Operating a Legal Practice
Establishing a new Legal Practice
There are four ways to practise the profession of the law in South Australia:
- As an employed practitioner:
o Employed in a legal practice; or
o Employed by an organisation that does not provide legal services (‘in-house’).
- As a sole practitioner or barrister;
- As a director of an Incorporated Legal Practice;
- As a partner of a partnership.
If you are establishing a new legal practice in South Australia, or a South Australian office of an existing interstate legal practice, and you will not practise using a corporate structure, you need to lodge a Form H. The details on that form are required for various regulatory purposes and also to enable the new practice to be issued with an L Code. The form must be lodged prior to commencing practice. You are also required to complete a Practice Profile for the purposes of insurance. That Profile can be downloaded here.
If you are commencing as a Barrister you need to lodge a Form F and a Barrister Practice Profile.
If you or your practice (in any form) receives trust money that is required to be deposited in a trust account, you must establish and maintain a general trust account in this jurisdiction with an approved authorised deposit-taking institution (ADI). The account type must be a Statutory Trust Account and the ADI’s currently approved are:
- Adelaide & Bendigo Bank
- Commonwealth Bank
- Macquarie Bank
- National Australia Bank
It is important to remember that there are requirements under Schedule 1 Part 2 of the Legal Practitioners Act 1981 which must be observed as well as those under the Legal Practitioners Regulations 2014. Importantly, in accordance with regulation 19(2) the name of the trust account must contain the name of the law practice or the business name under which the law practice engages in legal practice; and the expression “law practice trust account” or “law practice trust a/c”, unless the words “law practice” already form part of the name or business name of the law practice.
If you require assistance in relation to applying the trust accounting requirements, the Society holds regular Trust Accounting Courses. For information about those courses, click here. The Society also publishes a trust accounting handbook, which is available in soft or hard copy, here. Direct assistance can be obtained by contacting one of our Law Practice Compliance Investigators on (08) 8229 0229.
The following details of the account must be provided to the Society in writing within 14 days of opening any trust account by lodging a Form T:
- name of ADI and their BSB
- account name
- account number
- names of all persons authorised to operate the account
As soon as practicable after the end of each financial year, a law practice must have its trust records for that year externally examined by an external examiner appointed in accordance with the regulations.
A law practice should appoint a designated person as external examiner, allowing sufficient time in order to comply with the requirements of clause 34(1) of Schedule 2 of the Legal Practitioners Act 1981; and must provide written notification of the appointment to the Law Society, within two months of the appointment of the designated person as an external examiner, using Form J which can be downloaded here.
Only persons that are granted designated person status by the Society can be appointed by legal practitioners to conduct external examinations of legal practitioner trust accounts. They must agree to the appointment in writing. The Law Society maintains a list of the designated persons you may appoint as your external examiner. The current list is available here.
You are required to liaise with your external examiner to ensure that you provide as much information as the examiner requires to complete their report. The report must then be provided to the Society by the examiner as soon as practicable on or after 31 October following the financial year to which the report relates.
Incorporated Legal Practices
The regulatory requirements for incorporated legal practices (ILPs) engaging in legal practice in South Australia are contained in Schedule 1 of the Legal Practitioners Act 1981 (Act).
Clause 4 of Schedule 1 of the Act requires all ILPs intending to provide legal services in South Australia to provide notice via the approved form and pay the prescribed fee. This includes:
• South Australian ILPs; and
• Interstate ILPs providing legal services in South Australia on a fly-in/fly-out basis.
South Australian ILPs also have to comply with other Schedule 1 requirements with respect to legal practitioner directors, professional indemnity insurance, and auditing requirements (among other things).
Interstate ILPs also have to comply with the interstate practice and practitioner requirements contained in Division 3A of the Act which includes the requirement to provide notification of an office in South Australia.
Breaches of Clause 4
An SA or Interstate ILP which commences providing legal services in South Australia without providing the Notice and paying the Prescribed Fee pursuant to Clause 4 of Schedule 1 of the Act may be in default of Clause 4, the consequences of which might be:
• the imposition of a maximum penalty of $50,000; and
• inability to recover fees or costs incurred during the breach; and
• liability to repay money paid to it for legal services provided during the breach.
South Australian ILPs
ILPs with a company address and office in South Australia, and which provide legal services through legal practitioners holding South Australian practising certificates (South Australian ILPs), should provide notice pursuant to Clause 4 by completing and submitting Form G (Notice of Intention to Start Providing Legal Services – SA ILPs).
On receipt of the completed Form G the Society will issue an invoice for the Prescribed Fee. On payment of the prescribed fee, the ILP will be considered to have completed the Clause 4 notification process.
Other statutory requirements for South Australian ILPs include:
• Prohibition of non-legal services and businesses (Clause 2 of Schedule 1).
• At least 1 legal practitioner director holding an SA practising certificate (Clause 8 of Schedule 1).
• Professional indemnity insurance (Clause 12 of Schedule 1).
• Disqualified persons (Clause 18 of Schedule 1).
• Audit of ILPs (Clause 19 of Schedule 1).
• Participate in the SA Legal Practitioners Professional Indemnity Insurance Scheme (see section 19 and 52 of the Act). For information about the Scheme please click here.
South Australian ILPs may practise in partnership (clause 3A of Schedule 1). South Australian ILPs wanting to practise in partnership must provide notice and pay the prescribed fee before doing so. New South Australian ILPs will comply with the notice requirement by completing and submitting Form G (see above). Existing South Australia ILPs that have provided notice of intention to provide legal services in South Australia pursuant to Clause 4 of Schedule 1 but have not practised in partnership and have not provided notice of doing so pursuant to Clause 4A of Schedule 1 can provide the required notice by completing and submitting Form P (Notice of Intention to Practise in Partnership – SA ILPs).
Legal Practitioner Directors of South Australian ILPs should familiarise themselves with Schedule 1 of the Act to ensure that they are familiar with the entire range of professional obligations that apply to them.
ILPs with a company address outside South Australia, and which intend to provide legal services in South Australia through legal practitioners holding interstate (non-SA) practising certificates on a fly-in/fly-out basis, (Interstate ILPs), should provide notice pursuant to Clause 4 by completing and submitting Form U (Notice of Intention to Start Providing Legal Services – Interstate ILPs).
Section 23D of the Act also requires interstate legal practices (including ILPs) providing legal services through interstate PC holders on a fly-in/fly-out basis to provide notice of the establishment of an office in South Australia. Form U (Notice of Intention to Start Providing Legal Services – Interstate ILPs) also constitutes notice by interstate ILPs for this purpose.
Closing a Legal Practice
If you close a legal practice, you must provide the Law Society notice in writing within one month of doing so. Notice can be sent simply by emailing Form Q
. If the practice held trust money, the trust records must continue to be externally examined for every financial year that trust money is held. Those reports must be provided to the Law Society. When all trust money is lawfully withdrawn and the account is closed, a final examination must be prepared pursuant to clause 37 of schedule 2 of the Legal Practitioners Act 1981
and provided to the Society.
Small Practice Kit
Members of the Society have access to a kit that provides in depth guidance and advice in relation to establishing a small practice. The kit contains guidance in relation to complying with obligations and minimum requirements, but also provides information in relation to varying ways of practising and comments on best practices.
The kit is available to Members here
. To find out more about becoming a member of the Society, click here
If you have any further queries, contact the Ethics and Practice Unit at email@example.com
or (08) 8229 0200.