Lawyers must be aware that if their practices are shown to be anti-competitive under the Commerce Act, then the Commerce Commission can and will take action against them, Commission Chairman Dr Alan Bollard said in a speech to the New Zealand Law Conference on Friday.
Dr Bollard said that lawyers must expect scrutiny from the Commission in the same way as other businesses. Being professionals with their own regulatory organisations does not exempt them from the Act.
Arguments that practices are traditional - in some cases centuries old - or are sanctioned or even required by Law Society rules are not defences.
Dr Bollard discussed several practices which have at least the potential to restrict competition.
These included the way in which lawyers are trained and registered, how their code of ethics is designed and enforced, the division of the profession into barristers and solicitors, the restrictions in how they organise their businesses, the conveyancing monopoly held by lawyers, Law Societies' pricing guidelines and any restrictions on advertising.
Some parts of these practices are beyond the Commerce Act because they are protected by other laws. For example, lawyers' monopoly on conveyancing is now a very rare example in New Zealand of a monopoly protected by the law.
Property deals involving complex legal issues clearly require a lawyer to be involved. However, there are straightforward transactions where licensed para-legals are keen to compete and could offer customers lower charges.
The Australian experience is that conveyancing fees are 50 percent lower in states which allow licensed para-legals to carry out conveyancing, compared to states which have maintained the legal monopoly.
"My aim," Dr Bollard said, "has been to highlight a number of practices in the legal services industry that are unusual by the standards of other service industries. Too often these are resulting in competitive inefficiencies for clients. The arguments that the practices provide protection for clients have some validity, but I see little evidence that they represent the best way of doing this."
Media contact: Communications Officer Vincent Cholewa
