Queensland Law Society has seen an increase in principals accepting appointments as directors of law practices without doing sufficient due diligence.
Please be aware that upon appointment as a legal practitioner director you are:
- responsible for the management of legal services provided by the practice (s117(2) of the Legal Profession Act 2007 – the Act)
- required to ensure that appropriate management systems are implemented and kept to enable the provision of legal services by the practice under the professional obligations of Australian legal practitioners and other obligations imposed under the Act (s117(3)(a) of the Act)
- required to exercise reasonable supervision over solicitors and other employees of the law practice
- responsible for the trust account, including payments from the trust account and any deficiencies (ss37-38 of the Legal Profession Regulation 2017, s259 of the Act);
- required to discharge the responsibilities of the law practice under part 3.3 of the Act relating to trust money and the trust account (s244 of the Act).
- required to discharge obligations imposed on directors under the Corporations Act 2001 (for example, see the ASIC website).
Over the past 12 months several principals have had their principal certificates cancelled or downgraded to an employee certificate as a result of their failure to do proper due diligence prior to their appointment, and failing to ensure proper oversight of the law practice after their appointment.
Before accepting appointment as a legal practitioner director (or principal of a law practice) the Society recommends at a minimum you check the position of the trust account, whether the monthly reconciliations are up to date, the most recent external examiner’s report, whether there have been any recent investigations of the law practice and if so, obtain a copy of the trust account investigation report. Please note, you cannot obtain this information from QLS prior to appointment due to confidentiality.