End this rort

WHEN Lydia Maric trounced the Law Institute of Victoria last week, it might have looked like the final chapter in this regrettable affair. But it's not.

We are now about to see the Law Institute avoid financial responsibility for the damage it has inflicted on this non-lawyer conveyancer.

The Law Institute's vain attempt to permanently restrict Maric's business has probably cost the best part of $1 million.

Maric's lawyers are still tallying up the full extent of her legal bills, but it looks like she will be presenting the Law Institute with a bill - for costs and damages - that could be anywhere between $400,000 and $500,000.

And if that is what this case has cost Maric, the Law Institute has probably incurred something similar.

But really, who cares? The entire cost of this ludicrous episode will be met using public money.

The Law Institute and its members - many of whom compete against conveyancers - will never need to put their hands in their pockets and take direct responsibility for what they have done to this woman.

That's the extraordinary result of the fact that the "regulatory" activities of the Law Institute are paid for using other people's money. The state Government allows the Law Institute to regulate its members using money that originates with solicitors' clients.

Anyone who is silly enough to leave their money sitting in a solicitor's trust account can take comfort from the fact that Victorian law allows the interest that is earned on that money to be skimmed off. Instead returning that interest to clients, a series of Victorian governments have adhered to the belief that the Law Institute has a much better idea of how it should be used - chasing people such as Maric, for example.

This rort has been on the nose for decades. But the Maric case shows that this arrangement has also undermined the normal rules of economics that encourage people not to take frivolous disputes to court.

If anything qualifies as frivolous, it is this case.

Remember, the lead judgment in the Court of Appeal said it would be "an exercise in futility" to grant the Law Institute the injunction it was seeking against Maric.

A new regulatory system is about to permit licensed conveyancers to compete on an equal footing with Victoria's solicitors for conveyancing work.

And the court noted that Maric has done everything she needs to do in order to qualify for a licence.

The dubious nature of this case was apparent from the beginning. In 2005, the organisation then known as the Victorian Legal Practice Board had discussions with Maric about the way she was conducting her business. After reaching an agreement, the Legal Practice Board told Maric in writing that the case against her had been finalised.

Maric was then given a lesson in what double jeopardy really means. The Law Institute was not satisfied with the settlement that had been reached with the Legal Practice Board. So the Law Institute jumped in and took her to court.

At the time, the Legal Practice Board's chief executive, Sue Walpole, contacted John Cain, who was then the Law Institute's chief executive.

Walpole urged the institute to drop its action. She told Cain that the board had made a conscious decision not to prosecute Maric, and because of that it was "arguably not sensible" for the Law Institute to take its own action against her. "John said there was nothing he could do and they had a good case," Walpole said at the time.

There is only one positive aspect to this affair. The Law Institute has since been stripped of the power to take unilateral court action against conveyancers.

The top regulator of the state's lawyers is now the Legal Services Board, whose chairman, Colin Neave, has told the Law Institute that he "would expect to be consulted by the LIV about any future decision to initiate action against people unqualified to perform legal work".

That will probably be enough to prevent the Law Institute embarking on another $1 million frolic.

But why should the public be left to pay for the Maric case?

The Law Institute was warned not to pursue her. It persisted when it knew conveyancers were about to be licensed and it justified its actions by pointing to the need to have a legal phrase defined by a court.

Those responsible for this case might have honestly believed they were acting in the public interest. But the interests of the legal profession are not always equivalent to the public interest.

PREJUDICE: Chris Merritt | March 28, 2008 | The Australian