Division 2ADivision 2A Incorporated legal practices
In this Division:corporation means:
(a) a company within the meaning of the Corporations Act 2001 of the Commonwealth, or(b) a State owned corporation, or(c) an industrial organisation incorporated under a law of the Commonwealth, a State or a Territory, or(d) any other body corporate, or body corporate of a kind, prescribed by the regulations.director means a director within the meaning of the Corporations Act 2001 of the Commonwealth.
legal services means work done, or business transacted, in the capacity of a solicitor.
solicitor director means a director of an incorporated legal practice who holds an unrestricted practising certificate as a solicitor and barrister (including an interstate practising certificate that confers a similar authority to practise in this State).
47C Nature of incorporated legal practice
(1) An incorporated legal practice is a corporation that provides legal services.(2) Any incorporated legal practice may provide any other service and conduct any other business that the corporation may lawfully provide or conduct (other than a managed investment scheme within the meaning of Chapter 5C of the Corporations Act 2001 of the Commonwealth).(3) However, a corporation is not an incorporated legal practice if:(a) the corporation does not receive any form of, or any expectation of, a fee, gain or reward for the legal services it provides, or(b) the only legal services that the corporation provides are in-house legal services, namely, legal services concerning a proceeding or transaction to which the corporation (or a related body corporate within the meaning of section 50 of the Corporations Act 2001 of the Commonwealth) is a party, or(c) the regulations exempt the corporation from this Part.
47D Corporations eligible to be incorporated legal practices
(1) Any corporation is eligible to be an incorporated legal practice.(2) This section does not authorise a corporation to provide legal services if the corporation is prohibited from doing so by the Act or law under which it is incorporated or its affairs are regulated.Note. See sections 48D and 48E for offences relating to the provision of legal services by unauthorised corporations.
47E Solicitor directors of incorporated legal practices
(1) An incorporated legal practice is required to have at least one solicitor director.Note. Section 48D provides that an incorporated legal practice is guilty of an offence under that section if it does not have a solicitor director (except for any reasonable period required to appoint a replacement solicitor director).(2) The solicitor director or directors of an incorporated legal practice are, for the purposes only of this Act, generally responsible for the management of the legal services provided in New South Wales by the incorporated legal practice.(3) It is professional misconduct if any such solicitor director does not ensure that:(a) appropriate management systems are implemented and maintained to enable the provision of those legal services in accordance with the professional obligations of solicitors and the other obligations imposed by or under this Act, and(b) any conduct of another director of the practice that has resulted or is likely to result in a contravention of those obligations is reported to the Law Society Council promptly after the solicitor director becomes aware of it, and(c) any professional misconduct of a solicitor employed by the practice to provide legal services is reported to the Law Society Council promptly after the solicitor director becomes aware of it, and(d) all reasonable action available to the solicitor director is taken to deal with any professional misconduct or unsatisfactory professional conduct of a solicitor so employed by the practice.(4) It is also professional misconduct for any such solicitor director to remain as a director of the corporation, and thereby authorise its continued provision of legal services, if it becomes apparent that the provision of those legal services will result in breaches of the professional obligations of solicitors or other obligations imposed by or under this Act (whether because of the unsuitability of any other director or directors or otherwise).(5) The provisions of this section relating to a solicitor director of an incorporated legal practice that is an externally-administered body corporate under the Corporations Act 2001 of the Commonwealth do not apply to the extent that they are inconsistent with the provisions of Chapter 5 of the Corporations Act 2001 of the Commonwealth or of Parts 8 and 8A of this Act.(6) This section does not apply to a community legal centre that complies with section 48H.
47F Prohibition of repeat offender from managing a corporation that is an incorporated legal practice
(1) The Supreme Court may, on the application of the Law Society Council, disqualify a person from managing a corporation that is an incorporated legal practice for the period the Court considers appropriate if the Court is satisfied that:(a) the person is a person who could be disqualified under section 206E of the Corporations Act 2001 of the Commonwealth from managing corporations, and(b) the disqualification is justified.(2) The Supreme Court may, on the application of the disqualified person, revoke a disqualification imposed under this section.(3) A corporation is not an incorporated legal practice (within the meaning of this Division) that is authorised to provide legal services if a disqualified person is a director or other officer (within the meaning of the Corporations Act 2001 of the Commonwealth) of the corporation.Note. See sections 48D and 48E for offences relating to the provision of legal services by unauthorised corporations.(4) A disqualification imposed under this section has effect for the purposes only of this Act and does not affect the Corporations Act 2001 of the Commonwealth.
47G Solicitors rules—application to incorporated legal practices
(1) The solicitors rules apply to solicitors who are officers or employees of an incorporated legal practice.(2) However, the solicitors rules cannot prohibit or regulate any of the following matters:(a) the corporations eligible to be incorporated legal practices,(b) the other services or other business that an incorporated legal practice may provide or conduct,(c) the conduct of officers or employees of an incorporated legal practice (other than solicitors in connection with the provision of its legal services).(3) In this section:solicitors rules includes joint rules.
47H Solicitors’ professional obligations and privileges
(1) A solicitor who provides legal services in the capacity of an officer or employee of an incorporated legal practice is not excused from compliance with the professional obligations of a solicitor and does not lose the professional privileges of a solicitor.(2) For the purpose only of the application of those obligations and privileges, the persons provided with legal services by an incorporated legal practice are taken to be the clients of the solicitors engaged in providing those services.(3) To avoid doubt, the law relating to client legal privilege (or other legal professional privilege) is not excluded or otherwise affected because the solicitor is acting in the capacity of an officer or employee of an incorporated legal practice.(4) The directors of an incorporated legal practice do not breach their duties as directors merely because legal services are provided pro bono by the solicitors engaged by the practice.(5) In this section:professional obligations includes:
(a) duties to the court, and(b) obligations in connection with conflicts of interest, and(c) duties of disclosure to clients (including with respect to matters relating to costs under Part 11), and(d) ethical rules required to be observed by a solicitor.
47I Advertising and disclosures with respect to legal services
(1) Any restriction imposed by or under this Act in connection with advertising by solicitors applies to advertising by an incorporated legal practice with respect to the provision of its legal services.Note. See sections 38J and 38K with respect to advertising by solicitors.(2) Any such advertisement is, for the purposes of disciplinary proceedings under this Act, taken to have been authorised by the solicitor directors of the practice.(3) The regulations may make provision for or with respect to disclosures by an incorporated legal practice in connection with the provision of legal services, including the kind of services provided by the practice and whether those services are or are not covered by the insurance or other provisions of this Act.
47J Application of Part 11 (Legal fees and other costs)
(1) Part 11 applies to legal services provided by an incorporated legal practice as if a reference in that Part to a solicitor included a reference to the incorporated legal practice and to any external administrator.(2) The regulations may make other modifications to the application of Part 11 for the purposes of this section.
47K Provisions relating to indemnity insurance
(1) An incorporated legal practice is required to comply with the obligations of an insurable solicitor under Division 2 with respect to insurance policies and payments to or on account of the Solicitors’ Mutual Indemnity Fund. The Law Society Council may suspend the practising certificate of a solicitor director of the practice if any such obligation is not complied with.(2) The insurance premiums or other amounts payable under Division 2 by an incorporated legal practice may be determined by reference to the total number of solicitors employed by the practice and other relevant matters.(3) The amounts payable from the Solicitors’ Mutual Indemnity Fund include amounts for such liability of an incorporated legal practice, and of the solicitors who are officers and employees of the practice, in connection with the provision of legal services as the Law Society Council determines with the approval of the Attorney General.(4) The Law Society Council may exempt an incorporated legal practice from this section on such grounds as the Council considers sufficient.
47L Application of Part 6 (Trust accounts)
(1) Part 6 applies (subject to this section) to incorporated legal practices in the same way as it applies to solicitors.(2) Accordingly:(a) the obligations and rights of a solicitor under Part 6 extend to an incorporated legal practice, but only in connection with legal services provided by the practice, and(b) money received by a solicitor on behalf of another person in the course of practising as a solicitor (within the meaning of Part 6) includes money received by any officer or employee of the incorporated legal practice on behalf of another person in the course of providing legal services.(3) The Law Society Council may exercise its powers under section 38 (Refusal, suspension or cancellation of practising certificate as solicitor and barrister—trust accounts etc) with respect to a solicitor director of an incorporated legal practice for any relevant failure of the practice or any officer or employee of the practice.(4) The regulations may make any other modifications to the application of Part 6 for the purposes of this section.
47M Application of Part 7 (Solicitors’ Fidelity Fund)
(1) Part 7 applies (subject to this section) to incorporated legal practices in the same way it applies to solicitors.(2) Accordingly, an incorporated legal practice is required to make payments to or on account of the Solicitors’ Fidelity Fund under Part 7 as if it were a solicitor applying for or holding a practising certificate. The Law Society Council may suspend the practising certificate of a solicitor director of the practice if any such payment is not made by the due date.(3) The amounts payable to that Fund by an incorporated legal practice may be determined by reference to the total number of solicitors employed by the practice and other relevant matters.(4) For the purposes of the application of Part 7 to incorporated legal practices:(a) a failure to account by a solicitor extends to a failure to account by an incorporated legal practice, but only if it occurs in connection with the provision of legal services, and(b) a dishonest default by a solicitor extends to a dishonest default by an incorporated legal practice, but only if it occurs in connection with the provision of legal services, and(c) a reference to a firm of solicitors includes a reference to an incorporated legal practice.Note. See for example section 89 with respect to the ceiling on payments from the Fund for failures to account by the same firm.(5) The regulations may make any other modifications to the application of Part 7 for the purposes of this section.
47N Extension of vicarious liability of incorporated practice relating to failures to account and dishonesty
(1) This section applies to any of the following proceedings (being proceedings based on the vicarious liability of an incorporated legal practice):(a) civil proceedings relating to a failure to account for, pay or deliver money or other valuable property received by, or entrusted to, the practice (or to any solicitor or other employee of the practice) in the course of the provision of legal services by the practice, being money or other valuable property under the direct or indirect control of the practice,(b) civil proceedings for any other debt owed, or damages payable, to a client as a result of a dishonest act or omission by a solicitor who is an employee of the practice in connection with the provision of legal services to the client.(2) If the incorporated legal practice would not (but for this section) be vicariously liable for any acts or omissions of its officers and employees in any such proceedings, but would be liable for those acts or omissions if the practice and those officers and employees were carrying on business in partnership, the practice is taken to be vicariously liable for those acts or omissions.
47O Investigation of incorporated legal practices
(1) Section 55 and section 152 apply (subject to this section) to corporations that are or were incorporated legal practices in the same way that they apply to persons who are or were solicitors or legal practitioners.(2) An investigation under either of those sections extends to all of the affairs of an incorporated legal practice and to all of its documents, so long as the investigation relates to the provision of legal services.(3) The regulations may:(a) extend the powers of investigation under section 55 or section 152 in relation to incorporated legal practices by reference to any powers of investigation conferred on the Australian Securities and Investment Commission under the Corporations Act 2001 of the Commonwealth or under any Commonwealth Act with respect to the affairs of a corporation, and(b) require a copy of any document that is to be furnished by an incorporated legal practice to the Australian Securities and Investment Commission under the Corporations Act 2001 of the Commonwealth to be furnished also to the Law Society Council or the Commissioner, or both, and(c) make other modifications to the application of section 55 or section 152 for the purposes of this section.
47P Review of incorporated legal practices
(1) The Law Society Council or the Commissioner may conduct a review of the compliance of an incorporated legal practice (and of its officers and employees) with the requirements of or made under this Act in connection with the provision of legal services by the practice.(2) The investigative powers referred to in section 47O may be exercised for the purposes of any such review.(3) Any such review may be conducted whether or not a complaint has been made with respect to the provision of legal services by the incorporated legal practice.(4) A report of any such review:(a) is to be provided to the incorporated legal practice concerned, and(b) may be provided to the Commissioner by the Law Society Council or to that Council by the Commissioner (as the case may be), and(c) may be taken into account in connection with any disciplinary proceedings under Part 10 or in connection with the issue, suspension or cancellation of practising certificates by the Law Society Council.
47Q Disclosure of information to ASIC
(1) The Law Society Council (or a person referred to in section 56 (1) or (3)) or the Commissioner may disclose to the Australian Securities and Investment Commission information concerning an incorporated legal practice or former incorporated legal practice that has been acquired in connection with the exercise of functions under this Act.(2) Any such information may be provided despite any law relating to secrecy or confidentiality (including any provisions of section 56).
47R External administration proceedings under Corporations Law
(1) This section applies to proceedings in any court under Chapter 5 (External administration) of the Corporations Law:(a) relating to a corporation that is an externally-administered body corporate under that Law, or(b) relating to a corporation becoming such a body corporate,being a corporation that is or was an incorporated legal practice.(2) The Law Society Council and the Commissioner are entitled to be a party to any such proceedings, unless the court determines that the proceedings do not concern or affect the provision of legal services by the incorporated legal practice.(3) The court may, when exercising its jurisdiction in any such proceedings, have regard to the interests of the clients of the incorporated legal practice who have been or are to be provided with legal services by the practice (even if those interests conflict with the interests of the creditors or shareholders of the practice). This subsection does not authorise the court to make any decision that is contrary to a specific provision of Chapter 5 of the Corporations Law.(4) Parts 8 (Receivers) and 8A (Managers) do not apply to corporations that are or were incorporated legal practices.
47S This Act prevails over Corporations Law and certain other instruments
(1) The provisions of this Act or the regulations that apply to or in respect of an incorporated legal practice prevail, to the extent of any inconsistency, over the applicable corporate law.(2) For the purposes of this section, the applicable corporate law for an incorporated legal practice comprises the following:(a) the provisions of or made under the Corporations Law,(b) if the practice is not incorporated under the Corporations Law—the provisions of or made under the Act or law under which the practice is incorporated,(c) the constitution or other constituent documents of the practice.(3) The regulations may declare any matter relating to an incorporated legal practice that is prohibited, required, authorised or permitted by or under this Act or the regulations to be an excluded matter for the purposes of section 5F of the Corporations Act 2001 of the Commonwealth in relation to:(a) the whole of the Corporations legislation, or(b) a specified provision of the Corporations legislation, or(c) the Corporations legislation other than a specified provision, or(d) the Corporations legislation other than to a specified extent.(4) In this section:matter includes act, omission, body, person or thing.
47T Regulations relating to incorporated legal practices
(1) The regulations may make provision for or with respect to legal services provided by incorporated legal practices.(2) A regulation prevails over any inconsistent provision of the solicitors rules or joint rules.(3) A regulation may provide that a breach of the regulations constitutes or may constitute professional misconduct or unsatisfactory professional conduct by a solicitor director or by the solicitor responsible for the breach, or both.