In her final annual report, Kate Hamond says if the new Legal Services Commissioner, Victoria Marles — due to takeover on 12 December — chooses to delegate “significant regulatory roles” to the Law Institute of Victoria and the Victorian Bar Association, and delivers only “superficially independent public protection, legal regulation will indeed have taken a backward step”.

“It is time for the Law Institute and the Bar to let go of regulation and with it the community scepticism that their direct involvement has brought.”

She told Lawyers Weekly the new Legal Services Commissioner would have “a great deal of scope to really contract out an awful lot of the work”. This could involve just obtaining external legal advice, “but the actual handling and running of the investigation, the contact with the public, it’s always been my view that on principle it should be handled by a totally independent body; independent of the bodies that advocate for lawyers”.

The new Commissioner was going to need “strength and courage” to maintain her independence, she said, because her experience as the Ombudsman had been that the professional associations “have never truly accepted independent regulation … and of course they get enormous funds to self regulate, so they want to hang on to that as well — the Institute, [for instance], gets about $10.5 million [per year] at the moment”.

“It is an inherent conflict of interest for the body that advocates for its members to also take complaints against them.”

A spokesperson for the Law Institute said in fact they received $9.5 million in 2005 from the Legal Practice Board, which is split between regulating the legal profession and other costs like educating the profession.

Christine Harvey, chief executive officer of the Victorian Bar Association said the new system is “definitely co-regulatory” and said Hamond had always been “philosophically” opposed to that, preferring complaints handling completely independent of the professional bodies.

But she pointed out that the Legal Services Commissioner would not be able to “delegate” the investigation of complaints to the professional associations, only “refer” them, and this decision was at her discretion. She said the distinction was that although the LIV or the Bar may investigate and make a decision on a complaint, the Legal Services Commissioner could then review that decision.

“With the development of the national model law … I think there was a consideration as to what is an ideal model, particularly in relation to complaints,” she said.

“In the end, the consensus was that the co-regulatory regime was the best way to proceed. You have independent oversight, but you could still have some involvement of the professional associations. That’s the way it has come out [in Victoria] and I think it will be effective.”

Law Institute of Victoria CEO John Cain said there is a “genuine benefit” in having the involvement of the professional associations “because it brings to the process a specialist knowledge and the professional associations are also able to actively participate in establishing and maintaining the highest possible standards of professional conduct”.

Hamond praised the new regime for ending the “confusion” of the current system, under which complaints can be made to four separate bodies — the Legal Practice Board, the Law Institute of Victoria, the Victorian Bar Association, and the Legal Ombudsman.

However, she was also critical of the removal of the ability to make a complaint about a law firm, which made up about a third of all current complaints, she said. Instead complaints will only be allowed against individuals, which Hamond said could also lead to a bigger workload for the Commission.

“It was a very, very strong measure that we could use against firms, because often problems are not an individual lawyer’s fault, they’re a systemic problem or a cultural problem.”

Cain said Hamond’s concerns were “unfounded” and there is “ample power” in the Act to investigate and regulate the conduct of lawyers.

“Law firms are made up of individual practitioners and it’s about maintaining the standards of the individuals, which when they come together of course make up the firm.”

He said for incorporated legal practices, the firm’s board has a separate power to undertake audits and investigations of those firms.

Hamond stressed that Victoria Marles is a “very sound” appointment as the new Legal Services Commissioner.