65 Whether a person is carrying on legal practice is very much a question of fact and degree. Here, AIH made no bones about its intention to require solicitors to undertake matters in accordance with its protocol, essentially designed to ensure that cases were managed efficiently and without undue expense and delay and, consistently emphasised, in regular and timely communication with the client. On the face of it, these are desirable objectives and do not, of themselves, suggest undertaking legal practice, even if the way in which that practice is undertaken is regulated. Of course, from the solicitor's point of view, it would be a breach of professional obligations if, indeed, the management of the clients' matters according to AIH's protocols amounted to a delegation to AIH of professional obligations to the clients or interfered with the solicitor's judgment as to the interests of the clients. In short, the obligations of the solicitor to the client are of a primary kind and cannot be controlled in any way that might prejudice the client's interests, let alone delegated to a person who is not appropriately qualified and entitled to practice. There was no suggestion put to me, except possibly by way of implication, that any of the solicitors whose dealings with AIH were the subject of evidence had delegated their professional responsibilities to AIH. Certainly there was no suggestion that they had acted in any way that was not entirely in their clients' interests.
66 A useful commencement point for this discussion is the "Panel Solicitors Operating Manual" sent to each of the panel solicitors explaining the expectations of AIH by way of reciprocation for being on the panel. Two of these have been tendered by the plaintiff, the first is dated 1 May 2001 and the second 1 January 2005. It is necessary to deal with these manuals in some detail.
67 Section 1, headed "Introduction and Overview", states first the purpose of the manual. It is said that it "provides that information and guidance on the methods of operation of the Australian Injury Helpline Scheme". The solicitor dealing with claims referred by AIH "must be familiar with the contents of the manual … [and] they must fully adhere to the guidelines and procedures outlined in this manual". Following are the most significant portions of the 2001 manual for present purposes.
"SECTION ONE - INTRODUCTION
AND OVERVIEW
A
Purpose Of The Manual
This manual is for the use of the Australian Injury Helpline Ltd's Panel of Solicitors and provides both information and guidance on the methods of operation of the Australian Injury Helpline scheme. From here on in the Australian Injury Helpline Ltd is referred to in this document as 'AIH'.
The partner, solicitor or fee earner who deals with claims referred to AIH must be familiar with the contents of this manual. In addition, they must fully adhere to the guidelines and procedures outlined in this manual.
Asking legal practices to adopt procedures set out in this manual helps to standardise management and reporting information and ensures that consistent a high standard of service is maintained, regardless of which Panel Solicitor have been instructed to act. It is also important that legal services provided are consistent with promotional and marketing material.
Whilst this manual is intended to ensure protocols and maintenance of certain procedures, AIH is not concerned with trying to tell the Panel Solicitor how to run a case. It is the province of the Panel Solicitor to ensure that appropriate legal advice is given at each stage and that standards of ethical conduct are maintained.
It is important for clients who are insured, to ensure that AIH are kept fully informed of all material developments. Cover under the insurance policy requires regular review and certain conditions to be fulfilled.
AIH constantly review the content and procedures outlined in this manual. Any update sheets for the manual will be supplied to ensure your manual remains current. Any questions or comments on the content of this manual should be addressed to AIH.
PLEASE NOTE A SERIOUS BREACH OF THE TERMS OF THIS MANUAL MAY LEAD TO THE TERMINATION OF A PRACTICE'S MEMBERSHIP ON THE PANEL
B
A Brief Overview of AIH
AIH generates leads for Personal Injury claims through numerous different advertising mediums. All advertisements give out a free phone number and a team of trained advisors answers all telephone calls.
The initial inquiry is answered by one of the team of trained advisors. The advisor asks the enquirer a number of relevant questions about the circumstances of the accident and full details are passed on to the claims Manager for consideration and referral.
The Claims Manager will assess with the aid of independent legal advice whether there would appear any merit in the claim on the basis of the information supplied. This is only an initial assessment and the company has not contacted the prospective claimant further at this stage.
There are 3 different stages at which the Panel Solicitor can receive referrals from AIH.
1, following the initial assessment and indication of a possible claim (REF).
2, after extensive further enquiries are completed and it has been established that the claimant has more than a 51% chance of succeeding (CLM).
3, after extensive enquiries are completed and it has been established that the claimant has more than a 51% chance of a successful Workers Compensation Claim (WCC).
Should the Panel Solicitor wish to receive REF claims from AIH they will be referred following the initial assessment by the Claims Manager. Claims referred at this stage have no established degree of liability against a third party, no guarantee of success and no agreement from a client they want solicitors instructed. No further contact has been made with the prospective claimant following their initial response to the advertisement, it is thereafter up to the Panel Solicitor to contact the prospective claimant, investigate the matter further and convert the referral into a claim.
AIH makes no claims regarding REF referrals and conversion thereof apart from confirming that the prospective claimants have responded to an advertisement. AIH will at the Panel Solicitor's request write to the prospective claimants who are referred at this juncture on an agreed format basis.
CLM and WCC claims are fully established claims with clients who have agreed to the instruction of solicitors on their behalf. A 'considered' assessment that the claim has more than a 51% chance of succeeding will have been made.
AIH investigates CLM and WCC claims further and in-depth. The Claims Manager will have arranged for all the necessary information to be obtained to enable a fuller assessment of liability to be made. This can include a detailed client statement, a plan of the locus, photographs, witness statements etc. The claimant will have signed an Instruction Form and also an application for the Conditional Fee Arrangement Insurance Policy and credit agreement will have been made on CLM claims.
The claim is then sent to a Panel Solicitor who can then decide whether or not to accept the case, there is no obligation on any Panel Solicitor to take any case. The Panel Solicitor should fax the Acceptance Forms to AIH and an invoice will be sent out for payment within 7 days of receipt of the same.
AIH will arrange directly with the claimant the purchasing of the Conditional Fee Arrangement Insurance policy. The Panel Solicitor will be supplied by AIH with full details of the policy purchased including the premium and interest rate applicable. Where the client appears to have the option of proceeding at common law or under Workers' Compensation legislation, any insurance policy purchased by the client may be cancelled, without cost or penalty if the client elects not to proceed under common law.
The Panel Solicitor must give the client the opportunity to withdraw from the scheme in line with their full legal entitlements. The Panel Solicitor must also outline the consequences of pulling out of the credit agreement of the AIH scheme.
Where the case has the benefit of an insurance policy the full amount due to the insurance premium Credit Company including interest must be discharged prior to the balance of the claims settlement being forwarded to the client. This is the responsibility of the Panel Solicitor who will be responsible for any shortfalls to the Credit Company."
68 Despite the Society's submissions to the contrary, it does not seem to me that there is anything in this section which suggests the undertaking of legal practice. It is true that the advisor is said to ask "the enquirer a number of relevant questions about the circumstances of the accident" and it may be that the determination of relevance is at least to some extent a legal task. Nevertheless, the relevance in this context is not the relevance for the purpose of advising the enquirer but to the claims manager to assess whether there is any merit in the claim for the purpose of a referral. I do not think there is anything that suggests that the enquirer is informed whether there is any merit in his or her claim. This is made clear from the specified stages at which the Panel Solicitor can receive referrals. The reference to "the instruction of solicitors on their behalf" seems to me to mean merely that the clients will have agreed to instruct the solicitors to act for them. I do not think it means that the instructions come from AIH.
69 It seems to be a significant part of the scheme operated by AIH that the enquirer will purchase a Conditional Fee Arrangement Insurance Policy. The terms of such policy are not set out in the document, but it appears that AIH will pay for the cost of medical reports when a Conditional Fee Arrangement Insurance Policy has been entered into.
70 AIH charges $200 for the "work undertaken on the matter" referred. The invoice is "supplied in the form of a disbursement fee note", I take it to enable the fee to be recovered from a defendant in the event of a successful claim. When the Panel Solicitor has decided to accept the case by filling in the acceptance form, AIH "will raise an invoice for the work undertaken". This invoice is for $1,100 plus GST for a common law claim or $700 plus GST for a workers compensation claim. Again, "the invoice will be supplied in the style of a disbursement fee note". It is difficult to understand the basis upon which these fees are calculated but it does not seem to me that the requirement that these sums be paid is material to whether or not AIH is conducting legal practice. In dealing with the claims manager's role, the "Panel Solicitor is urged to use the Claims Manager to obtain any further supporting evidence required" and the services supplied following such a request will be paid for only upon conclusion of the claim, that is to say "credit will be supplied" in the meantime.
71 It is commonplace that investigators are used in litigation or proposed litigation to obtain statements and procure evidence. To some extent it is necessary to exercise judgments about relevance and the like that are similar to the exercise of legal skill. But it cannot be suggested that merely to do this for the purpose of submitting the material to a solicitor for use in connection with a claim is undertaking legal practice.
72 Section 7 deals with CFA insurance policies. This section is in the following terms -
" A
Insurance Policy
The Conditional Fee Arrangement Insurance policy provides the client with indemnity against the third party's costs, both sides disbursements and the policy premium should the claim be wholly unsuccessful.
If the Panel Solicitor has varied from the procedures outlined in this manual they must produce written authority from AIH in order that the client can claim indemnity under the policy. In addition, the Panel Solicitor must produce written authority for all disbursements claimed.
Should at any stage the Panel Solicitor feel that indemnity should be withdrawn from the client they must first obtain the written approval of AIH. In such circumstances the Panel Solicitor should write to AIH outlining the situation of the 'change of fact' that has taken place along with all supporting evidence. The matter will then be considered and thereafter a decision will be given to the Panel Solicitor.
The Panel Solicitor is not entitled to seek indemnity in relation to disbursements incurred where there has been an error of judgement on their part This can be either in accepting the case or continuing on when there has been a clear 'change of fact'. This does not relinquish any claim the client may have in respect of negligence on the part of the solicitor concerned.
Should at any stage the prospects for the success of the claim fall below 51% the Panel Solicitor MUST immediately notify AIH. Any material fact that in anyway affects the prospects for the success of the claim should be immediately advised to AIH."
73 It seems that this insurance policy is an essential part of the entire scheme. It is the indemnity provided by the policy which, of course, will be in question when unnecessary disbursements are incurred. AIH requires that, for the purpose of obtaining an initial medical report, instructions should be sent "direct to medico legal consultancy". Where this is not appropriate "permission must be sought from AIH to use an alternative medical expert". Quite what the medico legal consultancy is does not appear from the material but I assume that it is a referral list of doctors that AIH considers to be appropriate. It is clear, as it seems to me, that the solicitor nevertheless has a responsibility to ensure that an appropriate medical expert is consulted and if he or she considers that someone other than being a part of the medico legal consultancy should be used, the solicitor of course is obliged to follow his or her own judgment. A refusal of permission by AIH must be immaterial to this exercise of professional responsibility. The consequences of non-compliance with a refusal by AIH, should that occur, cannot redound to the client's disadvantage although there may be consequences in connection with the insurance policy. I do not that think that, in this situation, by requiring solicitors to use the medico legal consultancy or obtain permission AIH is conducting a legal practice. It is simply acting as any insurer is entitled to do. The point is specifically made in the manual that a credit is given by AIH for the purpose of obtaining medical reports and it is not unreasonable that AIH should decide the cases in which it will be prepared to advance credit. So far as additional medical reports are concerned, they "should only be obtained with the express permission of AIH". This requirement is explained as follows -
"It must be remembered that proportionality (the extent of costs and disbursements against the size of the claim) and whether further disbursements are justified may be the subject of scrutiny even when costs are assessed. The Panel Solicitor should also remember that they would only be able to recover disbursements which are recoverable at Assessment on a party/party basis."
74 So far as it goes, this is a perfectly proper consideration to bring to the solicitor's attention and must at all events be a relevant matter when considering whether further medical opinion should be obtained. This is in the client's interest. The manual makes it clear that if prior authority is not sought or obtained in relation to additional medical reports "indemnity in relation to the cost of the second report will not be provided". Again, I do not see that this is any interference with the due undertaking by a solicitor of his or her professional obligations to the client. Nor does it amount to the undertaking of legal work.
75 Similarly, the requirement that the Panel Solicitor "should only instruct counsel with the authority of AIH" has the possible consequence, if it is not complied with, that indemnity will not be provided. The solicitor is not bound to comply with the condition. He or she is bound to act in the client's interests, one of the aspects of which would be whether indemnity for the cost of briefing will be provided.
76 Section 3 of the manual deals with reporting to the client. The solicitor agrees that there will be no contact with the client on a referral before the case has been accepted. I do not see any impropriety in such an agreement. The manual points out that failures by the solicitor to advise a client of progress in his or her case is a common complaint and therefore requires the solicitor to send to the client at least one letter a month, even if nothing has happened on the file. I think this is excellent advice. The manual points out that, once a medical report has been obtained, the Panel Solicitor should obtain the client's instructions on its content and, if counsel's opinion has been sought the solicitor should obtain the client's instructions on that opinion. The manual requires all offers of settlement to be referred to the client and acceptance of any offers must be in writing from the client. It is suggested that where the client has the benefit of an insurance policy he or she should be reminded in writing when the written acceptance of the offer is received, that the client has given authority for the cost of the insurance and interest to be deducted from their settlement. It does not seem to me that any of these requirements are unreasonable. To the contrary, it would be good if all solicitors practiced in this way. Still less do they smack of undertaking by AIH of legal practice.
77 Secton 4 of the manual deals with the seeking of authority from AIH for actions to be taken. It is clear, I think, that the authority referred to is for actions in respect of which indemnity or credit will be sought. In my view, it is reasonable that AIH's authority in respect of these matters should be sought. There is no suggestion in the manual that the solicitor should not or, indeed is not bound to follow his or her own professional judgment in the conduct of a matter, even if that might involve either not obtaining the authority from AIH or proceeding with some action when authority has been refused. The consideration of the question whether authority should be given is not the undertaking of legal practice in the relevant sense, although AIH may need to exercise some legal judgment in respect of its own decision-making. This section ends with the following passage -
" Panel Solicitor's Views
A Panel Solicitor must form their own views on each individual case. A Panel Solicitor should not send a case to AIH requesting how they should proceed in the matter. A Panel Solicitor should suggest a course of action and then seek authority to proceed from AIH.
AIH are not a mechanism for telling Panel Solicitors how to progress files. Whilst advice is available, the primary function is concerned with authorising certain action in line with this manual and considering indemnity issues."
78 There is nothing in this matter which, to my mind, suggests that AIH is undertaking legal practice.
79 There are some changes that were made to the manual in 2005. Although I do not think that there are any significant changes, it is probably worthwhile to refer to several differences. The brief overview now contains a statement that the investigation department "is headed up by a qualified solicitor whose experience and expertise is in the personal injury and litigation field". The use by AIH of a qualified solicitor to enable it to determine whether it will refer a matter is not the conduct by it of legal practice, it is merely a mode of informing itself whether or not the case is an appropriate one for referral. It appears at all events that this manual has been further amended in this particular respect by substituting for the "qualified solicitor" a "registered private investigator" and changing references to "advisers" to "investigators". These changes do not lead me to change my view about the nature of the manuals.