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The NZLS Review Report: time for robust and open debate

16 Mar 2023

| Author: Warren Pyke

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.

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 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 time- consuming 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 career-destroying. 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 “first law” actually means (report p 83), particularly in the context of a proposal to enact an “overarching Te Tiriti clause”.

By “overarching” one can infer the authors mean this clause will trump other powers and fundamental principles (including the duty to promote the rule of law and the administration of justice?). Is this notion premised on Ma Te Ture te Ture e Patu (only the law can defeat the law)? If it is, will it work? And does the profession want it to work in this way?

As the minority in Ellis pointed out (see my article in LawNews issue 36, 2022), enfolding tikanga into new areas of law must be carefully and sensitively managed. All law must be coherent, understandable and accessible to everyone, not just a minority (here, a minority of a minority). These principles are central to the rule of law in an open society.

Will aspirational statements achieve meaningful change for Māori lawyers and Māori clients? Based on past experience, I doubt it. How long ago did we see Te Urupare Rangapu: Partnership Response? (the answer is 1988 and yet we still see over-the-top rates of incarceration of young Māori, increasingly more female Māori in jail and too many young Māori failing in life).

Mantra about ‘partnership’ and ‘partnership principles’ do not cut it in the real world. While in legal doctrine, in an open society, all are notionally equal before the law, regrettably all are not in fact equal before the law, as all are not equal in life. Access to resources, money, smarts, connections – all of these human realities enter into the equation. Such fine-sounding proposals are redolent of what Paterson recommended in his review of the Health and Disability Commissioners Act in 2009. Where have they got us? It would be interesting to see evidence.

I can add my own experience to those who have recently complained about the Health and Disability Commission’s services. A couple of years ago, I took a young Māori to a medical clinic; she was doubled over with severe pain. There were colourfully illustrated posters splashed about the walls of the clinic saying how the management respected tikanga and were sensitive to the principles of te Tiriti o Waitangi. But they left a young Māori woman writhing in pain for 40 minutes, and ignored my pleas for assistance (I did not feel moved to point out that I was also Māori, as it is uncomfortable to be seen to be given a race preference).

It was “take a number and wait your turn”, notwithstanding that those in the front of the box tickers’ queue did not appear to be in any discomfort. We eventually left and we went to a public hospital, where similar signs were splashed about and a similar wait ensued, until an experienced nurse observed us and took us up to an empty ward, where the patient spent four days under care. Virtue signalling achieved nothing; nor did a complaint to the Health and Disability Commission: no doubt my complaint was ‘triaged’.

This is the brave new world of state regulation which awaits the legal profession if we are foolish and gullible enough to swallow it.

Healthy debate 

The report could and should ignite an open debate across the profession. Law change in a democracy works best when it is subject to a process of robust democratic disputation, rather than supine obedience to a party line.

For example, it is not sufficient for Paterson and his co-authors to merely pronounce that te Tiriti o Waitangi shall be overarching of the regulatory regime when the profession at large not only has not embraced such a thing, but won’t understand what it entails. Some may see this proposal as a radical departure from orthodoxy and become alarmed. It requires a sensitive and complex conversation, including how tikanga might fit in a meaningful way into a lawyers’ regulatory regime.

Pronouncing it as eminently desirable in the modern era is not sufficient. Issues of history, meaning and mana must first be understood (for insight into such issues see Margaret Mutu and Moana Jackson, Report of Matike Mai Aotearoa – The Independent Working Group on Constitutional Transformation, the result of 252 hui between 2012 and 2015). It should be borne in mind that the reform that culminated in the 2006 Act was the result of a long process of consultation and engagement across the profession. Only in this way was buy-in achieved.

So, what is truly fundamental for the legal profession? Sir Stephen Sedley has summed up what is required of the legal profession. Lawyers must be knowledgeable about the law, competent in giving legal advice and in arguing the law, loyal to clients, and honest with clients and courts (Stephen Sedley Ashes and Sparks, Cambridge University Press, Cambridge, 2011, at 148). We must have a corps of lawyers who are well-trained and knowledgeable, and who can be trusted to the ends of the earth (Bolton v Law Society [1994] 1 WLR 512 (CA), at 492, per Sir Thomas Bingham MR). These are the overarching principles of regulation of the legal profession.

In an open society it is not only government power that matters: consent is maintained by available resort to an accessible and impartial legal system supported by lawyers who are independent of the state and influential political or other powers within civil society. The law is a uniquely important profession, and its status is reflected by the enactment of the fundamental obligations in s 4 of the Lawyers and Conveyances Act 2006. Lawyers take this oath at admission:

“Ladies and gentlemen, do each of you swear by Almighty God or solemnly, sincerely and truly declare and affirm that you will truly and honestly conduct yourself in the practice of a Barrister and Solicitor according to the best of your knowledge and ability.”

Honesty, knowledge and ability: these must remain our regulatory focus. ■
Warren Pyke is an Auckland barrister ■

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