Attorney-General, Robert McClelland, today released the final discussion paper by the National Legal Profession Reform Taskforce on the issue of fidelity cover.  

The paper has focussed on ensuring adequate protection for consumers while aiming to reduce the compliance burden on lawyers.

Each state and territory has a fidelity or guarantee fund to protect their clients against losses caused by negligence or wrongdoing, which is administered by the law society or regulator in each jurisdiction. 

This regime has led to differences between jurisdictions in the level of protection that consumers and other parties may be afforded.

The Taskforce recommended today, however, that an appropriate long-term goal would be the establishment of a single, national fund with uniform cover. 

The Taskforce said the pooling of funds could allow for a higher cap, or no cap at all, on the quantum of compensation. This "would allow victims to be compensated fully for their losses", it said.

"In relation to solicitor contribution amounts, different contributions based on an assessment of each jurisdiction’s risk factors could be retained or the risk could be redistributed and a single, national contribution amount be levied," the report said.

The discussion paper also proposes that determinations of claims against fidelity funds be made independently and at arm’s length from the profession to avoid any conflict of interest. 

It suggests multi-jurisdictional law practices be allowed to hold a single trust account in one jurisdiction, rather than one account in each jurisdiction in which it operates. 

“I thank the Taskforce for their work in developing papers on this and a range of other issues including, regulatory frameworks, costs, professional standards, complaints and discipline procedures over the course of this year.” 

This work will now form the basis of a draft National Legal Services Bill and Regulation Impact Statement which the Taskforce will release for discussion early next year before presenting draft uniform legislation to the Council of Australian Governments (COAG) at the end of April 2010.  

“I encourage all those with an interest in these issues to provide submissions to the Taskforce as we seek to achieve national regulation of the legal profession that will benefit consumers, lawyers and firms alike," said McClelland.