued or substantial unsatisfactory conduct (s4.4.3); not being a fit and proper person (s4.4.3); contravention of the Act, regulations and rules (s4.4.4); excessive costs (s4.4.4). The expanded definition of misconduct also includes: being guilty of a serious offence (s4.4.4); being guilty of a tax offence (s4.4.4); being guilty of an offence involving dishonesty (s4.4.4); being insolvent (s4.4.4); being a practitioner who is disqualified from being involved in the management of any corporation under the Corporations Act (s4.4.4); www.liv.asn.au/regulation/arf/ 17

Complaints and discipline failure to comply with the conditions of your practising certificate (s4.4.6); failure to comply with an undertaking to a court, tribunal or Commissioner (s4.4.6). 8. Q. Has there been a change in the definition of unsatisfactory conduct? A. The definition is basically the same. However, it now includes: conduct which falls short of the standard of competence and diligence expected by a member of the public (s4.4.2); contravention of the Act, regulations or rules (s4.4.4); excessive costs (s4.4.4). The definition also includes: being guilty of a serious offence (s4.4.4); being guilty of a tax offence (s4.4.4); being guilty of an offence involving dishonesty (s4.4.4); being insolvent (s4.4.4); being a practitioner who is disqualified from being involved in the management of any corporation under the Corporations Act (s4.4.4); failure to comply with the conditions of your practising certificate (s4.4.5). 9. Q. What happens after an investigation into a conduct matter has been completed? A. Only the Legal Services Commissioner can deal with the matter. 10. Q. What can the Legal Services Commissioner decide? A. 1. If the Commissioner is satisfied that there is a reasonable likelihood that VCAT would find the practitioner guilty of professional misconduct, then the Commissioner must charge the practitioner before VCAT. (s4.4.13) 2. If the Commissioner is satisfied that there is a reasonable likelihood that VCAT would find the practitioner guilty of unsatisfactory professional conduct, the Commissioner may: (a) apply to VCAT for an order in respect of the practitioner; or (b) with the consent of the practitioner, reprimand or caution the practitioner; or (c) take no further action against the practitioner if satisfied that: (i) the practitioner is generally competent and diligent; and (ii) there has been no substantiated complaint, other than the complaint that led to the investigation, about the conduct of the practitioner within the last five years. (s4.4.13) 18 www.liv.asn.au/regulation/arf/

External intervention - receivers and others (Chapter 5) Under the new Act, the power to appoint external interveners now vests with the Legal Services Board rather than the Law Institute of Victoria. The new Act also creates the role of supervisor. 1. Q. What is external intervention? A. External intervention is the appointment of a person to oversee the trust account and the law practice. 2. Q. What levels of external intervention are there? A. The new Act provides for three levels of intervention, increasing in seriousness from supervisor (s5.3.1) to manager (s5.4.1) to receiver (s5.5.1). 3. Q. Who can be an external intervener? A. An appointee as a supervisor or a receiver must be either: an Australian legal practitioner who holds a practising certificate as a principal authorising the receipt of trust money; or a person holding accounting qualifications with experience in law practice trust accounts. (ss5.3.1(3) and 5.5.1(5)) An appointee as a manager can only be an Australian legal practitioner who holds a practising certificate as a principal authorising the receipt of trust money. (s5.4.1(3)) 4. Q. What is the role of a supervisor? A. Supervision is the least invasive form of intervention. Although a supervisor of trust money has all the powers and duties of the law practice in relation to trust money, including powers to receive trust money and to open and close trust accounts, the supervisor otherwise does not have any role in the management of the affairs of the practice. (s5.3.4) 5. Q. What is the role of a manager? A. A manager for a law practice can do all things that the practice or a legal practitioner associate of the practice might lawfully have done. (s5.4.4) 6. Q. What is the role of a receiver? A. The role of a receiver is to take control of the trust property of the practice and wind-up and terminate the affairs of the practice. (s5.5.4(1)) The new Act provides that the order appointing the receiver can www.liv.asn.au/regulation/arf/ 19

External intervention - receivers and others authorise the receiver to carry on the legal practice. (s5.5.4(2)) 7. Q. Who can appoint an external intervener? A. The Legal Services Board can make the determination to appoint a supervisor or a manager and can make a determination to apply to the Supreme Court for the appointment of a receiver. (s5.2.2) 8. Q. Can the appointment of an external intervener be appealed? A. Yes, unlike the old Act, the new Act provides for an appeal against the appointment of an external intervener. The practice or a member of the law practice affected, or any other person whose interest may be adversely affected by the appointment, can appeal against the appointment. (s5.6.4(1)) The appeal must be lodged within seven days of the service of a notice of appointment. In relation to a supervisor or manager, the appeal is to the Supreme Court and in relation to the appointment of a receiver, the appeal is to the Court of Appeal. (ss5.6.4(2) and (3)) 9. Q. When will the appointment of an external intervener be made? A. The new Act provides for two general situations where the appointment of an external intervener is warranted: where the practitioner is unable to attend the practice either voluntarily or involuntarily. where there has been a serious failure to comply with the Act or regulations in relation to the receipt, maintenance or disbursement of trust money or other trust property. The new Act has also added a more general catch all provision, allowing the Legal Services Board to appoint or seek the appointment of an external intervener where any other proper cause exists in relation to the practice. (s5.2.1) 10. Q. When is external intervention terminated? A. External intervention lasts for the term provided for in the instrument of appointment or is otherwise terminated under the Act. (ss5.3.7, 5.4.8 and 5.5.17) 20 www.liv.asn.au/regulation/arf/

Many of the rules governing legal practice in Victoria will change due to the introduction of the Legal Profession Act 2004. This booklet Goodbye Legal Practice Act 1996 Hello Legal Profession Act 2004 is one of the ways in which the LIV is working to inform members of the changes the new Act will bring to the legal landscape in Victoria. See inside for your short introductory guide and information on other ways LIV members can keep up-to-date with this important new Act. A Law Institute of Victoria Ltd publication 470 Bourke Street, Melbourne, Victoria 3000 Ph (03) 9607 9423 www.liv.asn.au/regulation/arf/ Copyright 2005 Law Institute of Victoria