New Zealand Law Society - Are legal disrupters steering people off the road?

Are legal disrupters steering people off the road?

Are legal disrupters steering people off the road?

The choices faced by a person stripped of their driver’s licence and wanting to apply for a limited licence illustrate the dangers as well as the benefits of disruption in the legal market, and how more attention to the regulatory pitfalls and opportunities could improve access to justice in New Zealand.

Limited licence applications are ripe for disruption as they are usually straightforward and template based, yet lawyers offering help with these applications often charge upwards of $1,000. It is no wonder that businesses have swooped in with cheaper online services promising to get drivers back on the road for far less. Cheaper and more convenient services should be good news, especially for low wage earners. Yet the University of Otago Legal Issues Centre has identified serious questions about these services – for consumers as well as regulators.

The centre started by putting ourselves in the shoes of a de-licensed driver. A person who has been disqualified from driving and wants to apply for a limited licence so they can, for example, drive to work, has at least three options. They can pay upwards of a thousand dollars for a lawyer to represent them, they can pay a little less for an online service to help them, or they can do it themselves, perhaps with free help from Community Law or another community provider.

The lawyer option

Let’s look at the lawyer option first. For lawyers, the limited licence procedure is usually relatively straightforward. The documents (notice of application, affidavit(s) in support, draft order) can be drafted by relying on templates, and the tests of “extreme hardship to the applicant” and/or “undue hardship to any other person” are well settled at law. Yet the price charged by most lawyers for preparing a limited licence application and appearing at court are high – the Community Law guide to applying for a limited licence (on communitylaw.org.nz/) suggests, at page 5, that the cost “could be more than $1000”. Given the low level of transparency around lawyers’ fees, a person wanting to hire a lawyer may feel this is a price they have to pay to keep working, and some may even pay considerably more.

Now let’s look at the experience of a person who cannot afford a lawyer. We assumed most people would start by looking for information online. A Google search for “limited licence NZ” turns up varied resources on the first page of search results – community law centres, NZTA, lawyers – along with ‘disrupters’, the cheaper online services.

Disruptive services

We looked at three of the disruptive services. These services produce limited licence documents and send them to the applicant, who can then file the documents and appear in court in person. One website provided template documents only for applications following demerit point suspensions, while the other two websites provided services to individuals who have been either disqualified following a conviction or suspended for excess demerit points.

Who are these providers? Only one website gave any indication of who was behind it. This provider stated that he was not a lawyer, but had previous work experience giving him “experience of the limited licence process”. He also gave his name and a New Zealand mobile phone number. None of the websites offered a registered company name or physical address. One provider made it clear what it was not: “xxx is NOT a law firm and we do not provide ANY legal advice to applicants”, and that it created documents for self-represented litigants. On another page within its site, this provider stated that it “uses solicitors that are members of the New Zealand Law Society … As part of the application process, the applicant will be contacted by our lawyers and sent their terms of engagement.” This suggested to us that the provider may be a clearing house working with lawyers who are independent contractors. The same provider also advises applicants to “seek their own independent legal advice and direction … regarding their application” which would seem to be unnecessary if users are being connected with lawyers via a clearing house model. The third provider stated that it was a “WINZ registered supplier” with “3 Decades of Expertise”. We could not find any statements on its website to confirm that it was run by a New Zealand lawyer, nor could we find any disclaimers making clear that it was not.

Not knowing who is behind some of the websites makes it hard to know how a dissatisfied customer, the Police, the courts, or the Law Sociey, might follow up in the event of any concerns arising. We assume that unless they clearly say so, no website offering limited licence services is run by a lawyer holding a practising certificate. This means that individuals using their templates will not have the benefit of professional indemnity policies or the Law Society’s Lawyers Complaints Service.

Advice on success prospects

An issue with these services, from a consumer perspective, is that there is no advice on the prospects of success. This arguably avoids the problem of the providers encroaching on the reserved area of work provisions (s 6, Lawyers and Conveyancers Act 2006) as if providers do not evaluate information entered and tailor it, or ask for additional information to ensure that the application satisfies the test, then the service may not qualify as “legal advice”. For the user (and also for the courts), this presents difficulties, as they may be filing an application that lacks any prospect of success. By way of example, we accessed the online form for one provider without having to pay. We were therefore able to see the text boxes that asked for information that would be used for the hardship tests:

While we assume that this information would be set out in the affidavit in a way to illustrate the hardship test, we were not prompted to explain why we could not get to work without driving, or whether we were required to drive as part of our employment. Both of these issues need to be covered off in the supporting affidavit to satisfy the test.

A lawyer who charges a client for filing a limited licence application without making any attempt to consider the merits, or who files documents that do not address the points required by the court, runs the risk of a finding of unsatisfactory conduct. We consider that, at the least, some of these online providers are putting individuals in a situation where they are spending money on an application with no prospect of success. The examples given on the data input page that we accessed might result in some individuals whose applications have no prospect of success coming to this realisation while entering information, and proceeding no further. Other users might proceed, and if unsuccessful, would have to avail themselves of “money back guarantees”, where offered.

Providing legal advice

If the online providers did offer to assess their customers’ prospects of success, this might be considered providing legal advice about contemplated proceedings in court and so encroach on a reserved area of work. Some providers did appear to us to be skirting up to the very edge of this line – one provider stated that their “previous experience” resulted in them “knowing exactly what is required” for an application to succeed. Another took what seems like an even greater risk – despite clearly stating that they were not lawyers, they offered a “document review” for an additional $220:

“Document reviews of your application, affidavit and draft orders reviews increase the accuracy of your documents and will be more favourably received by the Police and the District Court. Failing to convince the Court that you need a limited licence means, the application will be declined and you lose your Court Filing fee of $200.”

From a regulatory standpoint, it is an offence for non-lawyers to offer services in the reserved areas of work. It is not clear whether the Law Society is interested in the issues that arise with online providers, and whether it has the appetite or resources to follow up with them. For a consumer protection standpoint, these providers raise issues. The reason for a reserved area of work is consumer protection, ensuring quality service to the public, and a complaints mechanism if the service falls short. We found some inaccuracies in the websites, for example one suggested that limited licences could only be for “five days of driving” even though there is no law to that effect. If consumers do encounter a substandard service, there is no mechanism to address the problem.

The counter argument is, however, that the reason these services have arisen is that lawyers are charging too much. The University of Otago Legal Issues Centre is supportive of innovations that result in more affordable legal services, and is concerned about the high costs asked for by some lawyers providing limited licence services.

However, some of these disruptive services did not strike us as particularly good value given their limitations. One provider offered its most basic service for $800, with no guaranteed timeframe for delivery. While it did offer a money back guarantee if the application was unsuccessful, this would only be paid if the customer had sought an adjournment from the court to amend their application. The demerit-only provider was $375 (with “priority rush” an additional $270) – no mention was made of GST. In contrast, one lawyer advertising their services online charges a flat fee of $599 plus GST, which includes service of the application on the police and the court appearance. Other lawyers are, however, charging much more, allowing for these disruptive services to flourish.

Community providers

Now let’s look at a third option, community providers of the service. Community Law Aotearoa’s limited licence guide came up on our Google search, in amongst, but not standing out from, links to the disruptive services. As well as explaining the law and procedure in plain English, the guide contains templates that explain the information required to satisfy the legal tests, for example:

Being unable to drive would cause me an extreme hardship because [why is it so important that you keep this job? For example, what qualifications and work experience do you have? How difficult would it be to find another suitable position without a driver's licence?

While Community Law will not generate the formatted documents for the applicant, an applicant who has time to type their information into the templates may be as well – or better – served by this free resource. This service offers better consumer protection while recognising that many people simply cannot afford what lawyers charge.

The example of limited licence provision is just one example of the shifting ground in the provision of legal services. Will the reserved area of work be policed as new disruptive services enter the market? Why are many lawyers continuing to price their services out of the reach of many New Zealanders, opening up space for competition? Why are people paying for anonymous services when there is free information and assistance from a known and trusted provider such as Community Law? Is it a simple case of competing for prominence on Google or do we need other efforts to raise awareness of the free help available?

We expect that these questions will continue to rise in a number of different areas of the legal services market as the justice gap continues to leave many New Zealanders unable to access regulated, lawyer-provided assistance.

Allie Cunninghame allie.cunninghame@otago.ac.nz is a Professional Practice Fellow with the University of Otago Legal Issues Centre.

Law Society comment:The Law Society welcomes referrals in relation to potential regulatory offences and regularly deals with concerns raised by members of the public and people in the legal community. When concerns such as those referenced in the article above are referred to the Law Society they are investigated to ascertain whether any regulatory concerns may arise under the Lawyers and Conveyancers Act 2006. The focus of the Act offence provisions are related to misleading representations and people who are not lawyers undertaking the type of work which only lawyers are permitted to. There are a wide range of services that people who are not lawyers are able to provide and there is no ability for the Law Society to look into the quality of these service providers. However, the Law Society will look at how services are promoted to the public. When regulatory concerns are raised, an investigation would typically involve examining whether there is evidence that any legal consumer appears to have been misled about the status of any person and/or entity providing legal services. In general, the regulatory process involves trying to work constructively with providers of legal services to make the required changes to ensure that there is no scope for legal consumers to be misled or confused. If that approach does not resolve the issues of concern, further consideration would be given to what other formal steps may be available.

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