The Society operates, for some of its full and honorary members and the law practices they constitute a Professional Standards Scheme (Scheme) pursuant to the Professional Standards Act 2004 (Q) (the Act). A link to that Scheme and detailed guidance about its operation is below.
About the scheme
The Scheme limits the liability of participating members and their law practices for damages arising out of the provision of legal services (there are some exceptions to this, please consult the guidance document, particularly if your law practice is predominantly in personal injuries matters). The size of the cap depends upon the size of the law practice in which the member practices unless that law practice has obtained a decision from the Society to exceed that cap.Such a discretionary extension can be for all matters, some matters or some clients.
The Scheme applies to most full and honorary members. It is an incident of membership. To not participate, a member must be exempted from the Scheme. The Scheme is for private practices only and does not apply to full members who hold corporate or government practising certificates. It is unlikely to be of utility to any one else.
A law practice or participating member can increase the cap on liability for individual clients or types of work but may not contract out of the Scheme.
To obtain the benefit of the Scheme, all eligible practitioners who are part of or employed by a law practice must participate in the Scheme. These practitioners and law practices must at all times have the benefit of compliant professional indemnity insurance cover in respect of the legal services to the value of the practices’ cap on liability. Most law practices in Queensland are insured with Lexon Insurance. That insurance and top-up insurance provided by Lexon are compliant with the requirements of the Scheme. So too are the professional indemnity insurance and top-up insurance provided by comparable providers throughout the Australian states and territories.
Incorporated legal practices are now able to join the Society as ILP members and also obtain the protection of the Scheme. Previously the ILP, the entity most likely to be the subject of legal action in relation to services provided by it could not be protected under the Scheme. An ILP cannot obtain this protection without taking up ILP membership of the Society. An ILP membership of the Society provides no participatory rights in the activities of the Society. It's utility is to allow for the ILP's participation in the Scheme and so avail itself of the cap on liability. If an ILP does not wish to obtain this protection it should not take out incorporated legal practice membership of the Society.
So in the case of a sole practitioner or a law firm, to obtain protection under the Scheme:
- all solicitors who are principals or employed solicitors must be full or honorary members of the Society;
- the law practice must have the benefit of compliant professional indemnity insurance in respect of legal services;
- the law practice must comply with the disclosure requirements of s33 of the Act on all of its business documents (the details of this requirement are contained in the detailed guidance below), and
- all solicitors who are full or honorary members of the Society must also participate in the Scheme.
For an ILP, in addition to those requirements it must be a member of the Society, as an ILP member and also of itself participate in the Scheme.
An ILP is eligible to be an ILP member of QLS if:
- all of its employed solicitors holding practising certificates are full or honorary members of the Queensland Law Society
Participation in the Scheme
Because of the one in all in nature of both the Act and the Scheme, participation in the Scheme depends on all eligible staff and if relevant, the ILP participating in the Scheme.
Scheme participation for eligible full and ILP members is automatic upon being granted or renewing membership unless the member applies for and is granted an exemption. Participation in the Scheme, like membership, must be renewed each year,- it is part and parcel of membership.
Honorary members with practising certificates are regarded as participating in the Scheme unless they are exempted. A form for an application to exempt from the Scheme is below.
Throughout the year, members who are exempt from the Scheme may wish to join, and members who participate may wish to exempt from it. Details of how to do this are to be found in the guidance and the relevant forms (see below). When undertaking such action the member should carefully consider the following:
- A failure to participate in the Scheme, when one is a member or an employee of a law practice that does participate will, because of the one in all in nature of Scheme participation, deny the protection of the Scheme to their law practice and its other members and staff.
- If one joins a law practice that does not participate in the Scheme then it is, because of the one in all in nature of the Scheme, unlikely that you have its protection. Further, you are most unlikely to be able to comply with the requirements not to contract out of the Scheme or to provide the disclosures upon your business documents as required by s33 of the Act.
Participating law practices should ensure that all eligible members and staff participate in the Scheme. A relevant form to have new staff who are not already participating in the Scheme join the Scheme is below. This form may have to be accompanied by application to revoke an exemption or to join the Society. If a new staff member is already a member of QLS and is a participant in the Scheme then that membership and participation transfers to your law practice upon employment.
Classes of Cap on Liability
The cap on damages provided by the Scheme depends on the size of the law practice in which a participating member practices. Those caps are either $1.5 million or $10 million. It is not an either/or. A law practice is within either the $1.5 million (class 1) or the $10 million (class 2). cap.
The criteria for those classes of cap are as follows
- Class 1 – a law practice of up to and including 20 principals and where the law practice generates a total annual fee income for the financial year of the relevant time of up to and including $10 million.
- Class 2 – law practices consisting of more than 20 principals or which generates a total annual fee income for the financial year at the relevant time greater than $10 million.
The relevant time is at the time of joining or renewing participation in the Scheme i.e. the time at which membership is taken up or renewed.
There is no exercise of discretion in the allocation of practices to these classes. Therefore a law practice which fits within Class 2 is required if it wishes to participate in the Scheme to hold professional indemnity insurance cover to a minimum of $10 million. If a Class 2 practice wishes to participate in the Scheme they must give the notification to the Society in the Class 2 notification form (see below) and accompany that form with the required documentation.
Aside from those two classes participating members may apply for a higher maximum amount of liability then would otherwise apply under the Scheme. In order to do this the discretionary higher cap application form should be used by the relevant law practice (see below). Again, that law practice must accompany that application with the required material. If a practice that falls within Class 1 wishes to avail itself of a limitation of liability in excess of $1.5 million then it must obtain the exercise of the discretion. It cannot opt to join Class 2
Fees for participation
|Full members||$153 plus GST|
|ILP member||$50 plus GST|
The Professional Standards Council charges the Society a licensing fee of $50 per participating member. The remainder of the fee is retained by the Society. Honorary members do not pay for membership or scheme participation. The Society pays a participation licence fee to the Professional Standards Council in respect of each honorary member holding a practising certificate who does not exempt.
The Society limits the ILP participation fee to $50 in recognition of the cost of ensuring all eligible staff participate in the Scheme and to as near as possible keep the cost of participation of an ILP the same as that of a sole practitioner or law firm.
An ILP Society membership fee is free.
- 2022 - 2027 QLS Professional Standards Scheme
- Professional Standards Act 2004
- Class 2 notification form
- Guidance for members
- Application for discretionary higher cap
- Application to revoke an exemption from the Scheme
- Application for exemption from the Scheme
- Application to participate in the Scheme (law practice document)