Planning an innovative legal solution in New Zealand? (DRAFT - NOT FOR COPYING)

Planning an innovative legal solution in New Zealand?

General legal guidance only – for individual cases, specific professional legal advice should be sought

Key questions: 1. Is your product a ‘legal service’?

2. Who can provide it?

3. To what extent do the regulatory rules apply?

4. Can you comply with the regulatory rules?

Is your product a ‘legal service’?

5. LCA s 6 (Interpretation) – ‘legal services’: a. legal services means services that a person provides by carrying out legal work for any other person b. legal work includes— (a) the reserved areas of work: (b) advice in relation to any legal or equitable rights or obligations: (c) the preparation or review of any document that— 1. creates, or provides evidence of, legal or equitable rights or obligations; or 2. creates, varies, transfers, extinguishes, mortgages, or charges any legal or equitable title in any property: (d) mediation, conciliation, or arbitration services: (e) any work that is incidental to any of the work described in paragraphs (a) to (d).

6. Thus, ‘legal services’ includes legal advice, and document preparation or review. It also includes mediation, conciliation and arbitration.

7. It also includes the ‘reserved areas of work’ (see below).

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8. LCA s 6 (Interpretation) – ‘reserved areas of work’: a. reserved areas of work means the work carried out by a person— (a) in giving legal advice to any other person in relation to the direction or management of— 1. any proceedings that the other person is considering bringing, or has decided to bring, before any New Zealand court or New Zealand tribunal; or 2. any proceedings before any New Zealand court or New Zealand tribunal to which the other person is a party or is likely to become a party; or (b) in appearing as an advocate for any other person before any New Zealand court or New Zealand tribunal; or (c) in representing any other person involved in any proceedings before any New Zealand court or New Zealand tribunal; or (d) in giving legal advice or in carrying out any other action that, by section 21F of the Property (Relationships) Act 1976 or by any provision of any other enactment, is required to be carried out by a lawyer.

9. Note the restriction on legal advice – it is only in relation to ‘the direction or management’ of the ‘proceedings’. The restriction does not extend to legal advice about the proceedings if the advice is not about the ‘direction or management’. a. That was intended to be a real distinction. b. In the Bill, the word ‘conduct’ was used. The Select Committee changed it to ‘direction and management’ because ‘conduct’ was being interpreted too widely.

The Select Committee wanted to keep it a narrow exception.

10. If you are providing automated documents that create legal obligations, you are providing legal services, even if you are not providing any legal advice.

Who can provide your product/service?

11. This is where it gets interesting.

12. In the following (and in the LCA), ‘lawyer’ means the holder of a current practising certificate. It does not extend to anyone else who is on the roll of barristers and solicitors but does not hold a practising certificate.

13. Anyone can provide ‘legal services’ for gain or reward – unless those services are: a. Conveyancing (defined in s 6); or b. Reserved areas of work (see paragraph 8 above).

14. Incidentally, ‘Conveyancing’ ‘does not include the legal work involved in the preparation or drafting of a will’ (LCA s6).

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15. That means anyone – anywhere in the world, and regardless of legal qualifications – can provide legal advice in New Zealand (except in the reserved areas of work, or conveyancing) for gain or reward.

16. However, it is a criminal offence if someone who is not ‘an authorised person’ ‘drafts, settles, or revises for or on behalf of any person who is a party to proceedings before any court or tribunal or who proposes to intervene in, or become a party to, any such proceedings any document that is to be filed in those proceedings’. (LCA s 26). a. An ‘authorised person’ includes not only a lawyer, but also ‘a person acting under the supervision of a lawyer’. b. It also includes anyone who is entitled under legislation to draft, settle or revise such a document – e.g. employment legislation, Maori land, ACC, and other areas where rights of appearance are not confined to lawyers. c. An exception exists if someone fills in, for someone else, a printed form prescribed for the proceedings or prepared by an authorised person, as long as no charge is made for filling in the form or any related service. (LCA s 27(3)) 17. ‘Reserved areas of work’: a. Subparagraph (a) – legal advice in relation to the direction or management of any proceeding... – may only be provided by a lawyer or incorporated law firm, if for gain or reward. (LCA s 24(1)(a)) However, this may also be provided by a non-lawyer employee of a lawyer or incorporated law firm to clients of their employer. In such a case, the advice is provided on behalf of the employer and the employer is responsible for it. 1 b. Subparagraphs (b) to (d) – representation and specified statutory advice – may only be provided by a lawyer. (LCA s 24(1)(b)) c. This does not prevent employer organisations or unions from employing a lawyer to represent their members. (LCA s 24(2).)

To what extent do the regulatory rules apply?

1. All providers are subject to the general law relating to the provision of services – contract, fair trading, consumer rights, etc.

2. No one may hold themselves out as a ‘lawyer’ (or certain other reserved terms) if they do not hold a current practising certificate. It is a criminal offence. It is also an offence to make misleading representations about legal qualifications, or about who is providing the services. 2 3. In addition, lawyers and their employees are subject to the lawyers’ regulatory regime in respect of their provision of legal services.

4. Non-lawyer conveyancers are subject to a parallel regulatory regime for conveyancers.

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Canterbury Westland Standards Committee v Simes [2012] NZLCDT 4 (5 April 2012), para 79-82 (obiter).

See LCA ss 21-23 for details.

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5. Non-lawyers are not subject to such a regulatory regime. (They may however have a different professional regime – e.g. accountants, psychologists, financial advisers, etc.)

6. This was supposed to be the point of difference on which – having lost their statutory monopoly - lawyers would market the benefits to consumers of using lawyers instead of other providers. 3 Consumers would be encouraged to choose lawyers because of the additional protection from the lawyers’ regulatory regime, even though non-lawyer providers would also be available.

7. So, if you are a lawyer or incorporated law firm and you are providing legal services, you must comply with the trust-account rules and client-care rules, etc, regardless of whether those legal services are ‘reserved’ to lawyers.

8. Lawyers also have to comply with AML requirements if they are providing services that fall within the AML regime. Details there will depend on the nature of the services, clients, and risks. I note the actual rules are flexible as to how compliance occurs. ‘Guidelines’ are not binding. (I have not researched this in detail, as most of my services fall outside the AML regime, and those that do come within the regime are ‘low risk’ with less onerous obligations.)

Can you comply with the regulatory rules?

9. This is where the technicalities come in.

10. The NZ rules permit prepayment to an office account if it is a fixed fee and if it is invoiced before payment. a. Lawyers and Conveyancers Act (Trust Account) Regulations 2008 cl 10. b. This requires full disclosure to the client (that it is not going to a trust account), and the ability to refund if the services are not provided or are not of acceptable quality.

11. The NZ rules require specified client-care information and terms of engagement. c. They can be provided by drawing them to the client’s attention by a link to an online page, or by emailing or handing them to the client. I don’t see this aspect as posing any great difficulties for online providers. d. They have to contain information about any limits on the lawyers’ liability: I confirm that my instructions are limited to the specific task / unbundled services / document.

Concluding comments 12. If you are a lawyer or incorporated law firm and you are providing ‘legal services’, you must comply with the regulatory regime.

13. Unless your ‘legal services’ revolve around (a) conveyancing (excluding wills), or (b) court or tribunal proceedings that do not permit non-lawyer representation, you may be able to provide your legal services without being a lawyer or incorporated law firm. If so, and

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Select Committee submissions and other background material.

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especially if the regulatory rules pose a barrier, shred your practising certificate and get on with it.

Cheryl Simes 24 September 2020

Let me know if you identify any errors or omissions in this guidance. c.simes@kiwilaw.co.nz

Š Cheryl Simes (Kiwilaw) 2020 – not to be reproduced without permission

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