The concept of law firm incorporation was introduced with the Lawyers and Conveyancers Act 2006 (LCA).
As soon as an incorporated law firm is formed, Regulation 16 of the LCA (Lawyers: Practice Rules) Regulations 2008 requires that the Law Society is advised of:
Every subsequent change of name, directors or shareholders must also be notified as soon as practicable. If the Law Society requests further information about the firm’s structure, directors or shareholders, this must be provided promptly.
The incorporated law firm structure is also available to barristers.
Misconduct and unsatisfactory conduct
The LCA defines ‘misconduct’ and ‘unsatisfactory conduct’. These provisions apply to incorporated law firms (or former incorporated law firms) in the same way as to other lawyers. Any orders a standards committee can make against an individual lawyer may also be made against an incorporated law firm.
Incorporated law firms are referenced throughout the LCA and associated regulations. The more important of these are:
- Section 30(2) provides that a lawyer who is a director or shareholder of an incorporated law firm is deemed to be practising on their own account. So before a lawyer can be a director or shareholder (voting or non-voting) in an incorporated law firm, the lawyer must be entitled to practise on their own account.
- A person may complain to the Lawyers Complaints Service about incorporated law firms as well as individual lawyers (s132(1)(ii)).
- Section 340, which permits lawyers to undertake the work of a real estate agent, is expressed as extending to an incorporated law firm. However, the definition of ‘regulated services’ in s6 applies to both lawyers and incorporated law firms, and regulated services include those provided by undertaking the work of a real estate agent. So it is considered that an incorporated law firm can provide real estate agency services through its lawyer members and their supervised employees.
- A lawyer who is the only director of an incorporated law firm must give a power of attorney to another lawyer authorising them to act as the board of the incorporated law firm (s44(1)(b) and cl 4 of Schedule 1).
- If an incorporated law firm goes into receivership or liquidation (other than for amalgamation under Part XIII of the Companies Act 1993), this constitutes grounds for a standards committee exercising its intervention powers under Part 7 of the act (s163(h)).
More information on incorporating your law firm is available in the NZLS CLE books Incorporating Your Law Firm – What you need to know (Grice, Haynes and Thompson), June 2007; and Incorporating Your Law Firm – Working Through the Process (Grice, Haynes and Thompson), October 2008.
To order these, contact NZLS CLE: www.lawyerseducation.co.nz