The terms ‘partner’, ‘principal’ and ‘director’ are to be used only by those entitled to do so. The Legal Services Commission is becoming increasingly concerned with the misleading and improper use of these terms in describing legal practitioner roles.
As such, the Commission reminds practitioners that under the Legal Profession Act 2007 (the LPA):
While the term 'partner' is not defined in the LPA, it is widely understood and traditionally accepted that a partner in a law firm is a senior legal practitioner who is an owner of the law firm and/or a non-equity partner who has decision-making powers or influence, and is nevertheless a principal.
This understanding is supported by the LPA at section 7(4)(b), which confirms that a partner in a law firm is a principal and that, historically, partners of a law practice held a principal level practising certificate. They are also liable for any contravention of the LPA or a regulation imposing an obligation on the practice under section 701.
The Commission considers that a legal practitioner who uses the term 'principal' or 'partner' to describe their role when they do not hold a principal practising certificate, does so in breach of the LPA and rule 36.1.2 of the Australian Solicitors Conduct Rule 2023 (ASCR). This is because doing so is misleading and/or deceptive, or likely to mislead and/or deceive consumers, colleagues and others about the legal practitioner’s practising rights, seniority and/or status within the law practice.
Additionally, the description of a legal practitioner as a 'partner' in a sole practice or ILP is both misleading and inaccurate based on how these law practices are legally constituted.
Similarly, the Commission considers that a legal practitioner who uses the term 'director' to describe their role, when they do not hold a principal practising certificate and are not a director of the company which operates the ILP, also does so in breach of the LPA and rule 36.1.2 of the ASCR. Doing so is improper for the same reasons as set out above and may mislead or deceive consumers, colleagues and others into believing that the legal practitioner is a director of the company that operates the ILP.
Just as the legal term of 'partner' suggests that there are statutory rights, responsibilities and restrictions that apply under the Partnership Act 1891, the legal term 'director' also suggests that there are statutory rights, responsibilities and restrictions that apply under the Corporations Act 2001 (Cth).
Legal practitioners must ensure that the role descriptions used in their legal practice do not misrepresent a person’s position within the law practice or their practising rights, and does not suggest the operation of statutory rights, responsibilities and restrictions, which don’t apply when the title used does not accurately represent the legal status of the person’s role.
The title 'partner' should only be used if the practitioner holds a principal practising certificate and practices in a law firm (not in a sole practice or under an ILP).
Further, legal practitioners should only describe themselves as legal 'practitioner director' or 'director' if they hold a principal practising certificate, practice under an ILP and are a director of the ILP (and registered as such against the company records recorded with the Australian Securities and Investments Commission).
Sole practitioners and LPDs may both describe themselves as 'principal', given that they are required to hold a principal level practising certificate.
All legal practitioners are encouraged to consider whether the way they describe their roles and those of non-qualified persons in their legal practice is appropriate when considering the LPA, ASCR and this regulatory guide. If a legal practitioner believes that their role description may mislead or deceive, or is otherwise in contravention of any legislation, they must take appropriate steps ensure it best reflects their true position.
Breaches of or inconsistency with any statutory instrument and/or this regulatory guide is likely to be considered a suitability matter under sections 9 and 46 of the LPA and may be considered as conduct for the purposes of Chapter 4 of the LPA.
Legal practitioners who are in breach of the LPA must rectify the error immediately and take steps to ensure that all roles within their legal practice are accurate and not able to be misconstrued or likely to mislead any other person. Appropriate management systems should be in place accordingly.
The Commission issues this regulatory guide to uphold the good standing of legal practitioners and protect consumers, colleagues and others from conduct that is misleading and /or deceptive, or likely to mislead or deceive, in the provision of legal services by the law practice.
