Holding Legal Professionals to Standard

Commonwealth and Other Key Legislation Holding Legal Professionals to Standard

Commonwealth Acts – currently in force

1. Crimes Act 1914 (Cth) – general criminal liability applying to all; solicitors have no exemption from Commonwealth criminal offences including aiding, abetting, counselling or procuring offences (s 11.2 Criminal Code). The “Turning a Blind Eye” paper’s discussion of conspiracy applies here.
2. Criminal Code Act 1995 (Cth) – the principal Commonwealth criminal statute. Relevant to solicitors in areas including: fraud on the Commonwealth (Division 135), money laundering (Division 400), and conspiracy. A solicitor who draws documents knowingly to assist a client’s fraud is squarely within its reach.
3. Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act) – this is the most significant current development. Following amendments enacted in December 2024 (the so-called “Tranche 2” reforms), lawyers providing “designated services” will become “reporting entities” with compliance obligations from 1 July 2026. Designated services include certain conveyancing, trust account, and company/trust formation services. The regime imposes obligations including a duty to file suspicious matter reports, and a prohibition on “tipping off” a client that such a report has been or is being made. This creates a direct and acute tension with the duty of confidentiality discussed throughout the “Turning a Blind Eye” paper – the very conflict the Ethics Committee found so uncomfortable regarding s 316 of the NSW Crimes Act, now replicated at Commonwealth level and on a wider scale. Even a civil penalty breach is relevant to whether a solicitor is a fit and proper person to hold a practising certificate, and there is also potential criminal liability.
4. Competition and Consumer Act 2010 (Cth) (CCA), Schedule 2 – the Australian Consumer Law (ACL) – prohibits misleading or deceptive conduct (s 18) and unconscionable conduct. Solicitors who provide legal services are engaged in trade or commerce and are not exempted. This replaced the Trade Practices Act 1974 (Cth) referenced in the 2001 paper. Maximum criminal penalties for conduct including false and misleading representations have been increased, applying to conduct engaged in from 28 March 2026.
5. Privacy Act 1988 (Cth) – legal practices handling personal information are generally bound as “APP entities” under the Australian Privacy Principles. There are legal professional privilege intersections but the Act sets baseline obligations.
6. Proceeds of Crime Act 2002 (Cth) – imposes obligations on all persons, including solicitors, in relation to tainted property and benefits of crime. Solicitors handling funds or assets in circumstances where they have reasonable grounds to suspect a proceeds-of-crime connection are exposed.
7. Judiciary Act 1903 (Cth), s 55B and 55C – the High Court and the Federal Court each have inherent jurisdiction over practitioners admitted before them, and the Judiciary Act provides the framework under which federal court practitioners are regulated. As the Queensland Legal Profession Act expressly states, it is subject to the Judiciary Act 1903 (Cth) for persons employed in a department of government of the Commonwealth whose employment includes engaging in legal practice.
8. Corporations Act 2001 (Cth) – solicitors advising on corporate matters are potentially liable as accessories if they assist in breaches of directors’ duties (s 79, 183, 184) or participate in schemes that are misleading. ASIC has taken action against solicitors on this basis.

A critical current development – the AML/CTF conflict

The Law Council of Australia, as at March 2026, was publicly consulting on proposed amendments to the Australian Solicitors’ Conduct Rules to provide greater clarity when the AML/CTF reforms commence on 1 July 2026 – specifically because the tipping-off prohibition directly conflicts with the existing duty of candour to a client. This is the 2026 version of exactly the s 316 dilemma described in the 2001 paper.

Common law obligations – not to be overlooked

Separate from statute, solicitors remain bound by the inherent jurisdiction of the Supreme Court of each state and territory, and the equitable duties arising from fiduciary and confidential relationships. These are not creatures of statute and survive legislative change.

Note on Western Australia specifically

WA has not adopted the Legal Profession Uniform Law (operative in NSW and Victoria). The Legal Profession Act 2008 (WA) remains the primary state statute, together with the Legal Profession Conduct Rules 2010 (WA). All of the Commonwealth Acts above apply equally in WA.

Turning a Blind Eye summary

“Turning a Blind Eye: Professional Liability and Responsibility Dealing with Clients” – Summary

Author and context

Written by Virginia Shirvington BA, LLB (Syd), Senior Ethics Solicitor, Law Society of New South Wales, February 2001. It was presented as a professional ethics paper for NSW solicitors.

Core thesis

A solicitor who turns a blind eye to a client’s fraudulent or improper activity is not protected from professional and legal liability. Passive non-intervention can be just as culpable as active participation.

Structure and key topics

1. The competing duties of lawyers

Solicitors owe duties simultaneously to the court, the client, the public, and the profession. The Law Society of NSW Statement of Ethics (proclaimed 20 November 1994) and case law (notably Lord Reid in Rondel v Worsley [1969]) confirm that the duty to the client, while important, cannot override the duty to the administration of justice.

2. Engaging in personal illegal activity

Conduct outside legal practice that demonstrates unfitness remains grounds for disciplinary action and removal from the Roll. Examples given include solicitors struck off following convictions for fraudulent misappropriation, dishonesty, and bribing a public officer.

3. Assisting fraudulent or improper activity

The paper uses “fraud” broadly to include any dishonest or improper conduct. Categories examined include:

• Abuse of process and spurious litigation – case law including Levick v Deputy Commissioner of Taxation (2000) and White Industries v Flower and Hart (1998) show costs orders can be made personally against solicitors who run arguments with no rational basis.
• Defrauding the revenue – splitting consideration between property and chattels, or re-exchanging contracts to gain stamp duty advantages, with the English case Saunders v Edwards [1987] used as an example.
• Defrauding the mortgagee – inflating the purchase price in contracts to assist purchasers obtain finance beyond actual equity, described as a prevalent conveyancing problem. Several worked examples are set out, all from the Ethics Committee’s actual inquiries.
• Death of client mid-conveyancing – proceeding to settlement as though the vendor were alive, when a power of attorney ceases on death, would be misleading to the Land Titles Office.
• False attestation of security documents – a significant body of disciplinary cases from the early 1990s involving solicitors who witnessed signatures not signed in their presence, or certified explanations of mortgages never given.

4. Criminal complicity (Forsyth’s Case)

R v Forsyth (1990) is examined as the leading Australian case on a practitioner’s potential criminal exposure. The Victorian barrister was acquitted of conspiracy to defraud the Commonwealth, the trial judge directing an acquittal at the close of the Crown case on the basis that knowledge of an unlawful purpose was insufficient without more. The paper notes the tension between explaining the law and encouraging a breach of it, drawing on McHugh J’s 1988 paper which argued that drawing documents to achieve an unlawful objective makes it almost impossible to deny aiding the offence.

5. Reporting obligations – s 316 of the Crimes Act 1900 (NSW) versus Rule 2

This is the most technically detailed section. Section 316(1) imposes a duty on any person who knows a serious indictable offence has been committed to report it to police, with failure carrying a two-year imprisonment penalty. Rule 2 of the Revised Professional Conduct and Practice Rules imposes a parallel duty of confidentiality. Senior Counsel’s opinion, obtained by the Ethics Committee, was that the duty of confidentiality under Rule 2 constitutes a “reasonable excuse” under s 316(1), relieving the solicitor of the obligation to report. The Ethics Committee expressed significant discomfort with this conclusion, considering that “reasonable excuse” ought to be limited to legally privileged material rather than the broader ethical duty of confidentiality. The NSW Law Reform Commission (2000) had recommended repeal of the primary offence in s 316(1) while retaining the compounding offence.

6. Prevention – anticipatory offences and threats of harm

Where a client or third party signals an intention to commit perjury, the solicitor faces difficulty as no offence has yet been committed. Where a client threatens death or serious physical harm to another, the paper takes the view that the duty of confidentiality may yield to the obligation to prevent the harm, and that a solicitor reporting such a threat would be unlikely to face successful disciplinary action.

Conclusion

The paper concludes that a solicitor cannot advise how to circumvent the law. Advising as to how the law applies may itself carry risk. A solicitor does not need to be actively assisting, or to receive any direct benefit, to incur liability. The closing statement of the paper is unambiguous:

Turning a blind eye will not save you.

Note: This paper dates from February 2001 and references NSW legislation and rules current at that time, including the Legal Profession Act 1987 (NSW) and the Revised Professional Conduct and Practice Rules made under it. Subsequent legislative reforms in NSW (notably the Legal Profession Act 2004 and later the Legal Profession Uniform Law) have altered some of the specific provisions discussed, though the ethical principles remain broadly applicable.

Last Updated 3 months ago

Views: 137