News

Internet Privacy Debate Ignited

Wed, 12 Jun 2013 13:41:11 +1000

Last week, The Guardian reported allegations that the National Security Agency (NSA) had obtained direct access to the systems of Google, Facebook, Apple and other Internet giants.

The Guardian alleged that it obtained a top secret document outlining that these major companies allow NSA officials to collect material including search history, the content of emails, file transfers and live chats.

Apple, Google and other companies linked to the story have been strongly denying the allegations and as such, Google has requested permission to reveal Foreign Intelligence Surveillance Act (FISA) requests in its Transparency Report.

In a letter to the offices of the US Attorney General and the Federal Bureau of Investigation, which Google published on their blog, the company said such allegations were simply untrue.

The letter reads: "Assertions in the press that our compliance with these requests gives the U.S. government unfettered access to our users’ data are simply untrue. However, government nondisclosure obligations regarding the number of FISA national security requests that Google receives, as well as the number of accounts covered by those requests, fuel that speculation."

Google Chief Legal Officer, David Drummond, concludes the letter by stating "Transparency here will likewise serve the public interest without harming national security."

The office of the Attorney General and the Federal Bureau of Investigation have yet to respond.

To read the letter published on Google's company blog click here.

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Another Privilege Win for In-house Lawyers

Fri, 10 May 2013 15:01:02 +1000

In another win for the in-house legal profession, in-house counsel will be protected as long as they retain their independence as legal advisors.

In-house lawyers can be confident of being protected from legal professional privilege even if they don’t have a practising certificate in the jurisdiction in which they practice.

This follows a recent decision of the Supreme Court of Queensland in Aquila Coal Pty Ltd v Bowen Central Coal Pty Ltd.

“The decision reinforces previous judgements of Courts in other States that an in-house lawyer can practice in one Australian jurisdiction with a practising certificate from another jurisdiction (even a foreign jurisdiction) and still protect his or her employer’s claim for legal professional privilege in respect of legal advice given by the lawyer” according to Tony de Govrik, Legal Affairs and Communications Director, ACLA.

“The real test is one of independence in the giving of the advice and this is something that necessarily in-house lawyers bring to their employer in relation to the legal advice they provide.”

This case can only serve to broaden and reinforce the scope for claims for legal professional privilege which attach to legal advice provided by in-house lawyers. And highlights the continuing need for evidence of independence to be available.

To assist its members with maintaining their independence within their employment, ACLA has made available an Independence Statement which the legal team in an organisation (corporate or government) can agree with their employer.

The Case

In the Aquila Coal case the plaintiff and the defendant entered into a joint venture arrangement for the development of a proposed mine in Central Queensland. The joint arrangement became the subject of a dispute and the matter before the court concerned the disclosure of certain documents.

The defendant claimed that the disputed documents, all of which concerned email communications between the defendant and their in-house legal advisers, were subject to legal professional privilege while the plaintiff maintained they were disclosable.

Boddice J first dealt with the plaintiff’s submission that none of the documents were the subject of privilege because all emails were between the company’s in-house lawyers. The plaintiff relied on Glengallan Investments Pty Ltd & Ors v Arthur Anderson & Anor and the observations in GSA Industries (Aust) Pty Ltd v Constable as precedents for this submission.

Boddice J found these cases did not support a contention that legal professional privilege cannot attach to advice given by in-house lawyers who are admitted to practice in places other than Australia. He stated that, while the presence of a practising certificate was a relevant factor in determining privilege, it was not determinative of the existence of privilege. In reaching his decision Boddice J referred to foreign lawyers and cited with approval the 1987 NSW decision in Ritz Hotel Ltd v Charles of the Ritz Ltd (No 4) – in which a claim for legal professional privilege in respect of legal advice given by a company employee, who was a qualified lawyer and member of the New York State Bar, was upheld.

The level of independence of the defendant's in-house legal team was also considered. Boddice J accepted evidence by a senior member of the legal team that they were independent in this work and were not subject to direction in respect of the giving of advice. The judge was satisfied there was a sufficient level of independence to allow legal professional privilege to attach to instructions given to members of the defendant's in-house legal team, and to any legal advice given by that team, provided the communication is made for a requisite dominant purpose.

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Corporate Lawyer Guilty of Professional Misconduct

Tue, 09 Apr 2013 15:42:02 +1000

In a decision handed down by the Victorian Civil and Administrative Tribunal on 25 March this year, a corporate lawyer has been found guilty of 16 charges of professional misconduct resulting in orders that:

the lawyer concerned not be granted a practising certificate before 1 April 2019
the Tribunal recommends to the Victorian Supreme Court that his name be removed from the roll of practitioners
the lawyer pay the costs of the Legal Services Commissioner

The disciplinary action in the main related to two issues – firstly, that the solicitor engaged in legal practice when not holding a practising certificate (from 30 June 2009 to 21 November 2011) and represented that he was entitled to engage in legal practice and, secondly, that he deliberately or recklessly mislead a judge on the Tribunal by falsely stating on affirmation that he was not currently practising as a lawyer (when in fact he was) and that he had applied for a practising certificate (when he had not done so). Some of the legal work which the lawyer engaged in while without a current practising certificate included work on a domestic conveyancing transaction for a party unrelated to his current employment including the receipt of deposit monies from the purchaser (for which a principal practising certificate and a trust account would have been required) and being involved in litigation before the Supreme Court which included acting as instructing solicitor and filing of a Notice of Appeal. The Tribunal did not accept the lawyer’s evidence that the failure to renew his practising certificate was due to inadvertence (he contended that in the past he had been use to his employers dealing with his renewals as an administrative matter) – he had failed to renew his practising certificate on 3 separate occasions in 2009, 2010 and 2011 – and found that there was clear evidence that by May 2011 at the latest he was well aware that he was practising without a licence but nevertheless decided to “chance his hand”.

The charges relating to this second category were regarded by the Tribunal as the more serious charges. It was submitted by counsel for the Legal Services Commissioner that there can be no more serious breach of a lawyer’s professional responsibility than to lie to a judge. Counsel also referred the Tribunal to the High Court decision in Hughes & Vale Pty Ltd v New South Wales (No. 2) which identified 3 key factors in determining whether a person is fit and proper to be a legal practitioner, namely, honesty, knowledge and ability. The Tribunal, in handing down its decision, found that the lawyer “also demonstrated a lack of knowledge of his ethical obligations as a legal practitioner.”

The Tribunal referred with approval to a number of relevant authorities including the recent decision in Legal Services Commissioner v. Rushford in which Bell J said “…only fit and proper persons are admitted to, and continue in, practice as officers of the court. Legal practitioners have heavy responsibilities and particular privileges which must be properly exercised in the interests of justice and of maintaining public confidence in the legal profession. Bell J in turn cited with approval the comments by Doyle CJ and Stanley J in another recent case, Legal Practitioners Conduct Board v. Clisby, that “It is of the utmost importance that public confidence in the legal profession be maintained. Legal practitioners play an integral part in the administration of justice. The duties of legal practitioners include a duty to uphold the law, a duty to the Court, a duty to clients and a more general duty to members of the public.”

The Tribunal’s decision is a timely reminder that it is the responsibility of all legal practitioners to see to the renewal of their practising certificates where practising certificates are required to undertake legal work. In-house counsel need to be mindful that their corporate employer, unlike a law firm, may not be well-geared to remind and encourage their in-house lawyers to renew their certificate each year. It should be noted that while there may be some exemptions from holding a practising certificate in certain jurisdictions or for certain categories of lawyer (see, for example, s.14(3) of the Legal Profession Act 2004 (NSW)), the provisions of the Legal Profession National Law when adopted by the various Australian jurisdictions will require all legal practitioners (including in-house lawyers) to hold an “Australian practising certificate”.

To read the decision of the Victorian Civil and Administrative Tribunal click here

What's in a name?

Fri, 05 Apr 2013 10:22:26 +1000

ACLA suggests the name of 'The Lawyers of the Year' list created by US-based company Best Lawyers, be renamed 'The External Lawyers of the Year' list.

Released today and published in The Australian Financial Review, the list only features external lawyers, but by its name we know there would be in-house counsel on the list if it were a true representation of the entire profession.

While ACLA suggests a name change, we respect the list's methodology of using peer based review in determining who the external legal professions top lawyers are.

From our investigation into the methodology used to compile the list it shows in-house lawyers are ineligible to nominate and therefore could not be involved.

What's in a name? A lot when you are in-house and driving value for the business, but still not recognised by all in the profession.

We feel it is important to clarify the list is not reflective of the entire legal profession, as the name infers, and that it should be renamed 'The External Lawyers of the Year' list.

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Legal action commenced over alleged inflated legal bill

Thu, 04 Apr 2013 11:05:42 +1000

Legal action has been commenced in the US against one of the world’s largest law firms over an allegedly inflated legal bill.

The spotlight was cast on the issue when certain emails became the subject of a court filing two weeks ago. The emails appear to be the result of lawyers within the firm passing casual emails amongst themselves which gave the impression that there was much joy in a bill that was running way over budget. Such unedifying comments as “churn that bill, baby!” and “That bill shall know no limits” are reported to be contained in the emails.

The issue arose from a fee dispute between the law firm concerned and a corporate client in the energy industry after the chief executive of the company refused to pay legal bills amounting to US$675,000. The company filed a counter-claim accusing the law firm of a “sweeping practice of overbilling.” The counter-claim was subsequently amended to include a fraud allegation and a claim for US$22.5 million in punitive damages – representing 1% of the firm’s reported revenue last year.

Legal ethics commentators in the US said that it was highly unusual to find documentary evidence of possible churning – the creation of unnecessary work to drive up a client’s bill. Professor William Ross at Samford University’s Cumberland School of Law who specialises in billing ethics said that the emails appear to support what several of his studies had shown – that churning, while not endemic, is an insidious problem in the legal profession. He said there is also evidence of the additional problem of “featherbedding” – throwing armies of bodies at every problem. However, Professor Ross did say that most lawyers are ethical but that the billable hour does create “perverse incentives”.

The emails came to light as part of pre-trial discovery in the case and are likely to reinforce a perception held by many corporate clients – and the public – that law firms inflate bills by performing superfluous tasks and overstaffing assignments. The issues raised by the emails have surfaced at a time when corporations are increasingly rejecting the billable hour standard and becoming vigilant about controlling escalating legal expenses.

The Australian Corporate Lawyers Association is unashamedly for in-house lawyers. But we recognise that to bridge the gap requires firms and in-house to work together. The 2012 In-house Counsel Report: Benchmarks and Leading Practices is the first step as it provides in-house with peer information, while giving law firms insights into the changing practice of in-house.

Our next step is to start the dialogue with a series of invitation-only workshops where leading senior GCs and senior partners will come together to discuss how to create mutual value in this new paradigm. The outcome of these workshops, we hope, will be a thought-leadership piece that starts to bridge the gap.

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New online resource for ACLA members

Thu, 28 Feb 2013 15:21:00 +1000

LexisNexis and the Australian Corporate Lawyers Association (ACLA) announced today that they have entered into a partnership to provide ACLA members with a new online resource – Practical Guidance ACLA.

Practical Guidance ACLA is a specifically designed online resource to assist in-house counsel with the skills and knowledge required to address the daily challenges of their role.

It contains practical advice on managing your legal function, engaging your business, as well as overviews and guidance notes on 14 areas of law relevant to in-house counsel.

“ACLA is constantly looking at ways to provide the best possible member value and this includes offering more relevant in-house content in a fast and efficient online environment. Practical Guidance ACLA brings together ACLA member insights on managing the in-house function, with LexisNexis expertise and renowned capabilities in legal content and functional online formats,” said Trish Hyde, CEO ACLA.

The content provided has been written by experts in the area, from both in-house and private practice. The 14 topic areas include:

• Employment law
• Leases
• Purchase and sale of business
• Contracts
• Governance and company secretary
• In-house know how
• Finance and securities
• Consumer protection
• Competition law
• Purchase and sale of property
• Intellectual property
• Data and privacy
• Outsourcing and Procurement
• Corporate Structures

LexisNexis will also be offering ACLA members the opportunity to upgrade to Practical Guidance ACLA Premium at a special affordable members only rate. Practical Guidance ACLA Premium gives users complete access to all content within the module including; additional commentary, cases, legislation, precedents and checklists.

To find out more regarding Practical Guidance ACLA and Practical Guidance ACLA Premium click here.

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Google High Court decision handed down

Wed, 06 Feb 2013 12:03:51 +1000

Google has today been cleared by the High Court of engaging in misleading or deceptive conduct.

The Australian Competition and Consumer Commission (ACCC) claimed that particular sponsored links displayed by the Google search engine between 2005 and 2008 had conveyed misleading and deceptive representations, breaching s 52 of the Trade Practices Act 1974 (Cth).

The Google search engine displayed two types of search results in response to a user's search request: "organic search results" and "sponsored links". Organic search results were links to web pages that were ranked in order of relevance; however, a sponsored link was a form of advertisement.

Google was successful when the case was first brought in the Federal Court, but the ACCC was then successful on appeal in the Federal Court. By special leave, Google then applied to the High Court to have the matter resolved.

The High Court unanimously allowed the appeal. It was agreed that Google had not engaged in misleading or deceptive behaviour, and ordinary users of the search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations.

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Value-based billing a focus

Thu, 31 Jan 2013 11:25:04 +1000

In-house lawyers are getting fed up with firms that fail to embrace value-based billing, the head of group legal at the Adelaide & Bendigo Bank has claimed ahead of the upcoming ACLA Corporate Counsel Days 2013.

Maria Polczynski, who was named ACLA Corporate Lawyer of the Year in 2012, will deliver a presentation at the ACLA Corporate Counsel Days in Victoria and South Australia this March.

Maria told Lawyers Weekly that she isn’t holding her breath for firms to come forward with a value-based billing model. Instead, she is trying to change their behaviours, and her progress so far will be the subject of her talk.

“Firms are never going to suggest anything other than hourly rates because it suits their current systems,” she said. “Until a lot of users of legal services start requesting or requiring [value-based billing] we won’t get a lot of change ... [so] we’re trying to make things happen.”

Polczynski will reveal how she has managed to encourage some of the bank’s most-trusted firms to embrace value-based billing, which has contributed to a significant reduction in the organisation’s external legal spend.

“I thought I’d go through the practicalities from my experience of dealing with external lawyers,” she said.

It has been slow progress, admitted Polczynski, with a number of firms “looking blankly at us, can’t get their heads around it ... and some just pay lip service”. Other firms, however, have demonstrated a willingness to adopt a value-based model, though Polczynski points out that smaller firms are the most receptive.

Personally, Polczynski is outraged at what some firms expect organisations to pay for legal services. She is also frustrated by firms that say they will adopt alternative fee arrangements but then simply calculate fixed fees based on their hourly rates.

“It’s infuriating when you can’t get them out of that psychology,” she said.

The 2013 ACLA Corporate Counsel Days will be held in Sydney (28 February), Brisbane (7 March), Melbourne (13 March) and Adelaide (22 March). Click here for more information.

Article written by Leanne Mezrani and published by Lawyers Weekly. For more information visit lawyersweekly.com.au

Increasingly Looking for In-house Skill for Top GC Role

Mon, 10 Dec 2012 16:41:28 +1000

Over two-thirds of ASX100 general counsel have come from the ranks of in-house counsel, with 25% avoiding private practice entirely. In a report focusing on the role of general counsel in the ASX100 companies, ACLA is pleased to see a greater recognition of in-house skills base by these leading companies.

‘While 32% of ASX100 companies employ a general counsel who reached partner level in private practice, the overwhelming trend is to promote to the top trusted advisor role, those that have solid in-house business experience,’ said Trish Hyde, CEO, ACLA.

The ASX100 General Counsel Report: The nature of the role as at 30 June 2012 constitutes the first comprehensive study of the general counsel practising in the ASX100 companies. Editor Alexandra Rose has been assisted by the University of Technology, Sydney, and worked in consultation with a select group of senior representatives from the legal industry in creating this Report.

The objective of this Report is to understand the composition, professional background and legal practice environment of Australia’s senior legal decision makers.

92% of ASX100 companies have a specified general counsel function, while 32 ASX100 companies cited their general counsel as ‘key management personnel’ for the purposes of ASX reporting on remuneration.

‘The role of the general counsel and company secretary in providing independent legal advice to management and the Board is unquestioned,’ said Tim L’Estrange, Chairman, L’Estrange Advisory Pty Ltd.

‘As with other key roles in an organisation, the ratio of variable pay to total remuneration is a matter that is likely to require more careful evaluation,’ said Mr L’Estrange. ‘ACLA’s approach to commence reviewing such data and to provide a platform for debate about such matters is both timely and welcome.’

AMP’s general counsel Brian Salter, a contributor to the Report said: ‘As a member of the senior executive team, the general counsel is increasingly involved in the strategic and tactical decisions of the company. A general counsel is more than a manager of legal risk, they are the leader of the legal function, and must seek new and better ways for the function to deliver value to the business.’

All information used was drawn from publicly available information, and based on the ASX100 Index on the Australian Stock Exchange as at 30 June 2012.

Key Findings:

92% of ASX100 companies have a specified general counsel function
The gender diversity spilt is 30% female and 70% male
32 ASX100 companies cited their general counsel as ‘key management personnel’
One in four general counsel have had no prior experience in private practice
Over the past financial year, 12 general counsel in the group changed roles

Click here to view the Report in full.

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Directors Breathe Easy

Tue, 27 Nov 2012 16:51:44 +1000

Article by Holding Redlich partner Howard Rapke and senior associate Kathryn Howard.

The High Court has vindicated Fortescue and Mr Forrest*. But what does this mean for directors and their companies going forward?

Some say nothing. We disagree. Directors can breathe a sign of relief. The Court has sent a clear message that statements made to investors are, quite simply, just that. And ASIC, having been lambasted by the Court, is likely to be twice shy before it goes after directors and their companies in this way again.

To recap well-traversed ground, the proceedings concerned statements made by Mr Forrest and Fortescue that it had entered a 'binding' contract with Chinese state-owned companies. ASIC alleged that, because the terms were not capable of enforcement in Australian courts, the statements were misleading or deceptive and breached continuous disclosure laws.

The Court held that the statements conveyed to their intended audience what the parties to the framework agreements had done and said they had done; including, significantly, that the parties genuinely sought to enter binding contractual relationships. The Court rejected ASIC's attempt to construe the statements as assertions about the legal enforceability of any such agreement in Australia. The Court pointed to the international aspects of the arrangements and the absence of choice of law provisions as indicative that no larger message was intended to be communicated.

Some will criticise the Court's construction as overly technical; investors would have understood the statements to communicate that the parties could not wriggle out of their agreement, putting aside questions of intention and enforcement.

But directors Australia-wide may take comfort that statements made will not readily have superimposed upon them a greater meaning than the plain words communicate.

In approving statements, directors should continue to consider what message will be conveyed to the ordinary member of the intended audience and ensure that the message is properly and clearly based in fact. This responsibility also applies to non-executive directors who are aware of statements before publication. In such circumstances, executive and non-executive directors are each obliged to take reasonable steps to ensure compliance.

This careful approach might just be enough to protect directors and their companies from zealous regulators, given the High Court's scathing comments about ASIC's approach to prosecuting the case and its 'extreme or fanciful' construction of Fortescue's statements**.

We expect that ASIC will be looking closely at its enforcement policies, and that we will see a greater emphasis on issuing infringement notices - which companies can choose whether or not to comply with. In the event of non-compliance, the ball will then be back in ASIC's court to decide whether to commence proceedings.

These are high stakes issues, the balance of which has just shifted slightly in favour of directors and their companies.

* Forrest v ASIC [2012] HCA 39

** Forrest v ASIC [2012] HCA 39 at [50]

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