"Appropriate management systems" for incorporated legal practices in Australia

Does your law firm need a quality management system?

The number of incorporated legal practices (ILPs) has been growing steadily since they were initially permitted in NSW in 1991. The Legal Profession Acts in various Australian States and Territories require that legal practitioner directors of incorporated legal practices must ensure that an "appropriate management system" is implemented and maintained. For example see s 2.7.10(3) of the Legal Profession Act 2004 (VIC), s 140(3) of the Legal Profession Act 2004 (NSW), s 105(3) of Legal Profession Act 2008 (WA), s 125(3) of the Legal Profession Act 2006 (NT), s 117(3) of Legal Profession Act 2007 (QLD) and s 107(3) Legal Profession Act 2006 (ACT).

Failure to comply can amount to professional misconduct. I do not intend to discuss the effectiveness of regulating incorporated legal practices. This is a matter for the regulators.

What is the solution?

I am more interested in writing about how a law firm can satisfy the current legislative requirements and implement an "appropriate management system".

The most suitable solution is provided by the LAW 9000 Legal Best Practice internationally recognised quality framework for law firms. LAW 9000 incorporates all the requirements of ISO 9001 international standard and was developed by SAI Global, College of Law, NSW Law Society and the NSW Legal Services Commissioner.

I am not a director of ILP. Why do I need to know about quality management systems?

Running a law firm is a business and every business must manage risk. Even if the law does not mandate that you should implement and maintain a quality management system you may wish to:

• protect your reputation
• prevent loss by reducing and eventually eliminating malpractice claims 
• lower operational costs 
• improve efficiency 
• achieve competitive advantage
• improve the quality of the working environment.

Implementing a quality management system in your law firm should be the principal method used for reducing risk and improving service quality.

What are the benefits of a quality management system?

All of the advantages of such a system may not be immediately obvious. The most commonly cited ones are that a quality management system:

• identifies and encourages more efficient and time saving processes (essential for law firms offering fixed fee service)
• improves consistency in service delivery
• provides transparency which ensures improved risk management
• improves customer communication and reduces the number of customer complaints
• highlights deficiencies
• provides additional marketing opportunities
• helps to attract and retain high calibre talent
• helps to document all policies, procedures and working instructions.

Next week

I will discuss the general and documentation requirements of a quality management system for your law firm.