LSB September 2017
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LEGAL PRACTICE<br />
Clarifying the rules on incorporated<br />
legal practices & partnerships<br />
ETHICS & PRACTICE UNIT<br />
Practitioners should be<br />
aware of the amendments<br />
to Schedule 1 of the Legal<br />
Practitioners Act 1981<br />
(“the Act”) with regard<br />
to Incorporated Legal<br />
Practices (ILPs) practicing in<br />
partnership with other ILPs<br />
or legal practitioners or both.<br />
Since the 2014 amendment of the Act,<br />
ILPs have become increasingly more<br />
popular in the South Australian legal<br />
landscape.<br />
The definition of an ILP is found in<br />
Clause 1 of Schedule 1 of the Act which<br />
states that an incorporated legal practice is<br />
a corporation that engages in legal practice<br />
in this jurisdiction.<br />
The reading of the Act prior to the<br />
amendment appeared to create difficulty<br />
with regard to whether or not ILPs could<br />
in fact operate in partnership. It was this<br />
apparent difficulty that the amendment set<br />
out to address.<br />
THE AMENDMENT<br />
Although the new ILP provisions<br />
contained in Schedule 1 of the Legal<br />
Practitioners Act 1981 were still in their<br />
infancy, it became clear that as result of<br />
the new Schedule 1 and other amendments<br />
that doubt had arisen as to whether or not<br />
Schedule 1 in its current format allowed for<br />
ILPs to practice in partnership with other<br />
ILPs and/or other natural persons. 1<br />
As a result, the further amendment<br />
followed to clarify this aspect by inserting<br />
sections 3A, 4A and 5A to Schedule 1<br />
of the Act which came into effect on 13<br />
November, 2016.<br />
The three newly inserted sections now<br />
make it clear that ILPs can practice in<br />
partnership with other ILPs or individuals<br />
or both.<br />
The newly inserted sections state the<br />
following:<br />
18 THE BULLETIN <strong>September</strong> <strong>2017</strong><br />
3A—Incorporated legal practices may<br />
practise in partnership<br />
Subject to this Act, an incorporated legal<br />
practice may practise in partnership with<br />
another incorporated legal practice or a<br />
legal practitioner (or both).<br />
4A—Notice to be given by incorporated<br />
legal practice of intention to practise in<br />
partnership<br />
(1) Before an incorporated legal practice<br />
starts to engage in legal practice in this<br />
jurisdiction in partnership with another<br />
incorporated legal practice or a legal<br />
practitioner (or both), the practice<br />
must give the Supreme Court written<br />
notice, in the approved form, and<br />
accompanied by the prescribed fee, of<br />
its intention to do so.<br />
(2) An incorporated legal practice must<br />
not engage in legal practice in this<br />
jurisdiction in partnership with an<br />
incorporated legal practice or a legal<br />
practitioner (or both) if it is in default<br />
of this clause.<br />
Maximum penalty: $50 000.<br />
(3) An incorporated legal practice that<br />
starts to engage in legal practice in<br />
this jurisdiction in partnership with an<br />
incorporated legal practice or a legal<br />
practitioner (or both) without giving a<br />
notice under subclause (1) is in default<br />
of this clause until it gives the Supreme<br />
Court written notice, in the approved<br />
form, of the failure to comply with<br />
that subclause and the fact that it has<br />
started to engage in legal practice in<br />
partnership with an incorporated legal<br />
practice or a legal practitioner.<br />
(4) The giving of a notice under<br />
subclause (3) does not affect an<br />
incorporated legal practice’s liability<br />
under subclause (1) or (2).<br />
(5) A firm of incorporated legal practices,<br />
or of incorporated legal practices and<br />
legal practitioners, is not entitled to<br />
recover any amount for anything the<br />
firm did while a member of the firm<br />
was in contravention of subclause (2).<br />
(6) A person may recover from a firm<br />
of incorporated legal practices, or of<br />
incorporated legal practices and legal<br />
practitioners, as a debt due to the<br />
person, any amount the person paid<br />
to or at the direction of the firm for<br />
anything the firm did while a partner<br />
of the firm was in contravention of<br />
subclause (2).<br />
(7) This clause does not apply in relation<br />
to—<br />
(a) a firm of incorporated legal<br />
practices, or of incorporated legal<br />
practices and legal practitioners, if<br />
the firm—<br />
(i) was established before the<br />
commencement of this clause;<br />
and<br />
(ii) engaged in legal practice in this<br />
jurisdiction immediately before<br />
the commencement of this<br />
clause; or<br />
(b) an incorporated legal practice that<br />
was a member of a firm referred to<br />
in paragraph (a) immediately before<br />
the commencement of this clause<br />
insofar as the practice engages in<br />
legal practice as a member of the<br />
firm.<br />
5A—Notice to be given by incorporated<br />
legal practice providing legal services<br />
in partnership<br />
(1) This clause applies to—<br />
(a) an incorporated legal practice<br />
that—<br />
(i) immediately before the relevant<br />
day—<br />
(A) was a legal practitioner within<br />
the meaning of this Act (as in<br />
force immediately before the<br />
relevant day); and<br />
(B) was practising in partnership<br />
with another legal practitioner;<br />
and<br />
(ii) immediately before the<br />
commencement of this clause,<br />
continued to practise in the<br />
partnership; and
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