The new rule allows in-house lawyers to provide regulated services to a wider group of entities and organisations.
Regulated services are now able to be provided by an in-house lawyer:
The definition of entity is that used in s.5(1) of the Financial Reporting Act 2013 and includes:
An in-house lawyer engaged by the Crown, a Crown organisation or a statutory officer can provide regulated services to any other part of the Crown, a Crown organisation or a statutory officer (rule 15.2.4(c)). In the rules the following definitions apply (under s.6 of the Lawyers and Conveyancers Act 2006):
In-house lawyers engaged by the Crown, a Crown organisation or a statutory officer are referred to the Public Prosecutions Unit at Crown Law (firstname.lastname@example.org).
One of the most important aspects of the new rule is understanding “control” and the definitions of what it means to be a subsidiary entity. Where an in-house lawyer is engaged by a controlling entity the lawyer can provide regulated services to a subsidiary entity of the controlling entity (and vice versa) as long as there is sufficient control (50% or greater).
Where the entity is a company an entity is a subsidiary when the controlling entity holds at least half of the issued shares of the subsidiary entity or it is entitled to receive at least half of every dividend paid on shares (r 15.2.5(b)).
Whether or not the entity is a company subsidiary means and includes the situation where the controlling entity controls the composition of at least half the board (or governing body) or is in a position to exercise or control at least half of the maximum number of votes that can be exercised at a meeting of the subsidiary (r 15.2.5(a)).
A subsidiary can also mean a subsidiary that is a subsidiary of a subsidiary of the controlling entity (r 15.2.5(c)). For example, a lawyer engaged by subsidiary 1 can provide regulated services to: controlling entity, subsidiary entity 1 and subsidiary entity 2.
A lawyer must be independent and free from compromising influences or loyalties when providing services (r 5 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008).
The new rules add a footnote (footnote 25A) to rule 15.2 reminding in-house lawyers of the rules contained within Chapter 5 (independence), chapter 6 (client interests) and chapter 7 (disclosure and communication of information to clients). It is recommended that lawyers who wish to use the new rule have in place procedures to identify and respond to conflicts of interest. These should be discussed in advance with the employer and the other entity to which the in-house lawyer will be providing regulated services where appropriate.
In particular in-house lawyers may wish to consider:
Where it becomes apparent that an in-house lawyer can no longer discharge the obligations owed to both the employing entity and the other entity the lawyer must immediately inform each of this fact and no longer act on that matter (r.6.1).