Professional Standards Scheme

The Law Society of South Australia operates a Professional Standards Scheme with the Professional Standards Council (PSC) pursuant to the Professional Standards Act 2004 (SA). Practitioner Members (including Barrister Members) and Company Members who participate in the Scheme can benefit by having their occupational liability capped to an amount of $1.5M or $10M depending on the number of practitioners in the law practice and the annual fee income of the law practice (and to the extent that liability can be capped under the Act).

PSS Participation/Exemption Form

The Professional Standards Scheme ("Scheme" or "PSS") has been approved by the Attorney-General and was gazetted in the SA Government Gazette on 20 January 2022. The new Scheme commenced on 1 July 2022 and will operate for a period of five years. The Scheme operates under the Professional Standards Act 2004 (SA) and the associated interstate Professional Standards legislation, and under the governance of the Professional Standards Councils.

The Scheme reflects the commitment by the Society and its Members to standards of professional excellence.

The Scheme operates on a “one-in, all-in basis”. For a law practice to gain the full benefit of the Scheme and the limitation of liability, all legal practitioners (i.e. any person who holds a current Practising Certificate) within the law practice, and any ILP, will need to be Members of the Law Society and choose to participate in the Professional Standards Scheme.

Members should note that the Scheme is an “opt out" Scheme. Any Practitioner Member of the Society who does not want to take advantage of the Scheme will need to seek exemption from the Scheme by completing the relevant part of the Participation / Exemption form and returning it to the Scheme Manager.

The fee for the period 1 July 2024 to 30 June 2025 is $324, inclusive of the registration fee payable to the Professional Standards Council.

Society non-Members wishing to take advantage of the Scheme would need to first join the Society. If you would like further information about membership, please see the Membership page here or contact Member Services via email: mcs@lawsocietysa.asn.au.

If you participate in the Professional Standards Scheme, you are required under the professional standards legislation to disclose your limited liability status in all documents given to a client or prospective client that promote or advertise you or your business, including official correspondence. It is an offence not to disclose your limited liability status.

Please click here for your Disclosure Obligations.

Failure to disclose may result in a financial penalty of up to $20,000 in South Australia.

Please note these obligations apply regardless of the manner of working, i.e. remote working. Extra care should be given to ensure practitioners and firms who are using external devices such as iPads and mobile phones for communication, are still disclosing their limited liability status as required.

(New) LSSA Professional Standards Scheme Document - 1 July 2022 to 30 June 2027

LSSA Insurance Standard

Professional Standards Act 2004 (SA)

Professional Standards Regulations 2021 (SA)

Professional Standards Council website

Participation / Exemption form

Application Form Company Member and Professional Standards Scheme (PSS)

The Professional Standards legislation enables the establishment of schemes to limit liability of members of occupational associations. The legislation is state based. The relevant Act in SA is the Professional Standards Act 2004 (SA):

• View the Professional Standards Act 2004 (SA) (Act)

The relevant regulations in SA are the Professional Standards Regulations 2021 (SA) (Regulations).

• View the Professional Standards Regulations 2021 (SA)

For a Professional Standards Scheme (“PSS”) to be approved under the Act, occupational associations are required to demonstrate a high commitment to professional standards and consumer protection and to implement comprehensive risk management strategies.

The Law Society’s original Scheme – called the Limitation of Liability Scheme (“LLS”) commenced on 1 January 2012, and operated until 30 June 2017. It was then replaced by the Professional Standards Scheme (“PSS”), which commenced on 1 July 2017 and operated until 30 June 2022. The new PSS commenced on 1 July 2022. The Schemes are not retrospective. They apply to practitioners at the date they join the LLS / PSS and ongoing protection applies only for the time a practitioner remains within the PSS by renewing annually and continues to meet the eligibility requirements of the Scheme, including insurance requirements which may include in the top up insurance layer.

The PSS applies to Admitted Members and Company Members of the Law Society who have not been exempted from participation in the PSS, who have paid the relevant fee and met their obligations under the PSS and the Professional Standards Act 2004 (SA).

Admitted and Company members of the Law Society can participate and will need to provide a completed Participation / Exemption form to the Law Society.

The Participation form is available here.

The application form requires certain information to be provided to the Society for each Admitted and Company Participating Member in the PSS including:

1. Name of Law Society member;
2. Practising Certificate
3. Name of law practice at which the Society Member is working.

Additionally, the Law Society will require information from law practices to enable it to administer the PSS and report to the PSC regarding the PSS. This information includes:

1. Number of practitioners in the law practice;
2. Name of each practitioner in the law practice;
3. Approximate total annual fee income for the relevant financial year.

A fee of $324.00 per annum is payable for each practising full member and each ILP Company Member to participate in the PSS, made up of:

1. $50.00 registration fee which the Law Society will pay to the PSC; and
2. $274.00 (inclusive of GST) annual administration fee to enable the Law Society to administer the PSS.

Fees are pro rated every quarter. Please contact the Scheme Manager to obtain the current pro rated fee.

The Scheme operates on a “one-in, all-in basis”. For a law practice to gain the full benefit of the Scheme and the limitation of liability, all legal practitioners (i.e. any person who holds a current Practising Certificate) within the law practice, and any ILP, will need to be Members of the Law Society and choose to participate in the Professional Standards Scheme.

For example, a firm might have ten principals, nine of whom are participating in the PSS, but the tenth principal is neither a member of the Law Society nor the PSS. If a successful claim is made against the tenth principal, they might be found liable for the full amount of the claim, but could possibly be entitled to bring a contribution claim against all other principals to contribute to the balance of the claim which exceeds the monetary limit of the insurance policy held by the firm. This undermines the effectiveness of the limitation of liability cap.

Issues may also arise if an employed solicitor is neither a member of the Law Society nor the PSS. If a claim is brought against the employed solicitor, the principal/s (as the employer) will likely be vicariously liable for the employee’s act or omission committed in the course of employment, and may not be able to rely on the limitation of liability cap.

Firms wishing to benefit from the limitation of liability provided by the PSS should therefore ensure that:

• All solicitors (both principals and solicitor employees) renew their membership of the Law Society and the PSS on an annual basis; and
• All new solicitors (both principals and solicitor employees) retain or immediately gain membership of the Law Society and the PSS.

It is important to note that an ILP is a legal entity in its own right. The legal practitioner and the firm may both be named in a claim. If only the legal practitioners in an ILP are able to limit their liability under the Scheme, then both the ILP entity and the legal practitioners who are Directors of the ILP would be exposed to the risk of a claim exceeding any liability cap the individual legal practitioners applied for under the Scheme.

As a legal entity, an ILP can become a Company Member of the Law Society. Under the Rules of the Law Society, an ILP which is entitled to practise law in South Australia, and each of whose ILP Directors are Admitted Members of the Society, may be admitted as a Member (a Company Member) of the Law Society.

The PSS will limit the occupational liability of Participating Members for damages arising from a single cause of action to an amount of $1.5 million or $10 million depending on the insurance policies, total revenue and the number of practitioners of the law practice of the Participating Member, and to the extent that liability can be limited under the Act.

The monetary ceilings under the PSS are as follows:

1. $1.5 million cap

Where a law practice consists of up to and including 20 practitioners and where the law practice generated total annual fee income for the financial year prior to the relevant time (which refers to a cause of action founded on an act or omission, specifically to the time of that act or omission) up to and including $10 million; and

2. $10 million cap

Where a law practice consists of more than 20 practitioners or where the law practice generated a total annual fee income for the financial year prior to the relevant time (which refers to a cause of action founded on an act or omission, specifically to the time of that act or omission) greater than $10 million.

No, participation in the PSS is not mandatory. Under s19(2) and (3) of the Professional Standards Act 2004 (SA), the PSS will not apply to any person who or ILP which has applied to the Law Society to be exempted from participation in the PSS. A person or ILP exempted from participation in the PSS will not be able to rely on the PSS to limit their liability if a claim is brought against that person or ILP.

In principle, if proceedings are brought against a Law Society member participating in the PSS (“Participating Member”) relating to occupational liability for damages arising from a single cause of action, and the Participating Member is able to show that:

1. the Participating Member has Professional Indemnity insurance that complies with the Law Society's Insurance Standard and to which the cause of action relates; and
2. the amount payable under the insurance policy (or policies) is not less than the amount of the relevant monetary ceiling specified in the PSS; and
3. the cause of action is not excluded under the Professional Standards Act 2004 (SA) the Court, in awarding damages, will limit those damages to the relevant monetary ceiling specified in the PSS.

Pursuant to the Professional Standards Act 2004 (SA), the PSS provides for limitation of occupational liability arising from a single cause of action.

“Occupational liability” is defined in the Act as follows:

"civil liability arising (in tort, contract or otherwise) directly or vicariously from anything done or omitted to be done by a member of an occupational association acting in the performance of his or her occupation."

It is important to note that Professional Standards legislation is state-based and the definition of “occupational liability” differs from state to state.

The Act and, therefore the PSS does not apply to limit liability for damages arising from:

• The death of, or personal injury to, a person;
• Anything done or omitted to be done by a legal practitioner in acting for a client in a personal injury claim;
• An intentional tort;
• A breach of trust;
• Fraud or dishonesty; or
• Liability which may be the subject of proceedings under Part 18 of the Real Property Act 1886 (SA).

It is important to note that Professional Standards legislation is state-based and the exclusions differ from state to state.

Yes. If the Participating Member is not able to satisfy the Court that they have the requisite insurance policy, or if the amount payable under their insurance policy is less than the amount of the relevant monetary ceiling specified in the PSS, they will not be entitled to rely on the PSS to limit their liability for damages.

The SA Professional Indemnity Insurance Scheme policy (SA PII Scheme) provides cover of $2 million inclusive of defence costs.

The PSS operates to cap damages only. Defence costs incurred are not included in the damages cap.

There is therefore some limited potential for there to be a shortfall in the amount of cover available under the SA PII Scheme depending on the combined amount of the damages awarded to a claimant and the defence costs incurred.

For example, if a claim arose that required a payment to the claimant of $1.5 million under the PSS (i.e. up to the cap), but fees of $750,000 were incurred in defending the claim, the total loss would be $2.25 million of which the SA PII Scheme would pay $2 million leaving a shortfall of $250,000 to be met by the law practice.

Clause 6.5 of the PSS provides that the limitation of occupational liability of a Participating Member for damages will be that arising from a Single Claim to the relevant monetary ceiling specified in the PSS.

The SA PII Policy contains a broad aggregation provision which means that a series of related acts or omissions or a series of related matters or transactions with the same act or omission will be regarded as em>one loss; under the Policy. This means that the Policy limit of $2 million applies to one loss which could include a number of different causes of action and be based on a number of different acts or omissions.

Participating Members should note that:

• Claims by a number of persons who have a joint interest in a cause of action are likely to be treated as a single claim for the purposes of the PSS, despite the fact that they may also have several interests;
• Two or more claims by the same person arising out of a single event against persons to whom the PSS applies and who are associated persons (that is, partners or employees of the same employer or in the relationship of employer and employee) are likely to be treated as a single claim for the purposes of the PSS.

The SA PII Policy specifies a number of exclusions where insurers will not pay the insured any sum under the Policy.

Where an exclusion under the SA PII Policy applies, a practitioner will not be able to satisfy a Court that they have the benefit of an insurance policy insuring the practitioner against the relevant liability, and the PSS will also not apply.

The PSS is intended to limit liability arising from an act or omission where a person was a Participating Member at the ‘Relevant Time’ – that is, the time an act or omission occurred on which a cause of action is founded – rather than at the time the claim is made.

Yes.

The PSS will only limit liability in respect of an act or omission that occurs while the PSS is in operation. This means that a Participating Member cannot rely on the PSS to limit liability arising from an act or omission that occurred before the PSS commenced.

Law Practices should give careful consideration to whether or not, even if they become Participating Members of the PSS, they still require run-off and/or top-up insurance cover.

The Professional Standards Act 2004 (SA) includes mutual recognition of interstate professional standards schemes. The PSS includes a provision for mutual recognition.

If your SA office is part of a national practice or if you do work interstate, specific consideration should be given to the effect of the mutual recognition portions of all relevant legislation to ensure that the PSS applies to all parts of your practice. We recommend you speak with your PII Broker if you have any queries or seek your own legal advice.

The Professional Standards Councils have published a new Guidance Note on the operation of multi-jurisdiction professional standards schemes.

The guidance explains the general principles that govern the operation of schemes recognised under professional standards legislation across jurisdictions.

The Scheme document and legislation are very complex instruments and particular complex in their operation (if any) on work done interstate or outside of the Commonwealth of Australia. Practitioners should not assume that work done pursuant to any particular retainer will be covered by the Scheme and practitioners should satisfy themselves from time to time that work done is protected by the Scheme or covered by adequate insurance.

The PSS confers on the Law Society a discretion to specify a higher maximum amount of liability than would otherwise apply under the PSS to an amount not exceeding $50 million. A Participating Member who seeks a higher maximum must apply for the higher maximum.

No. The Professional Standards Act 2004 (SA) prohibits contracting out of the PSS (s54(1)). However the Law Society has a discretion to vary (increase) the monetary ceiling up to $50 million in all cases or any specified case or class of case, upon application by a Participating Member.

The Law Society only administers the PSS.

The PSS document and legislation are very complex instruments and particularly complex in their operation (if any) on work done interstate. Further, the PSS will not be applicable to limit liability for work done outside the Commonwealth of Australia.

Practitioners should not assume that work done pursuant to any particular retainer will be covered by the PSS and practitioners should satisfy themselves from time to time that work done is protected by the PSS or covered by adequate insurance.

Neither this webpage nor the Law Society’s acceptance of your participation fee should be construed as representing that any particular claim brought against you will be covered by the PSS.