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Key proposals for change to the Conduct and Client Care Rules

01 July 2020

This issue of LawTalk appears near the end of the consultation phase on the proposals to change the rules which apply to all lawyers. This summary outlines some of the key changes which are proposed. The full set of proposals has been sent to all practising lawyers and is also available on the Law Society website.

Why is change needed?

The revelations and discussion which began in 2018 about bullying and sexual harassment in the legal profession resulted in a commitment by the Law Society to help create healthy, safe, respectful and inclusive legal workplaces. Alongside widespread input from the legal community, important contributors have been the 2018 Legal Workplace Environment Survey, the December 2018 report and recommendations by the Independent Regulatory Working Group chaired by Dame Silvia Cartwright and consultation with executive and departmental government, workers in the regulatory and complaints area, the Law Society Board and members of the Culture Change Taskforce. The result is a set of proposed changes to the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC) and the (Lawyer: Ongoing Legal Education Continuing Professional Development) Rules 2013 (CPD Rules).

Why not legislative change?

Close contact with Government has been maintained throughout. While the prospect of changes to the Lawyers and Conveyancers Act 2006 was initially considered, the advice was that this was not possible. Substantive changes to the Act could follow the independent review of the structure and function of the Law Society which was announced in October 2019. In the meantime, changes to the RCCC and CPD rules are being proposed in response to the Working Group’s recommendations.

How can any changes be effected?

After the consultation process, any final changes to the RCCC and CPD Rules must be approved by the Council of the Law Society and the Minister of Justice.

Objectives

The Working Group identified keys areas for regulatory change to address serious conduct issues within the legal community. One of the issues it noted was the fact that the RCCC did not expressly state that sexual violence, sexual harassment, bullying and discrimination amount to breaches of specific RCCC rules. The Working Group also observed it was problematic that it was not clear how sexual violence, harassment, bullying and discrimination fitted within the statutory definitions of “unsatisfactory conduct” and “misconduct” that were in the Act

The proposed RCCC and CPD Rules changes draw on the Working Group’s recommendations for reform and aim to provide:

  • Clearer conduct obligations;
  • Clearer reporting obligations;
  • Protections for those reporting or experiencing unacceptable conduct;
  • Closer regulation of legal workplaces; and
  • Obligatory education and training aimed at reducing unacceptable behaviour.

Who will the changes affect?

All lawyers and employees of law practices: an individual lawyer practising on own account or everyone employed in any entity providing regulated services to the public. This is defined in RCCC 1.2.

New Definitions

Specific definitions of bullying, discrimination, harassment and violence are included in RCCC 1.2.

“bullying means repeated and unreasonable behaviour directed towards a person or people that may lead to physical or psychological harm”;

“discrimination means discrimination that is unlawful under the Human Rights Act 1993 or any other enactment”;

“harassment means– (a) intimidating, threatening, or degrading behaviour directed towards a person or group that may have a harmful effect on the recipient; and (b) includes repeated behaviour but may be a serious single incident”;

“sexual harassment means– (a) a request made by a person of any other person for sexual intercourse, sexual contact, or any other form of sexual activity that contains an implied or overt promise of preferential treatment or an implied or overt threat of detrimental treatment; or (b) subjecting another person to behaviour of a sexual nature that is unwelcome or offensive to that person (whether or not it was conveyed to that person)”;

“violence includes all forms of physical, psychological, and sexual abuse or assault”.

Clarity on obligations

Obligations contained in the Schedule to the RCCC are to be incorporated into the rules themselves to emphasise that the preservation of the integrity and reputation of the profession is the responsibility of all lawyers, to ensure public trust and confidence. Inclusion of these obligations in the body of the rules also makes it clear that there can be a regulatory response when a lawyer’s conduct does not meet these standards. RCCC 1.5.2 would state: “The preservation of the integrity and reputation of the legal profession is the responsibility of every lawyer.”

Reporting obligations

Changes are proposed to the reporting obligations in RCCC 2.8 to improve the reporting of unacceptable behaviour in the legal community and to provide safeguards for those who report or support reporters and people who are subject to it. The reference to the report being ‘confidential’ is removed, to assist in clarifying the process that will follow when a report is made. The proposed changes are also designed to include protections and exceptions for victims of the behaviour and make it simpler to understand when a report should be submitted.

Victimisation

A new rule RCCC 2.10 specifically says that a lawyer must not victimise a person who, in good faith, makes a complaint or report to the Law Society. The definition of victimisation is wide and includes bullying, intimidating and professionally disadvantaging someone. The intention of the rule is to protect people who come forward with complaints or concerns about conduct and to mark out victimising behaviour as completely unacceptable in the legal community.

Termination of lawyer-client relationships

Changes are proposed in RCCC 4.2 to provide a pathway for a lawyer or a law practice to terminate a retainer with a client if the client engages in sexual harassment, sexual violence, discrimination, bullying and other unacceptable behaviour towards a lawyer or employee.

Lawyers responsible for operating a law practice

RCCC chapters 10 and 11 are re-ordered to differentiate between general obligations which apply to all lawyers (Chapter 10) and specific obligations relevant to lawyers who are responsible for the operation and management of a law practice (Chapter 11). The proposed changes seek to set clear standards of what is expected of lawyers in their professional capacity and should make it easier to differentiate between a lawyer’s individual responsibilities as opposed to a lawyer’s responsibilities when managing a law practice. The overall intention is closer regulation of workplace obligations, a key element of the Working Group’s recommendations.

The heading to RCCC 10 would refer to “Professional standards”, with the statement that “A lawyer must promote and maintain professional standards.”

  • Changes to RCCC 10.1 would remove the inconsistency of lawyers being required to treat other lawyers with respect and courtesy as opposed to treating all people they engage with in a professional capacity with respect and courtesy.
  • A new RCCC 10.2 would reinforce the overriding obligation to maintain the reputation of the profession, to simplify its enforcement, and to be consistent with the obligations contained in RCCC 11 in relation to how a practice is operated.
  • A new RCCC 10.3 would make it clear that discrimination, harassment, bullying, and violence are unacceptable within the legal community, with the intention of simplifying enforcement for any breach.
  • A new RCCC 10.4 would reinforce the obligations to respond appropriately to requests for information from the Law Society as regulator.

Changes are proposed to RCCC 11 (to be entitled “Proper professional practice”) to simplify the wording and to expand the obligations to apply to employees and people engaged by the practice, including summer clerks, volunteers, contractors and others who may be affected by unacceptable conduct at the practice.

  • The current RCCC 11.3 would be moved forward to 11.1 with the wording simplified to confirm it relates to the operation of the practice.
  • A new RCCC 11.2 would confirm each law practice must have effective policies and systems in place to protect employees and other people working for the practice and ensure that the workplace is a safe place for all.
  • A new RCCC 11.3 would require a law practice to have a designated person responsible for discharging new reporting obligations designed to ensure unacceptable conduct by lawyers and employees is reported to the Law Society.
  • A new RCCC 11.4 to 11.4.3 would establish new reporting obligations designed to ensure unacceptable conduct by lawyers and employees is reported to the Law Society.
  • The existing RCCC 3.8, relating to the complaints procedures a law practice must have in place for clients, would be moved to Chapter 11 to create RCCC 11.5. This would group the obligations relevant to operating a practice together.

CPD Rules changes proposed

Changes are proposed to CPD Rules 3, 4 and 6 to allow for introduction of a mandatory CPD component. This would enable incorporation of training to address unacceptable behaviour in the legal community. The provision is intentionally broad to avoid an overly prescriptive approach and to enable targeted and effective education to be included in any mandatory component.

Emergency COVID-19 legislation needs additional safeguards, Law Society says

The COVID-19 Public Health Response Act 2020, passed under urgency on 13 May, enables orders imposing the most profound peacetime restrictions ever made to the rights and personal freedoms of all New Zealanders, and the New Zealand Law Society | Te Kāhui Ture o Aotearoa has recommended nine amendments to provide additional safeguards on the exercise of powers under the Act.

Following passage of the legislation, Parliament agreed to a motion that the Finance and Expenditure Committee would inquire into the operation of the Act and report to the House no later than 27 July 2020.

The Law Society told the committee on 11 June that it agreed that new legislation to deal with the ongoing public health response to the COVID-19 emergency had been needed and the new framework was an improvement, but it should have had public and select committee scrutiny before being passed by Parliament.

“Allowing just a few days for the usual select committee process would have enabled better consideration of the legislation before it was enacted, and increased its public legitimacy,” Law Society spokesperson Jonathan Orpin-Dowell told the committee.

The Law Society said it supported the Finance and Expenditure Committee’s post-enactment review, as an innovative procedure and an opportunity to review and improve the Act.

“The problem however is that time is very short to allow Parliament to consider and amend the Act before Parliament adjourns on 6 August ahead of the general election – and it is essential any amendment bill introduced to correct shortcomings that weren’t picked up earlier because the Act was passed under urgency, is given proper select committee scrutiny,” Mr Orpin-Dowell said.

The Law Society therefore asked the committee to report to Parliament at the earliest available date, so there was time for any proposed amendments to be considered and enacted without using urgency, before Parliament adjourned, he said. This was particularly important if powers under the Act needed to be used in the event there was a resurgence of COVID-19 cases and New Zealand returned to a higher alert level.

“As is now well known, restrictions in Alert Levels 4 and 3 impacted on almost every aspect of New Zealanders’ lives, and restrictions on the rights and freedoms of all New Zealanders may be imposed again under the new Act,” Mr Orpin-Dowell said.

“One important amendment is to impose a higher threshold for the making of a section 11 order, that the Minister is satisfied the order is 'reasonably necessary' as a proportionate response taking into account wider economic and social considerations.”

The Law Society also recommended other changes to the Act, such as strengthening Parliament’s oversight and scrutiny of orders, and improving New Zealanders’ ability to access orders so they could understand and comply with the law.

It was also important to reconsider the risk threshold for Police to exercise the power to enter premises, including private homes, without a warrant.

The Law Society said it acknowledged the challenging balance required between enforcement action to prevent the spread of COVID-19, and New Zealanders’ rights under the New Zealand Bill of Rights Act 1991 to be free from unreasonable searches. However, this balance could be better struck in the Act, by reserving the warrantless powers of entry only for cases where a constable had reasonable grounds to believe it was necessary to enter premises to provide a direction to prevent an immediate risk to the life or safety of any person.

GST and unconditional gifts

The Law Society’s Tax Law Committee has pointed out a number of items in an IRD draft interpretation statement which it believes should be reviewed and revised. It has provided comments on the draft item PUB00332: Goods and services tax – unconditional gifts (draft). This is intended to provide guidance on the interpretation and application of the ‘unconditional gift’ definition in section 2(1) of the Goods and Services Tax Act 1985.

Among the matters raised by the Law Society:

  • The draft refers only to “payments”, as per the “consideration” and “unconditional gift” definitions in section 2(1) of the Act. Inland Revenue should confirm, in the summary or later in the item, its position regarding payments “in kind”, ie, supplies of goods and/or services, being “unconditional gifts”.
  • The discussion of the relationship between the “consideration” and “unconditional gift” definitions should be amended to make it clear that a payment to a non-profit body may not fall within the first part of the “consideration” definition, in which case the issue of whether or not the payment is an “unconditional gift” will be irrelevant..
  • Discussion of the “voluntarily made” aspect of the definition should acknowledge that although voluntary payment will generally be one that is not made under a contractual obligation, there may be circumstances in which this is not the case (for example, a payment under a deed of gift may still be an unconditional gift).
  • The discussion of when a benefit arises “in respect of” a payment in the “unconditional gift” definition should be reviewed and revised, particularly in relation to the reference to a benefit having a “sufficient connection” with a payment based on the benefit being “conditional or dependent” on the payment.
  • A review of the draft discussion on the meaning of “arises or may arise” would be beneficial as it is confusing and does not appear to stay focused on the words “arises or may arise”.
  • Various aspects of the eight examples given at the end of the draft should be reviewed and revised. Some are potentially confusing or misleading.

Last updated on the 8th July 2020