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The rewards of robust debate (Sep 2010)

Some of the most remarkable issues which arise in our legal system and those of comparable jurisdictions are also the subject of great public attention and popular debate. Three very high profile issues recently have been the Fraser-Kirk harassment case against David Jones, criminal trial processes and the use of judge-alone trials, and, in the US, the decision not to lay charges against insurer executives of the American International Group (AIG) over the company's 2008 financial crisis.

In the Fraser-Kirk case, the plaintiff seeks $37 million in damages against David Jones, including five per cent of David Jones' company profits for the past seven years. The case is almost contemporaneous with the private settlement of a high-profile sexual harassment claim against the former CEO of Hewlett Packard in the US. The underlying legal issues of the Fraser-Kirk case, including the choice to proceed on grounds which include tortious, trade practices and contractual breaches, also underpin the public debate, even though they remain unarticulated in most coverage by the popular press.

The second topical issue has been the decision in the US to decline to pursue either a civil or a criminal prosecution against Joseph Cassano of AIG following an investigation into whether he had misled investors and auditors about the company's losses related to credit-default swaps. Vanity Fair dubbed Cassano 'the man who crashed the world' after his derivatives unit dragged AIG into near collapse, prompting a $182 million federal bailout that remains contentious. Whereas previously, big financial scandals were followed by criminal convictions, two years after the biggest financial collapse in 80 years there have been no criminal convictions, absent Bernie Madoff.

Bankers may have been foolhardy, rash or unethical, but apparently they didn't commit any crimes. As the Wall Street Journal reported, the lesson in the US appears to be that 'while practices may have been negligent, it may not be as easy to prove they were illegal'. Civil prosecutions may be more fruitful, and the US regulators continue their pursuit of executives involved in the global financial crisis.

These issues are partly a reflection of the sophistication and complexity of our economies; they do not really exist in less developed jurisdictions. The US, the UK and other common law countries debate such issues in order to reach a balance between the competing policies of protecting shareholders, consumers and creditors, and supporting entrepreneurial activity and the economy. From the latter perspective, and quoting from the World Bank's 2001 statement on effective insolvency and creditor rights: 'The rescue of a business preserves jobs, provides creditors with a greater return based on higher going concern values of the enterprise, potentially produces a return for owners, and obtains for the country the fruits of the rehabilitated enterprise'.

Another issue that has engendered public and legal debate recently is that of judge-alone trials versus jury trials and trial efficiency. In NSW the Legislative Council's Law and Justice Committee has been conducting hearings as part of its inquiry into judge-alone trials under s.132 of the NSW Criminal Procedure Act 1986, and at a forum held in the Banco Court we were fortunate to have Lord Justice Leveson describe to us some of the efficiency measures adopted for criminal trials on indictment, including timetabling and mandatory defence disclosure in the UK. With David Cameron's new UK government reportedly planning to cut £2 billion from the £9 billion Ministry of Justice budget, including the closure of more than 150 courts, it is likely that the courts there will be under even more pressure to find efficiency savings. At the same time, we learnt from Lord Justice Leveson that judge-alone trials are exceedingly rare in England and Wales, with only one successful application for trial by judge alone under s.44 of the Criminal Justice Act 2003. Perhaps this is one area where our colleagues in the UK may look to NSW for developments.

The art of being a lawyer is, in part, in the analysis of the question. All the questions above have been reported in the popular press, but less well publicised is the deep analysis of each of those issues that our profession performs. Last month we saw the annual Supreme Court Corporate Law Conference and the National Access to Justice and Pro Bono Conference, this month holds the Law Society's Government Solicitors Conference, to name just a few of the many high-calibre gatherings where robust and disciplined analysis of the issues of the day take place. It is rewarding to practise in a country where the operation of the law is subject to public and professional scrutiny facilitated by a commitment to freedom of speech.

As we move into a new financial year, making strategic plans for the continued advancement of the profession, I rely on our profession in all its manifestations to continue its commitment to provision of the highest quality of legal services and thereby be the lamp that lights the way.

It is the mark of an educated mind to be able to entertain a thought without accepting it.
ARISTOTLE

Mary Macken
President, Law Society of NSW