A common query received by the Professional Support Unit is the difference between a NSW legal practitioner who is a ‘solicitor consultant’ and one who is an ‘independent contractor’. Engaging in legal practice must be through a qualified legal entity.
Section 10 of the Legal Profession Uniform Law (NSW) (the Uniform Law) prescribes that a person must not engage in legal practice in NSW unless they do so through a “qualified entity as defined under section 6 of the Uniform Law. A “qualified entity” may include:
- An Australian legal practitioner, which means an Australian Lawyer who is admitted and has a practising certificate, or
- A law practice [a sole practitioner, a law firm partnership, a community legal service, an Incorporated Legal Practice or an Unincorporated Legal Practice].
Solicitor Consultants
A number of legal practitioners refer to themselves as ‘solicitor consultants’ or, simply, as a ‘consultant’. Usually, these practitioners provide short-term services to their clients, akin to typical consultancy arrangements. The term, ‘consultant’ or ‘solicitor consultant’ is not defined under the Uniform Law, except that a consultant can mean an “associate” of a law practice.
The lack of a definition under the Uniform Law is not in and of itself prohibitive, although there is no respective practising certificate (PC) category for a ‘solicitor consultant’. Rather, you must (either) hold an “employee of a law practice” or a “principal of a law practice” PC in private practice.
Typically, a ‘solicitor consultant’ is a legal practitioner who is an employee of a law practice engaged for a limited period of time.
Independent Contractors
Under the Uniform Law, the Law Society cannot issue a practising certificate permitting a solicitor to be an “independent contractor”. Rather, in private practice, you must (either) hold a “principal of a law practice” PC or an “employee of a law practice” PC.
Whether you are, in fact, an independent contractor is a question of employment law, rather than a regulatory one. The following information may assist in determining whether you are engaged as an ‘independent contractor’ rather than as an employee or consultant.
- The Australia Taxation Office contains helpful information to assist persons to work out whether they are an employee or a contractor, including the difference between employees and contractors.
- Fair Work Commission’s website
Legal practitioners who want to be independent contractors need to consider, among other things:
- how they are engaged to provide legal services for a law practice and how they are held out to clients,
- whether the law practice will be issuing the practitioners’ PAYG summaries, offering leave and superannuation entitlements (for example),
- whether the practitioner will supply his or her own equipment,
- whether the practitioner will be liable for his or her own income tax; and/or
- whether the practitioner has the freedom to choose his/her own work hours.
If you are providing legal services on your own account as an independent contractor to another law practice, you must hold a “principal of a law practice” PC and hold an approved professional indemnity insurance (PII) policy in your own name. In NSW, the approved PII is Lawcover. You will also need to be invoicing client/s directly.
A solicitor who is an independent contractor must ensure they meet the definition of a “qualified entity”. This requires, among other things, that the practitioner notify the Law Society’s Registry that they have established a sole practice, an incorporated legal practice (ILP) or an unincorporated legal practice (ULP). A solicitor will also need to ensure that they hold a PII policy. When the “qualified entity” is an ILP or an ULP, at least 14 days’ advanced notice is required before one can commence to engage in the provision of legal services. There may be other notification requirements as well.
Solicitor consultant vs independent contractor – which one am I?
If you are wondering whether you are a ‘solicitor consultant’ (an employee) or an independent contractor (principal), our guidance is to ask the following questions:
What category of practising certificate do you hold?
In private practice, you will hold either an “employee of a law practice” or a “principal of a law practice” PC. Generally, a solicitor consultant will hold the former PC category, while an independent contractor will hold the latter (noting that it is possible to work as an “employee of a law practice” if you hold a principal’s PC, upon notification of same to the Law Society’s Registry).[1]
What do you want or need to do in a particular role?
If you are required to independently sign a bill of costs and/or operate a trust account, you must hold a principal’s PC and your own PII policy.
How are you going to be engaged by the law practice?
Solicitor consultants (and locums)[2] are usually engaged on a short-term basis, so discussing the conditions of any employment contract; and who will hold PII to cover your legal practice is essential. When entering a short-term contract, it is important to discuss these issues before becoming engaged by a law practice.
Who is paying your professional indemnity insurance?
A law practice who engages a solicitor in a short term project should contact their PII insurer to enquire whether that solicitor will be covered as an employee under the policy for the legal work they perform.
When a law practice has contracted a solicitor as an “employee of the law practice” or as something akin to an employee, the law practice’s PII will provide coverage for work performed by the employee. If, on the other hand, the solicitor is an independent contractor, then they will need to have their own law firm which takes out its own PII policy.
Where there is any doubt as to whether your situation would enable you to be a solicitor consultant or independent contractor, Lawcover’s Consultancy Checklist will help determine whether you need to hold separate professional indemnity insurance.
Upon receiving a completed Consultancy Checklist, Lawcover will assess whether your arrangement falls into the ‘Consultant’ (employee) or ‘Contractor’ category.
In summary, whether a practitioner is an “employee of a law practice” or an ‘independent contractor’ will depend on several determining factors, including:
- the work the practitioner will be doing,
- the nature of the relationship between the practitioner and qualified legal entity; and
- the terms and conditions upon which the practitioner contracts with the client or employer.
Ethical obligations
Whether you want to operate as a solicitor consultant or independent contractor, ethical obligations will apply. Consider, in particular, the following Australian Solicitors’ Conduct Rules[3]:
Rule 3 Paramount duty to the court and the administration of justice
Rule 4 Other fundamental ethical duties
Rule 9 Confidentiality
Rule 10 Conflicts concerning former clients
Rule 11 Conflict of duties concerning current clients
Rule 12 Conflict concerning a solicitor’s own interests
Rule 36 Advertising
Regard should also be given to rule 8 (Conducting another business) and rule 9 (Business Name) of the Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 (Solicitors’ Practice Rules), depending on the factual circumstances of your arrangement.
Other resources
Our Legal Practice Matrix sets out what a solicitor can and cannot do at various stages throughout their career, including being (either) a consultant or contractor.
Practitioners holding a principal’s practising certificate, or contemplating becoming a principal solicitor, will find this article helpful to ensure you discharge your obligations under s34 (Reasonable supervision of legal services) and s35 (Liability of principals) of the Uniform Law:
As you would with any other major business decision, we recommend practitioners seek their own independent legal advice if they have concerns about their employment contractual arrangements.
If you would like more information, please contact the Law Society’s Professional Support Unit on the details below. The Professional Support Unit provides free, confidential guidance to legal practitioners about their compliance, costs and ethical obligations under the Uniform Law.
Costs [email protected] (02) 9926 0116
Ethics [email protected] (02) 9926 0114
Regulatory compliance [email protected] (02) 9926 0115
[1] You can notify the Law Society’s Registry your change in particulars by emailing [email protected].
[2] For more information on locum solicitors – how to engage or become one – see our previous article, https://lsj.com.au/articles/locum-solicitors-how-to-find-or-become-one/
[3] Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW)
