Incorporated Legal Practices
Q. I am an authorised principal of an Incorporated Legal Practice (ILP). I am aware that an ILP can provide legal services and other services. What, if any, are the further disclosure obligations to clients in these circumstances? Is it permissible for the ILP to have non-legal directors and shareholders?
A. As you correctly state, the law practice may provide other services pursuant to s 103 of the Legal Profession Uniform Law (NSW) (the Uniform Law), noting however the prohibited services and business outlined in s 258.
Where other services are provided there may be additional disclosure obligations (s 107). This section is engaged where a person instructs an ILP to provide services that the person might reasonably assume to be legal services and the ILP provides legal and non-legal services.
In such instances, the ILP must comply with r 31 of the Legal Profession Uniform General Rules 2015. Rule 31 requires giving the person notice in writing:
‘(a) setting out the legal services to be provided, and
(b) stating whether or not all of the services are to be provided by an Australian legal practitioner, and
(c) if some or all of the services are not to be provided by an Australian legal practitioner, identifying those services and indicating the status or qualifications of the person or persons who are to provide the services, and
(d) stating that the Uniform Law and these Rules apply to the provision of legal services but do not apply to the provision of non-legal services’.
Regarding the final part of your query, the Uniform Law does not prohibit non-legal practitioners from being directors of an ILP. As you will be aware, there is however a requirement that there be at least one authorised principal (ie a person who holds a principal’s practising certificate authorising the holder to supervise legal practice by others and who is also a validly appointed director of the company).
Section 37 of the Uniform Law specifically envisages that a practitioner may share receipts, revenue or other income from the provision of his or her services with lay associates of the law practice. Lay associate is defined in the Uniform Law to include a person who is not an Australian legal practitioner and who is a person who shares the receipts, revenue or other income arising from the law practice.
The foregoing is subject to pt 3.9 of the Uniform Law which prohibits a law practice from having a lay associate where it is known that the lay associate is a disqualified person or a person who has been convicted of a serious offence unless the lay associate is approved by the designated local regulatory authority.
For further information, see the Incorporated Legal Practice Toolkit on the Law Society website.