By Katherine Lau -
Part 1 – Employee due diligence
Operating a law practice effectively and providing quality legal services requires more than just knowing the law. What makes a robust legal practice is a sum of many parts – a thorough understanding of clients’ interests and needs, as well as effective supervision of staff, compliance and risk management, and good governance.
This is the first in a series of articles that takes a deep dive into the components that make up a strong and viable legal practice. In this instalment, we discuss the requirements of appropriate employee screening and compliance checks and why this process is critical to maintaining a law practice’s integrity and reputation.
The Regulatory Framework
Solicitors who principally practise law in NSW are regulated by the Legal Profession Uniform Law (NSW) No 16a of 2014 (Uniform Law) and associated legislation (together, the “Uniform Law framework”).
Supervision is the cornerstone of good legal practice and broadly encompasses:
- The appropriate control and management of a legal practice to ensure that the practice and its staff comply with obligations under the Uniform Law framework.
- The appropriate review and oversight of work performed by employees of the practice to ensure that legal services are delivered competently and diligently. This includes the training and mentoring of solicitors while they are required to undertake ‘supervised legal practice’. Further information and guidance about effective supervision for supervised legal practice is available on the Law Society website.
This article focusses on the first aspect, appropriate control and management of a legal practice; specifically, the appropriate screening of potential associates of the practice (see the definition of ‘associate’ of a law practice under s 6 of the Uniform Law).
Screening checks of potential associates of a law practice are not only important for regulatory compliance; they provide an assurance that the prospective associate is capable of fulfilling the inherent requirements of the role, trustworthy and meets the required criteria for the position.
There are high stakes tied to the delivery of legal services and ensuring those who are integral to this process are trustworthy and upstanding is part of maintaining public confidence in the administration of justice and the legal system.
When it comes to screening potential law practice associates, it is important to assess whether they are the right fit for the practice, both in terms of experience and cultural fit. Additionally, and equally as important, is assessing whether they satisfy the relevant regulatory requirements set out in the Uniform Law. These requirements are discussed below.
For solicitors and foreign qualified lawyers who maintain an office in NSW, their ability to practise law and what they can and cannot do in legal practice is largely dictated by the conditions on their practising certificate or Australian Registration Certificate. It is therefore critical to ensure that any solicitor or foreign lawyer who is employed by a law practice holds the appropriate licence to perform the work they are employed to undertake.
In relation to employees who are not required to hold legal qualifications, such as paralegals or legal support staff, the screening process needs to check whether the candidate has been convicted of a serious offence or is a ‘disqualified person’. These terms are defined under the Uniform Law and discussed in further detail below.
As with any recruitment process, it is important that legal practices take care not to discriminate against candidates and applicants. It is therefore recommended that legal practices establish and follow objective recruitment criteria which are not directly or indirectly discriminatory and not allow personal biases, prejudices or stereotyping to impact the selection process.[1] The Law Society’s Workplace Guide & Model Discrimination and Harassment Policies has further guidance in this regard.
Lawyers
A lawyer is defined under the Uniform Law as an Australian legal practitioner or an Australian-registered foreign lawyer who is an associate of a law practice.[2]
Under s 34 of the Uniform Law, a law practice’s principal must take reasonable steps to ensure that:
- all legal practitioner associates of the law practice comply with their obligations under the Uniform Law regime and their other professional obligations; and
- the legal services provided by the law practice are provided in accordance with the Uniform Law regime and other professional obligations.
Australian legal practitioners
One important aspect of this responsibility is ensuring that Australian legal practitioner associates hold a practising certificate in the appropriate category and comply with the conditions on their practising certificate.
Foreign lawyers
A foreign lawyer is defined under s 6 of the Uniform Law as an individual who is properly registered or authorised to engage in legal practice in a foreign country by the foreign registration authority for the country.
If a foreign lawyer wishes to:
- maintain an office in NSW for the purpose of practising foreign law, or
- practise foreign law as a partner, director or other principal of a law practice,
they must hold an Australian Registration Certificate (ARC).[3]
Law practices that wish to engage or employ a foreign lawyer for these reasons must therefore ensure that the foreign lawyer holds or is eligible to hold an ARC granted by the Law Society of NSW. For further information about why foreign lawyers in NSW should obtain an ARC, refer to this article.
Lay associates
Lay associates are broadly defined under the Uniform Law. They are anyone who is not an Australian legal practitioner and who is:[4]
- a partner, director, officer, employee or agent of the law practice;[5] or
- a consultant to the law practice (however described) who provides services relating to legal services to the law practice, or other services of a kind specified in the Legal Profession Uniform Rules for the purposes of this definition; or
- a person who shares the receipts, revenue or other income arising from the law practice.
Under s 121 of the Uniform Law, a law practice is prohibited from having:
- a person who has been convicted of a serious offence; or
- a “disqualified person”
as a lay associate unless the associate is approved by the relevant designated local regulatory authority.
To comply with this requirement, law practices should have processes in place for obtaining relevant information about any potential associate of the practice. These can include previous employment checks, third party provider checks (where relevant) and review of the register of disciplinary action.
Law practices may also wish to consider whether they ought to have a policy requiring lay associates to disclose any serious offence or disqualification. Under s 122 of the Uniform Law, it is an offence for a person who is disqualified or has been convicted of a serious offence to seek to become a lay associate of a law practice without first informing the practice of the disqualification or conviction.
Definitions
The following definitions are found in s 6 of the Uniform Law.
| Disqualified person | A person is a “disqualified person” if:
(a) their name has been and remains removed from the Australian Roll of Lawyers; or (b) their practising certificate has been suspended or cancelled, or its renewal has been refused; or (c) they are the subject of an order prohibiting them from working for, or in, a law practice, managing an incorporated legal practice, or being a partner in a multi-disciplinary partnership. |
| Serious offence | means an offence that is—
(a) an indictable offence against a law of the Commonwealth, a State or a Territory (whether or not the offence is or may be dealt with summarily); or (b) an offence against a law of a foreign country that would be an indictable offence against a law of the Commonwealth, a State or a Territory if committed in Australia (whether or not the offence could be dealt with summarily if committed in Australia) |
| Conviction | includes a finding of guilt, or the acceptance of a guilty plea by the court, whether or not a conviction is recorded. |
Checklist for compliance management
In order to appropriately screen potential and existing employees, and avoid penalties and disciplinary action for breach of regulatory compliance, principals of a law practice should, at a minimum:
- Familiarise themselves with the requirements of the Uniform Law, particularly the relevant practising certificate categories and conditions (see Divisions 2 & 3 of Part 3.3 of the Uniform Law) and ss 121 and 122.
- Request to sight the current practising certificate of any Australian legal practitioner candidate prior to confirming employment. For candidates who are foreign lawyers, either sight their ARC or check that they are eligible to hold an ARC.
- Have a process to ensure that, leading up to the end of the practising year, all legal practitioner associates have properly renewed their practising certificate. In relation to foreign lawyers, ensure they have properly renewed their ARC.
- Conduct appropriate background checks in relation to any potential associate of the practice, such as previous employment checks, third party provider checks (where relevant), and review of the register of disciplinary action. Access recent judgments and decisions about solicitors involved in disciplinary matters via the Law Society’s website.
- Having regard to the requirements under ss 121 and 122 of the Uniform Law, consider whether the practice ought to have a policy requiring lay associates to disclose any serious offence or disqualification.
- Know the process for seeking approval in relation to disqualified or convicted lay associates. In the case of a disqualified person, approval must be sought from the Law Society of NSW.[6] For lay associates who have been convicted of a serious offence, approval must be sought from the NSW Civil & Administrative Tribunal.[7]
Employee screening under the amended AML/CTF Act
From 1 July 2026, law practices that provide designated services under the amended Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) will need to conduct personnel due diligence to assess the people they employ or engage to perform AML/CTF roles.[8]
Personnel due diligence must be conducted before a person is employed or engaged by the law practice and on an ongoing basis during the person’s employment or engagement.
Law practices that provide designated services are encouraged to review AUSTRAC’s Program Starter Kits.
AUSTRAC’s Reforms Guidance regarding personnel due diligence and their employee screening processes also provides information on what changes may need to be implemented to comply with the AML/CTF Act.
Further guidance
The NSW Law Society’s Professional Support Unit (PSU) provides free and confidential guidance to solicitors across NSW on their regulatory, professional and ethical obligations in legal practice. Contact PSU’s regulatory compliance line on (02) 9926 0115 or email regulatory.compliance@lawsociety.com.au for further information and guidance on best practice for screening of law practice associates under the Uniform Law.
