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Hardie inquiry to decide fate of corporations law

Hardie inquiry to decide fate of corporations law

CORPORATIONS LAW serves the community well and ensures appropriate conduct, despite apparent failures revealed by the James Hardie inquiry, according to the president elect of the Law Council of…

CORPORATIONS LAW serves the community well and ensures appropriate conduct, despite apparent failures revealed by the James Hardie inquiry, according to the president elect of the Law Council of Australia.

If it is learned that the legal profession has not behaved ethically, however, appropriate amendments could be made, Steve Southwood said.

Speaking on ABC national radio to Geraldine Doogue this month, Southwood said that although it remains to be seen whether corporations law has fallen short in this particular instance, business generally behaves ethically as do most members of the legal profession.

The special commission of inquiry set up by the NSW Government is due to report back in September. But earlier this month the counsel assisting, Barrister John Sheahan, accused the company of a culture of secrecy and disdain for victims of asbestos poisoning.

In light of this, Doogue questioned Southwood on lawyers’ ethical obligations when advising big business. Pressed as to whether the inquiry would shift the debate within and outside the profession about ethical duty, Southwood said it would reactivate a debate, rather than start one.

Referring to the HIH case and a case several years ago in which the role of lawyers within various tax schemes were examined, Southwood said the current inquiry would activate what is an “old and nonetheless important debate”.

Accusations had been made against the lawyers working for Hardie, Doogue pointed out. “They failed to exercise due care and skill and … the in-house lawyer was possibly deceitful”.

Southwood replied that the profession is always “extremely concerned” about fraudulent behaviour. “Overall I think [the profession] regulates itself very well in that regard,” he said.

There is a role for lawyers to advise their clients about the consequences of their transactions but the final decision comes down to the client, Southwood said.

“A lawyer’s primary duty subject to ethical duties and subject to the law, is to always operate in the best interests of their client and that’s a fundamental principle which can’t change,” he said.

It is not necessary for corporations law to change at this point, Southwood suggested. But if the inquiry shows there had been evasive conduct in relation to foreseen but unascertained victims then limited amendments may be required, he said.

Asked whether there needed to be a genuine shift in the primary obligations of a professional lawyer, Southwood said he didn’t know that it was going to shift, “nor do I think you can really change the role of lawyers vis-à-vis their client subject to a number of factors”.

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