A matter of trust – mandatory reporting under s260 Legal Profession Act 2007

This above all: to thine own self be true.

 – Polonius, Hamlet, Act 1, scene 3

It is said that one of the hallmarks of a profession is the ability to regulate itself.

In this era of regulation, that may no longer be true, at least of the law; much of our ability to regulate ourselves has been taken away.

The upside to that is that there are few instances in which solicitors are obliged to report colleagues for transgressions or misdeeds; that in itself allows us some measure of self-regulation, in that we can often resolve minor issues via a ‘fireside-chat’ style of mentoring.

A young practitioner given to aggressive litigation might be pulled back into line by a senior member of the profession, via a discreet but robust discussion about the courtesies and demeanour expected of officers of the court.

In one area, however, we have no discretion and are subject to a reporting obligation: irregularities (or suspected irregularities) in relation to a trust account. Any solicitor encountering this is obliged, under s260 of the Legal Profession Act 2007, to report the details to the law society.

That obligation is mandatory and unambiguous, and stands regardless of whatever feelings of collegiality we have for the impugned practitioner, or any view we hold that the matter might be able to be resolved without resort to the authorities. The legislation is quite clear and worth noting:

260 Reporting certain irregularities and suspected irregularities

(1) As soon as practicable after a legal practitioner associate of a law practice becomes aware that there is an irregularity in any of the practice’s trust accounts or trust ledger accounts, the associate must give written notice of the irregularity to—

(a) the law society; and

(b) if a corresponding authority is responsible for the regulation of the accounts concerned—the corresponding authority.

Maximum penalty—50 penalty units.

(2) If an Australian legal practitioner believes on reasonable grounds that there is an irregularity in connection with the receipt, recording or disbursement of any trust money received by a law practice of which the practitioner is not a legal practitioner associate, the practitioner must, as soon as practicable after forming the belief, give written notice of it to—

(a) the law society; and

(b) if a corresponding authority is responsible for the regulation of the accounts relating to the trust money concerned—the corresponding authority.

Maximum penalty—50 penalty units.

(3) An Australian legal practitioner is not liable for any loss or damage suffered by another person as a result of the practitioner’s compliance with subsection (1) or (2).”

There is good reason for this seemingly draconian approach. Clients trust us with their money, often more than they can comfortably afford to part with, and do so on the presumption of integrity that comes with being an officer of the court.

The system relies on our honesty and trustworthiness, and there can be no compromise; if clients lose faith in our ability to handle trust funds with fidelity, the system breaks down and the profession itself becomes fragile.

It is a hard thing for a profession built on collegiality, professional friendships and a common belief in justice, to turn in one of our own, but it is those very values that mandate it. We should be ready to do this even if there were no legislative imperative, so important is the element of trust to our role and the justice system itself.

Australian culture has a reflexive objection to ‘dobbing’, but if a solicitor becomes aware of trust account irregularities, that must be pushed to one side; if a practitioner is forced to report such things, we should laud their courage, not pillory them. Self-regulation in this regard is a heavy burden, but what part of being a lawyer isn’t?

As a profession, we must to ourselves be true, we must live the values we espouse, and that means that sometimes we have to take the hard step of reporting a colleague. Integrity cannot be part-time, and recent events have shown that the health of our profession requires eternal vigilance; if we fail in that, we fail entirely.

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