Background

In late 2021 and early 2022 the Law Society consulted the profession on a proposal to amend the Lawyers and Conveyancers Act 2006 (LCA) to improve the transparency and efficiency of the complaints process for lawyers.

The Law Society requested proposed amendments to the LCA in line with the consultation. The Law Society was recently advised by the Ministry of Justice that Cabinet had agreed to progress three proposed amendments via a Regulatory Systems (Occupational Regulation) Amendment Bill, anticipated to be introduced in late 2024 and go through a full public consultation process.

Administrative triaging of complaints

Ninety per cent of respondents in the 2022 consultation agreed or strongly agreed with an amendment to allow administrative triaging of complaints. Respondents described it as a ‘practical’ and ‘sensible’ change, necessary to ensure the prioritisation of resources and timely complaints handling.

Enabling the complaints service to use its resources more efficiently, as other regulatory bodies do, will enable the complaints service to better serve complainants and lawyers alike. All parties stand to benefit from a more responsive complaints service.

Section 135 of the LCA currently requires all complaints received by the complaints service to be referred to a lawyers standards committee. Only a standards committee can determine that no action or no further action should be taken on a complaint. A consistently high proportion of complaints investigated by standards committees (over 80 per cent in 2022 or 1,088 individual complaints¹) are not upheld, which means no action or no further action is taken. Of these, some are plainly frivolous or vexatious, should be referred to another agency or have been resolved to the satisfaction of the complainant. 

Requiring those complaints to be dealt with by a standards committee is burdensome and takes away finite resource from dealing with substantive complaints. The proposed amendment will allow the complaints service to make an administrative decision not to refer a complaint to a lawyers standards committee.

Such a power is consistent with other regulatory and disciplinary bodies, such as the Real Estate Authority, Teaching Council and health practitioners’ authorities.

Other amendments to the legislation

1. Confirming that standards committee lawyer members, when sitting as members of standards committees and complaints service staff who hold practising certificates when in their role providing support to standards committees, are not providing regulated services. 
   • This amendment confirms the Legal Complaints Review Officer’s position² that standards committee lawyer members are not providing regulated services when sitting as members.
   • 80 per cent of submitters in the 2022 consultation agreed or strongly agreed with this proposed amendment and 14 per cent were neutral or did not respond.
   • Complaints about standards committee members and complaints service staff will be dealt with as a complaint against the complaints service itself, rather than incurring the time and resource of standards committees.
2. Amending Schedule 1 to automatically revoke sole directors’ power of attorney (POA) when entering into partnership or commencing practice as a co-director.
   • Currently if a sole practitioner goes into partnership, their POA is automatically revoked. However if a sole director enters into partnership or commences practice as a co-director, they must manually revoke their POA. This amendment seeks to automate this process, remove an administrative burden and eliminate an inconsistency in the LCA.
3. Repealing a transitional provision in respect of lawyers practising on own account under the previous LCA. There are no longer any lawyers practising under this provision and it has no future application.

AML/CFT

The Regulatory Systems (Justice) Amendment Bill will also include amendments to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, including to specify that a reporting entity is not required to verify information relating to the source of funds or source of wealth of a trust under enhanced customer due diligence requirements for low-risk trusts. This amendment is intended to provide regulatory relief by applying a more risk-based approach. A series of other, more minor amendments will also be made to the AML/CFT Act.

The Law Society continues to advocate for more substantive reform to the AML/CFT regime to ensure that obligations on lawyers are commensurate with the level of risk faced in the course of their business.

1. See page 41 of the New Zealand Law Society Annual Report 2022.

2. AB v DE & Ors, LCRO75/2014, 11 July 2016, at [54].