FEATURE ARTICLE -
Issue 23 Articles, Issue 23: Dec 2007
OPINION re: THE RE-INTRODUCTION OF THE “TWO COUNSEL” RULE
1. By letter dated 18 September 2007, the President of the Bar Association of Queensland (“the Association”) has sought our opinion on the following issues:
a) by what means could the “two counsel rule” be re-introduced in a way that would effectively bind Senior Counsel practising in Queensland? In particular, would this require an amendment to the Barristers Rule 2007 (“the Barristers Rule”) for it to be effective?; and
b) would the re-introduction of the two counsel rule (in a binding form, or in the form of an “aspirational statement” as one of the criteria for appointment), or attempts to enforce it, conflict with other legislation, including Part IV of the Trade Practices Act 1974 (Cth) (“the TPA”) or the Competition Code of Queensland enacted under the Competition Policy Reform (Queensland) Act 1996 (“the Competition Code”)?
2. By way of background, the above letter states that:
“The Council is in the process of considering whether the protocol for the appointment of Senior Counsel might usefully be reviewed, including in any of the ways discussed in the “Report of the Sub-Committee Regarding the Review of the Protocol for the Appointment of Senior Counsel” and the “Minority Report of the Sub-Committee Regarding the Review of the Protocol for the Appointment of Senior Counsel”.
In that context, one issue that has been raised is whether the “two counsel rule”, or some form of it, should be re-introduced. In that respect, two possibilities are mentioned in those reports, namely:
a) An “aspirational statement” in the criteria for appointment of senior counsel.
i) This might, for example, be to the effect that it will be expected that any successful applicant will appear in trials, hearings, and long chamber matters with a junior counsel, save in exceptional circumstances and otherwise for the performance of appearance work and matters in which the applicant has held the brief as a junior counsel prior to taking silk. (In addition, the former exceptions to the two counsel rule for Tribunal appearances and criminal work might be maintained).
ii) Other forms of such a statement are of course possible — for example, that a successful applicant should have those qualities which, if the applicant chose to practice in accordance with the “two counsel rule”, would likely lead to successful practice as Senior Counsel.
b) Alternatively, the re-introduction of the “two counsel rule” in a way that binds Senior Counsel practising in Queensland. (It is suggested in the “Minority Report” mentioned above that this should be by an amendment to the Barristers Rule 2004 (since replaced by the Barristers Rule 2007).”
3. Prior to its abolition, the two counsel rule provided as follows:
“15.2 THE TWO COUNSEL RULE
(a) Subject to the remainder of this Rule silks should not appear in any judicial or quasi-judicial proceedings of any kind without a junior. (b) A silk may accept instructions to appear as an advocate without a junior in the following cases:
i) an appearance before a private or domestic tribunal;
ii) an appearance to make submissions on a plea of guilty in any court;
iii) an appearance before any court or tribunal where, by law, only one counsel may appear for a party;
iv) an appearance before any tribunal established for the purpose of dealing with defence force discipline; or
v) an appearance before any disciplinary tribunal dealing with horse racing, trotting or greyhound racing.
(c) Nothing in this Rule shall be taken to oblige a silk to accept a brief without a junior.
(d) In any of the cases referred to in sub-rule (b) a silk must decline to appear alone if the interests of the client require that a junior should also be instructed.
(e)
i) Silks should not, without a junior, settle pleadings or draft such other documents necessary for the conduct of contentious proceedings as are normally drafted by junior counsel.
ii) Silks may accept instructions to advise in any matter or to draft a non-contentious document, without a junior.
iii) A silk may decline any such instructions if the interests of the client require that a junior should also be instructed.”.
4. At a special general meeting of the Council of the Association on 17 September 1991, the above rule was replaced with the following:
“15.2
(a) Queen’s Counsel may accept instructions in any matter without a junior
(b) Queen’s Counsel shall refuse to accept instructions in any matter if the interests of the client require that more than one counsel be instructed.
(c) Nothing in these Rules shall be taken to oblige a Queen’s Counsel to accept a brief without a junior.”.
5. There is no equivalent to the above provision in the Barristers’ Rule. Rule 88 provides that:
“Third-line forcing
88. A barrister must not require that any other particular legal practitioner be instructed or briefed, as the case may be, so as in any way to impose that requirement as a condition of the barrister accepting any brief or instructions.” (emphasis added).
Making the rule binding on Senior Counsel in Queensland
6. The Barristers Rule is binding in Queensland on legal practitioners in the State, including senior counsel.1 Subject to any inconsistency with State or Federal legislation, the introduction of the two counsel rule by way of an amendment to the Barristers Rule would bind senior counsel in Queensland.
7. Any non-statutory alternative would run the risk of being inconsistent with the Barristers Rule. We say this because rule 89 obliges barristers to accept briefs offered by solicitors, subject to certain limited exceptions. Rule 89 provides that:
“89. A barrister must accept a brief from a solicitor in a field in which the barrister practises or professes to practise if:
(a) the brief is within the barrister’s capacity, skill and experience;
(b) the barrister would be available to work as a barrister when the brief would require the barrister to appear or to prepare, and the barrister is not already committed to other professional or personal engagements which may, as a real possibility, prevent the barrister from being able to advance a client’s interests to the best of the barrister’s skill and diligence;
(c) the fee offered on the brief is acceptable to the barrister;
(d) the barrister is not obliged or permitted to refuse the brief under Rules 91, 92, 93, 95. 96 and 97.”.
8. None of the exceptions to the “cab rank” rule expressly refers to the absence of a junior counsel. Rule 97(g) provides that a senior counsel may refuse a brief on the grounds that, in the barrister’s opinion, the brief does not require the services of a senior counsel. Although senior counsel may consider that a brief requiring the services of only one counsel is not a brief requiring the services of a senior counsel, this is not a view expressed in the language of the Barristers Rule itself. Instead, the structure is that the “cab rank” rule requires that a brief be accepted, subject to the usual exceptions, including that a senior counsel may decline a brief to appear without a junior. That is not the same thing as a rule prohibiting a senior counsel from appearing without a junior, even if there are exceptions to the prohibition. It may thus be thought that a two counsel rule not contained in the Barristers Rule would be inconsistent with the Barristers Rule and therefore of no effect in the face of the obligations under the Barristers Rule.
9. We also note that implementing the two counsel rule by way of a regulation passed by the Association would not make it binding on non-members (such as interstate senior counsel), thereby offering non-members an advantage. We do not consider it necessary to consider the validity of a constitutional provision of the Association adopting the two counsel rule as a matter of corporations law.
10. Another important consideration is whether a two counsel rule would contravene provisions of the Competition Code or Part IV of the TPA. This is because:
a) by virtue of s. 109 of the Constitution, the TPA would invalidate any State legislation, including s. 227 of the Legal Profession Act 2007, to the extent of any inconsistency. Section 227 would give a two counsel rule, as part of the Barristers Rule, its binding effect, if the amended Barristers Rule were adopted by the executive and notified under the Act; and
b) s. 51 of the TPA provides a limited exemption from the operation of Part IV for restrictive trade practices found in State regulations. In particular, there is an effective two year limit on the period for which the regulations exempt the conduct from the operation of Part IV; and
c) adoption of a two counsel rule as a regulation of the Association or as a matter of practice by members of the Association might contravene the Competition Code.
11. It is, therefore, necessary to consider whether the two counsel rule contravenes a provision of Part IV of the TPA, or of the Competition Code.
The TPA
12. Subject to certain exceptions,2 Part IV of the TPA applies to corporations, rather than natural persons. Any consideration of the application of Part IV to the Association, and to individual members, is complicated by this fact. However, the Competition Act applies the “Schedule version of Part IV” of the TPA3 (and the remaining provisions as they relate to that version), named the Competition Code, as a law of Queensland, applying to natural persons. For this reason, we are of the opinion that it is unnecessary to separately consider the operation of the TPA.
The Competition Code
13. References, in the following paragraphs, to various sections of the TPA, should therefore be taken to be references to the Schedule version of Part IV of the TPA or the remaining provisions that relate to the Schedule version.
Exclusionary provisions
14. Section 4D of the TPA relevantly provides that:
“(1) A provision of a contract, arrangement or understanding … shall be taken to be an exclusionary provision for the purposes of this Act if:
(a) the contract or arrangement was made, or the understanding was arrived at … between persons any 2 or more of whom are competitive with each other; and
(b) the provision has the purpose of preventing, restricting or limiting:
(i) …
(ii) the supply of … services to … particular persons or classes of persons in particular circumstances or on particular conditions;
by all or any of the parties to the contract, arrangement or understanding …
(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person … is … in competition with the other person … in relation to the supply … of all or any of the … services to which the relevant provision of the contract, arrangement or understanding … relates.”.
15. Section 4D only applies to persons who are in competition with each other in relation to the supply of services to which the relevant provision relates. In our opinion:
a) the relevant provision (i.e. the two counsel rule) would relate to the supply of legal services by senior counsel;
b) senior counsel are in competition with one another in relation to the supply of these services; and
c) a contract, arrangement or understanding between senior counsel, that they would not supply legal services unless provided with the assistance of junior counsel, would have the purpose of preventing the supply of services in particular circumstances.
16. With respect to “purpose”, s. 4F of the TPA relevantly provides that:
“(1) For the purposes of this Act:
(a) a provision of a contract, arrangement or understanding … shall be deemed to have … a particular purpose if:
(i) the provision was included in the contract, arrangement or understanding … for that purpose or for purposes that included or include that purpose; and
(ii) that purpose was or is a substantial purpose; …”.
17. The purpose is the end sought to be achieved, rather than the reason for seeking that end.4 In our opinion, the end sought to be achieved by the two counsel rule is the prevention of senior counsel supplying services in the particular circumstances where they are briefed without a junior.
18. However, we do not consider that the “particular persons or classes of persons” element of s. 4D(1)(b)(ii) is satisfied in the present case. As Gleeson CJ stated in the News Ltd case:5
“The particularity of the persons or classes of persons who are the objects of the purpose defined by s 4D and proscribed by s 45 is essential to the concept of an exclusionary provision.”.
19. In our opinion, the targets of the purpose of the two counsel rule are not particular persons or classes of persons. Rather, the rule is concerned to prevent the supply of services by senior counsel (in particular circumstances) to anyone to whom such services may lawfully be provided.
20. We are, therefore, of the opinion that the two counsel rule is not an exclusionary provision within the meaning of s. 45(1) or 45(2) of the Competition Code or TPA.
Third line forcing
21. Section 47 of the Competition Code relevantly provides that:
“(1) Subject to this section, a person shall not, in trade or commerce, engage in the practice of exclusive dealing.
…
(7) A person (the “first person”)also engages in the practice of exclusive dealing if the first person refuses:
(a) to supply … services to a second person;
…
for the reason that the second person … has not agreed to acquire … services of a particular kind or description directly or indirectly from another person …
(13) In this section:
(a) a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having legal or equitable force or not, and includes a reference to a condition the existence or nature of which is ascertainable only by inference from the conduct of persons or from other relevant circumstances; …”.
22. In our opinion:
a) the services provided by a junior counsel in assisting a senior counsel are “services of a particular kind or description”; and
b) the implementation of the two counsel rule would require senior counsel (at least in particular circumstances) to refuse to supply legal services unless the recipient also acquired services of this particular kind or description.
23. However, in our opinion, a condition that the recipient acquire services of a junior counsel is not a condition that the recipient acquire services from “another person”. As Davies J stated in TPC v Tepeda Pty Ltd:6
“By the reference to “another person”, the section has in mind a specific person, otherwise the reference would be unnecessary. The provision does not prohibit a requirement such as, eg, that the customer will acquire finance or insurance from a reputable company. The vice with which it deals is a corporation’s requirement that such goods or services shall be obtained from a specified source. Such a requirement tends to have anti-competitive effects and a transaction which incorporates it is defined by s47(6) to be exclusive dealing.”.
24. Given that junior counsel comprise the bulk of barristers in Queensland, we do not equate a requirement that some unspecified junior counsel be retained with a requirement that “another person” be retained.
25. We are, therefore, of the opinion that the implementation of the two counsel rule would not breach s. 47 of the TPA.
Arrangements that restrict competition
26. Section 45 of the Competition Code relevantly provides that:
“(2) A person shall not:
(a) make a contract or arrangement, or arrive at an understanding, if:
(i) …
(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or
(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:
(ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition.
(3) For the purposes of this section …, competition, in relation to a provision of a contract, arrangement or understanding … means competition in any market in which a corporation that is a party to the contract, arrangement or understanding … supplies … services …”.
27. The implementation of the two counsel rule by means of an amendment to the Barristers Rule may arguably constitute a contract, arrangement or understanding for the purposes of s. 45, but we think it does not, because a statutory regulation is not within the ordinary meaning of that expression. On the other hand, a regulation of the Association alone would probably do so. In Dunn v Australian Society of Certified Practising Accountants,7 Whitlam J appeared to accept that the by-laws of the Society constituted a contract, arrangement or understanding, for the purposes of s. 4D of the TPA. His Honour stated:
“The applicant contends that the by-laws have the effect of a contract between the respondent and each member and also between each member and each other member. The respondent seems to accept that the so-called statutory contract constituted by the respondent’s memorandum and articles of association extends to the by-laws. After all, every member agrees to be bound by the by-laws.”.
28. The starting point for a consideration of s. 45(2)(a)(ii) of the TPA is the identification of the relevant market. The impact of the two counsel rule on competition would vary depending on whether the market were defined broadly (e.g. the national market for legal services), or narrowly (e.g. the Queensland market for legal services from senior counsel).
29. Section 4E of the TPA provides that:
“For the purposes of this Act, unless the contrary intention appears, market means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services.”.
30. The notion of substitution of one product for another is frequently a key factor in determining the relevant market. As Mason CJ and Wilson J stated in Queensland Wire Industries Pty Ltd v Broken Hill Pty Co. Ltd:8
“Section 4E directs that a market is to be described to include not just the defendant’s product but also those which are “substitutable for, or otherwise competitive with”, the defendant’s product. This process of defining a market by substitution involves both including products which compete with the defendant’s and excluding those which because of differentiating characteristics do not compete. In Hoffmann-La Roche v Commission (“Roche“) the Court of Justice of the European Communities said:
“The concept of the relevant market … implies that there can be effective competition between the products which form part of it and this presupposes that there is a sufficient degree of interchangeability between all the products forming part of the same market in so far as a specific use of such products is concerned.”
…”.
31. If Queensland senior counsel refused to provide services (or raised prices beyond an acceptable level), then a solicitor would, subject to the availability of senior counsel from other States and territories, be able to obtain equivalent services from other senior counsel. The services provided by the respective senior counsel are substitutable for one another.
32. If Queensland senior counsel refused to provide services, then a solicitor may decide to use local junior counsel, interstate senior counsel, or a solicitor to provide the legal services.
33. In our experience, it is not uncommon for a senior counsel to be substituted with a junior counsel. It is less common for a senior counsel to be replaced with a solicitor. Without wishing to profess any expertise in the area of market definition (which is largely an expert economic issue) our impression is that the relevant market, or at least one of them, may well be the provision of specialist advocacy services in Queensland by barristers and by those solicitors who practise as advocates. Clearly, the definition of the market is critical. The narrower the market, the more likely it is that any purpose or effect upon competition will be substantial, and vice versa.
34. The purpose of reintroduction of the two counsel rule might well be seen to be that senior counsel should not compete with junior counsel for briefs in cases where two counsel are not to be briefed. The question is whether that purpose involves a substantial purpose of substantially lessening competition.
35. Lessening includes preventing or hindering.9 However, “substantially” is necessarily imprecise. It is used in a relative sense and involves a quantitative and a qualitative assessment. With some diffidence, we have arrived at the conclusion, although it is a contestable point, that it would not be a substantial purpose of reintroduction of the two counsel rule to substantially lessen competition in the market as defined. Distortion of the market would not be the aim of removing senior counsel from the arena of single counsel cases. But that is not to the point under the statute. Removing senior counsel from single counsel cases necessarily removes them from that part of the market as defined above. It must lessen competition in that part of the market. The question is whether the purpose is to substantially lessen competition in the overall market. That would not be a purpose lightly attributed to the Association, in reintroducing the two counsel rule.
36. As to the effect of reintroduction, given that senior counsel constitute a minority of the relevant market, and given that (in our experience) many senior counsel do presently appear and advise or settle pleadings with a junior, we consider that the re-introduction of the two counsel rule would have a limited impact on competition. We consider that there would be relatively few senior counsel (if any) who would be forced out of the market. Even if this be incorrect, there would remain a substantial number of senior counsel (and junior counsel) operating in competition with one another. Again, we do not readily see that any substantial lessening of competition would occur.
37. It is unnecessary for us to consider whether the impact of the two counsel rule on competition would be negative. Although the minority report to the Association states that the two counsel rule would “redress the uncompetitive practices of those who, by taking silk, gain a considerable ‘marketing’ advantage over their peers”, there are statements to the opposite effect.10 Neither are we concerned with whether, if the reintroduction of the two counsel rule would otherwise contravene s. 45 of the Competition Code, any authorization under s. 88(1) of the TPA (see s. 45(9) of the Competition Code) might be obtained.
38. Subject to the caveat that our conclusions on the above issues are based on personal experience (rather than evidence), our opinion is that the two counsel rule would not contravene s. 45 of the Competition Code or TPA.
Conclusion
39. In summary, we are of the opinion that the re-introduction of the two counsel rule may lawfully be accomplished by an amendment to the Barristers Rule, but not by other non-statutory alternatives. Yours faithfully,
David Jackson QC
Peter Franco
Footnotes
- Sections 227, 218 and 219 of the Legal Profession Act 2007; the Legal Profession (Barristers Rules) Notice 2007; rule 9(b) of the Barristers Rule.
- For example, s. 6(3) of the TPA extends the application of Part IV (to the extent there stated) to natural persons engaging in conduct involving the postal, telegraphic or telephonic services.
- S. 150C TPA.
- News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at [18] per Gleeson CJ.
- At [20].
- (1994) 16 ATPR 41-319 at 42,246. See also SWB Family Credit Union v Parramatta Tourist Services (1980) 3 ATPR 40-180 at 42,481 per Smithers J; ACCC v Universal Music Australia Pty Ltd (2001) 201 ALR 502 at [458] — [459] per Hill J.
- (1996) 18 ATPR 41-461 at 41,619.
- (1989) 167 CLR 177 at 188.
- S. 4G TPA.
- For example, a former president of the Australian Law Reform Commission has referred to the two counsel rule as one of the “more egregious [of the] old restrictive trade practices” (cited from a speech delivered by Professor David Weisbrot, entitled “Reform of the civil justice system and economic growth: Australian experience”).
