Question On Notice No. 821 asked in the Legislative Council on 11 August 2022 by Hon Nick Goiran
Question Directed to the: Parliamentary Secretary representing the Attorney General
Parliament: 41 Session: 1
Question
I refer to the Legal Profession Uniform General Amendment
(Managed Investment Schemes) Rule 2021, and I ask:
(a) what
was the catalyst for bringing about this amendment to the rule;
(b) who
was consulted prior to this amendment rule being finalised;
(c) did
any person consulted raise any concerns;
(d) if
yes to (c), what were these concerns;
(e) has the finalised amendment rule addressed these concerns; and
(f) if
no to (e), why not?
Answered on 21 September 2022
(a) The Legal Profession Uniform General Amendment (Managed Investment Schemes) Rule 2021 amends rules 91B and 91BA of the Legal Profession Uniform General Rules 2015 relating to managed investment schemes.
The amendment to rule 91B updated the relevant test to whether an associate of a law practice's interest gives rise to a conflict of interest (as opposed to being a 'substantial interest').
The amendment to rule 91BA (which was originally made on an urgent and interim basis) ensures that law practices in participating jurisdictions do not contravene section 258 of the Legal Profession Uniform Law by promoting or operating a litigation funding scheme, or providing legal services in relation to a litigation funding scheme or the responsible entity for the scheme, beyond the original sunset date of 22 August 2021.
(b) The consultation was undertaken by the Legal Services Council consistent with the requirements of the Legal Profession Uniform Law. It is understood that submissions were received from the following stakeholders during the consultation process: the Legal Practice Board of Western Australia; the Law Society of New South Wales; the Victorian Legal Services Board and Commissioner; the Law Society of Western Australia; the Corporations and Securities Section of the Commercial Bar Association of Victoria; and the Law Council of Australia.
(c) Yes.
(d) One concern that was raised was a minor drafting change. A broader concern was raised by one stakeholder regarding whether proposed rule 91B lacked the clarity and certainty of the existing provisions, and whether proposed rule 91BA should expire on the basis that it is undesirable for law practices to provide legal services to managed investment schemes in the form of litigation funding of class actions where an associate of the law practice also has a substantial interest in the scheme or the responsible entity.
(e) The minor drafting change was addressed.
(f) As to the broader concerns raised, it is understood that, given the proposed amendments to rules 91B and 91BA were supported by the majority of stakeholders, the Legal Services Council after carefully considering these concerns, resolved to proceed with the proposed amendment rule, with no changes save for the minor drafting change to rule 91B suggested.
In relation to rule 91B, the Legal Services Council concluded that the existing provision requiring a law practice to look for interests that, even if they exist, do not give rise to an actual conflict, did not justify the regulatory burden.
In relation to rule 91BA, the Legal Services Council concluded that there was a real risk that a plaintiff law practice providing legal services in a class action would be prevented from doing so if the amendment was not made, due to the prohibitions in section 258(1) and (3) of the Uniform Law.