Section 130 of the Legal Profession Act 2007 (the Act) empowers the Commissioner to conduct an audit (a ‘compliance audit’) of an ILP about:
- ‘the compliance of the practice, and of its officers and employees, with the requirements of [the Act] or a regulation, the legal profession rules or the administration rules so far as they apply to incorporated legal practices’; and
- ‘the management of the provision of legal services by the incorporated legal practice, including the supervision of the officers and employees providing the services.’
Compliance audits are one of several regulatory tools available to us. The Commission uses compliance audits for a number of reasons including preventing, detecting or deterring conduct which may amount to unsatisfactory professional conduct or professional misconduct.The Legal Services Commissioner has, by agreement with the Queensland Law Society, accepted primary responsibility for 'auditing' incorporated legal practices. The responsibility to audit a law practice’s trust account continues to be the responsibility of the QLS.
Our compliance audits cover a full spectrum, from supporting and educating ILPs to comply with the Act to practice audits using our extensive coercive powers on those who we identify to be at the greatest risk of non-compliance.
Our approach is governed by six fundamental criteria. These are that compliance audits should:
- be credible and robust.
- be proportionate.
- “add value” and to engage with legal practitioner directors with problem solving as to how they might best develop and continually improve their management systems, processes and workplace cultures to establish “ethical infrastructure”.
- be consistent with the Commission’s ‘education towards compliance’ approach to regulation which is aimed at promoting higher standards (compared to the traditional regulatory approach which is geared to enforcing minimum standards).
- not add any regulatory burden to incorporated legal practices unless there is some demonstrable risk-related reason that justifies a more intrusive approach.
- allow for the fact that we will inevitably have limited resources.
Types of Audits
In keeping with our approach we undertake 3 different types of compliance audit.
How we determine who to audit
Who and when we decide to audit is determined by a number of factors including:
- when a law practice commences as an ILP.
- the time since our last interaction with an ILP.
- analysing information based on a range of evidence including a firm’s complaints history, the firm’s self-assessment audit and the kinds of practice areas and aspects of practice that are most at risk.
In 2013–14 we will focus our ILP compliance activities on the following areas:
In keeping with this priority we are conducting a number of audits/investigations focusing on issues such as:
- Charging legal fees to which the practice was not entitled.
- Non-compliance with cost disclosure obligations.
- Failure to provide reasonable estimates.
- Implementation of appropriate management systems.