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Appropriate management systems

The Legal Profession Act 2007 (the Act) provides at section 117(3) that ‘each legal practitioner director of an incorporated legal practice must ensure that appropriate management systems (AMS) are implemented and kept to enable the provision of legal services by the practice:

a) under the professional obligations of Australian legal practitioners and other obligations imposed under this Act; and
b) so that the obligations of the Australian legal practitioners who are officers or employees of the practice are not affected by other officers or employees of the practice.’

The Act defines the professional obligations of an Australian legal practitioner at section 110 ‘to include duties to the Supreme Court; obligations in connection with conflicts of interest; duties to clients, including disclosure; and ethical rules the legal practitioner must observe.’

Though the Act does not define “appropriate management systems” there are a number of key principles which law practices should consider when designing and implementing their management systems:

  • the regulatory purpose of AMS is for law practices to develop and maintain an ethical infrastructure that encourages ethical behaviour by its legal practitioner directors and employees.
  • the practical effect of AMS is to encourage law practices to “self regulate” so as to prevent unethical behaviour and in the event that such conduct occurs, take remedial steps.
  • the legal practitioner director is the person responsible for both preventative and remedial steps to ensure compliance with the Act and professional rules. In the event of contravention of Part 2.7, there are disciplinary outcomes for the legal practitioner director.
  • AMS evidences a move away from the traditional focus of professional discipline (which has been the individual) and to allow “practice-based regulation”. These provisions represent a recognition that the law practice as an entity has the power to prevent or encourage ethical behaviour.
  • clearly a firm’s management systems won’t count as appropriate merely because they’re intended to achieve that purpose – a firm’s management systems hardly ‘enable’ the provision of legal services by the firm under the professional obligations of Australian legal practitioners if they’re applied only sometimes and not others or are applied differently by different of its employees at different times or if the people ‘down the line’ don’t know about them or understand them or worse still just don’t care.

Obviously, what is “appropriate” for one practice will not be for another. As a result when assessing whether management systems are “appropriate” legal practitioner directors should have regard to:

  • the size of the law practice;
    the experience and qualifications of their employees;
  • the nature of the legal services provided;
  • the nature of any business services provided in addition to legal services etc.

An appropriate management system, then, simply means a firms’ formal and informal management policies, procedures and controls, work culture, and habits of interaction and practice that support and encourage ethical behaviour by all employees. In short, the intent of the Act is that the practice will develop and implement management systems and culture which enables them to detect, prevent and correct employee conduct which may result in contravention of their professional and legislative obligations.

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Last reviewed
11 November 2013
Last updated
11 November 2013

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