Victorian Legal Services Commission failing its public mission, causing wide distress

The Victorian Legal Services Commission was created to ensure that complaints against Australian legal practitioners and disputes between law practices or Australian legal practitioners and clients are dealt with in a timely and effective manner and to protect both consumers of legal services and the public interest in the proper administration of justice. Unfortunately the Commission just does not seem to be doing its job.  The last formal investigation of the Commission (in 2009) was damning, but it is now impossible to find the report, which we quote below. There has been very little publicity about the amount of dissatisfied customers, but if you ask around you will hear a lot.

Here is a youtube report about a recent complaint by Shimmon Wallis:

Below we quote what the Victorian Ombudsman said about the Victorian Legal Services Commission in its 2009 report. The link to the report is broken and there appears now to be no record at the Victorian Ombudsman's site of any such investigation. There is, however, a record at Steven Warne's Australian Professional Liability Blog at https://lawyerslawyer.net/2009/09/22/ombudsman-carries-out-own-motion-investigation-of-legal-services-commissioner/ [The broken link for the original Ombudsman's report was http://www.ombudsman.vic.gov.au/resources/documents/OV_ANNUAL_REPORT_0809.pdf]

Here is what the Ombudsman's report said:

‘Legal Services Commissioner
The Legal Profession Act 2004 established the office of the Legal Services Commissioner and lists its objectives, one of which is:

to ensure that complaints against Australian legal practitioners and disputes between law practices or Australian legal practitioners and clients are dealt with in a timely and effective manner [s. 6.3.2].

The role of the Legal Services Commissioner is to protect both consumers of legal services and the public interest in the proper administration of justice. The Legal Services Commissioner has the power to address complaints made against Victorian legal practitioners to ensure that they acted within the confines of the law, with appropriate ethical standards and with deference to their professional position.

The Legal Services Commissioner can receive complaints which relate to disputes about legal costs, claims of up to $25,000, or disciplinary matters. The legal system can be financially costly and the law can be complex, with intricacies which many members of the public find difficult to navigate and understand. This can leave the public vulnerable to unscrupulous, negligent or unprofessional practices of legal practitioners.

Over the past year I received 95 complaints about the Legal Services Commissioner, which replaced the former Legal Ombudsman in December 2005. There were recurring themes in the complaints which pointed to a systemic failure by the Legal Services Commissioner to adequately undertake its statutory role. For example, complainants alleged that:

• complaints were inadequately investigated or not investigated at all
• there were significant delays – sometimes in excess of three years – in finalising complaints
• documentation practices were poor and failed to provide complainants with information about the Legal Services Commissioner’s internal review process and external review mechanisms investigations lacked procedural fairness.

The following case study highlights that the lack of appropriate review powers in place for the Legal Services Commissioner is still the case. It illustrates how this can result in injustice to complainants and allow practitioners to avoid detection and/or prosecution as a consequence of the current legislative framework. I recommended that the Attorney-General consider amending the Legal Profession Act 2004 to enable the Legal Services Commissioner to review its merits-based decisions where there have been deficiencies in its investigations or errors in its decisions.

I understand that this is being considered as part of a national reform of the Australian legal profession announced by the Council of Australian Governments.

Lack of appropriate review powers
The complainant required life-saving medical treatment and so his legal practitioner referred him to a mortgage broker, who sourced a short-term loan. Because the complainant was overseas his brother signed the contract, which contained different terms and conditions from the original agreement.

When the complainant defaulted on the loan the mortgage company sued. In this case the legal practitioner, who formerly represented the complainant, also represented the mortgage company.

The complainant contacted the Legal Services Commissioner (LSC) and maintained that the legal practitioner had a conflict of interest. He also complained that the legal practitioner failed to follow his instructions and advise him properly. The LSC dismissed the complaint because of insufficient evidence.

I investigated the complaint and established that the LSC did not interview the complainant, his brother or the legal practitioner. Although the LSC requested documents from the practitioner, it failed to exercise its powers to obtain the documents when they were not supplied. Instead of gaining access to documents which may have provided evidence, the LSC relied solely on the legal practitioner’s assertions.

Outcome
I asked the LSC to seek legal advice on whether the case could be re-opened. The advice identified that the solicitor ‘acted for both financier and borrower contrary to rules 10.2 and 10.6 [Professional Conduct and Practice Rules 2000]’; that the solicitor ‘failed to protect his client’s interests’ and ‘acted in a potential conflict of interest’.

The deficiencies in the LSC investigation and errors in the final decision drew into question the merits of the decision. However, the legal advice indicated that the legality of the decision was not brought into question because the LSC had followed the legal procedures set out in its governing legislation, the Legal Profession Act 2004.

The advice concluded that deficiencies in an LSC investigation or an error in its decision (which may have been caused by the deficiencies in its investigation) cannot be classed as a ’legal’ error but is an error that goes to the merits of the complaint (‘merits’ error). A merits error does not give the LSC the power to re-open a discipline complaint. This is unsatisfactory. Complainants should be entitled to reviews of deficient investigations or erroneous decisions. I have recommended to the Attorney-General that he amend the Legal Profession Act 2004 to allow the LSC to re-open a case where there has been a merits error.

I note that since this recommendation the Council of Australian Governments (COAG) announced that it had devised a plan to achieve a national regulation for the Australian legal profession and any proposed changes to the Legal Profession Act (including complaint-handling and professional discipline) will be considered as part of this process.

I also conducted an own motion investigation into the Legal Services  Commissioner and its decision-making processes under section 14 of the Ombudsman Act because of the number of complaints I had received. My investigation identified a lack of understanding by staff of the Legal Services Commissioner’s statutory powers and a restricted skills-set to conduct investigations. The Legal Services Commissioner’s investigators showed limited knowledge of the basic techniques of investigative processes. Case files lacked:

• investigation plans
• thorough and professional approaches to gathering evidence
• follow-up on serious allegations
• substantiating documents such as practitioners’ files
• timely conclusions
• verification of practitioners’ responses
• reasons for decisions.

I made 28 recommendations to the Legal Services Commissioner and am pleased to note that it has taken steps to address a number of problems identified in my own motion investigation. I intend to review the Legal Services Commissioner’s implementation of my recommendations over the next year. I also referred the report of my investigation to the Attorney-General for his information, particularly in relation to the inability of the Legal Services Commissioner to re-open cases on the basis of merits.’