Picture this: you owe a bank $1.75M. At trial, the worst that could happen to you is that you lose - you have to pay the bank the $1.75M, plus interest, and something for the banks costs. Let’s call it a ballpark total loss of $2M.
On the advice of your lawyer, you reach an out-of-court settlement that gives you five months to pay back the $1.75M or, oddly, you pay $3.4M if you miss the deadline. You miss the deadline, and suddenly you owe the grand sum of $3.4M, when only five months ago, at worst, you were looking at $2M. So you sue your lawyer, but your lawyer hides behind the age old protection of advocate’s immunity. Advocate’s immunity simply means that a lawyer/barrister cannot be sued for negligence in relation to work during a court case or reaching a settlement that affects a court case.
Advocate’s immunity is designed to give finality so that losing clients can’t drag a case out forever by suing their lawyers. But advocate’s immunity has been heavily criticised for the created perception that lawyers are “looking after their own” rather than the public. Further, it has been abolished in the US, Canada, New Zealand, India, Malaysia and Singapore without any apparent adverse effect on the legal systems used.
Yesterday, the High Court handed down its decision in Attwell v Jackson Lalic Lawyers Pty Ltd and decided that Jackson Lalic Lawyers were not immune from suit in relation to advice which led to the settlement of proceedings on terms disadvantageous to the Attwells. Jackson Lalic had admitted that their advice was negligent, but sought the protection afforded by advocate’s immunity on the basis that the immunity extends from negligence that leads to a judgment by a court, to negligence that leads to an agreed settlement of court proceedings. The High Court found (5-2) that this was not the case.
The Law Society of New South Wales, acting as a friend to the court, argued that the immunity should be extended and not abolished as it may discourage lawyers from giving frank advice in favour of settlement, because settlement would mean that lawyers are “outside the zone of immunity”. The court rejected that argument and ultimately allowed the Attwells’ appeal.
Whilst advocate’s immunity has not been abolished as in other jurisdictions, it has been clarified and narrowed, which can only lead to a more transparent and fair judicial system in Australia. As the court found, “operation of the immunity may incidentally result in lawyers enjoying a degree of privilege in terms of their accountability for the performance of their professional obligations. But this incidental operation is a consequence of, and not the reason for, the immunity.”