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External interventions

External intervention is the appointment of a Supervisor, Manager or Receiver to a law practice and the exercise of powers and functions of those persons in relation to a practice. See Chapter 5 of the Legal Profession Act 2004.

When would external intervention occur?

Section 615 of the Legal Profession Act 2004 outlines the situations when external intervention may take place. Generally the Council of the Law Society can use this disciplinary action when any proper cause exists, but typical examples include:

• Where a sole principal of a practice:

– has died
– ceases to be a legal practitioner
– has become an insolvent under administration
– is in prison.

• When a firm’s partnership or a corporation:

– is being, or has been, wound up, deregistered or dissolved
– ceases to be an incorporated legal practice. 

• When the Council believes on reasonable grounds that the laws or proper procedures regarding trust money or property are not being followed.
• When the law practice has failed to comply with any requirement of an investigator or external examiner.

Types of interventions

When are Receivers appointed, and what are their powers?

The Council of the Law Society may apply to the Supreme Court, by summons, for the appointment of a Receiver when a client cannot obtain trust money or when a solicitor:

• ceases to hold a Practising Certificate
• is mentally or physically infirm
• has abandoned his or her practice
• has died.

A Receiver’s powers under Part 5.5 of the Legal Profession Act 2004 are extensive and include taking possession of all trust property held by the solicitor in question.

When are Managers appointed, and what are their powers?

Managers may be appointed by the Council under Part 5.4 of the Legal Profession Act 2004 in identical situations to Receivers but as a matter of practice are usually appointed to ensure the orderly conduct of clients’ and practice affairs.

A Manager must hold a principal’s Practising Certificate and will take over all the duties and responsibilities of the solicitors’ practice including acting on behalf of existing and new clients (if they consent) and winding up the practice.

Managers are more usually appointed upon the death or ill health of a sole practitioner or where a Receiver’s powers of collecting or tracing trust money are not required.

When are Investigators appointed, and what are their powers?

The Council may appoint an Investigator to examine the affairs of a solicitor if there is a suspicion of improper conduct or irregularity in relation to a solicitor’s conduct or general affairs. The Law Society retains a number of experienced Investigators and also calls upon the skills of the Investigators within its Trust Account Department.

The Attorney General, the Council of the Law Society and the Legal Services Commissioner are each furnished with a copy of the Investigator’s report should there be an adverse finding.

The Law Society’s Professional Conduct Committee may, on the basis of the findings of the report, resolve to refer the solicitor to the Administrative Decisions Tribunal (ADT) if it is satisfied that there is a reasonable likelihood that the solicitor will be found by the ADT to have engaged in unsatisfactory professional conduct or professional misconduct.