NSW bar in turmoil over pressure for barristers to incorporate … Tyro barrister pushing the agenda … Will existing leadership be obliged to go into early retirement if rolled by the members? … Ethical considerations … Tax advantage questionable
The young pup on the council of the NSW bar ‘n’ grill is pushing remorselessly for the incorporation of barristers’ legal services.
Apparently, the tax benefit makes it all worthwhile.
The whole thing has distracted the bar council, while Hyde Page has secured enough members to petition for a general meeting to put this pressing issue to the rank and file.
The call for the meeting occurred before the delivery of all the legal advice sought by the bar council on the ins and outs of members incorporating into single director, single shareholder entities.
It’s all very exciting.
Apparently, it’s vital to get more than the capped $2,000 tax deductibility on self-education expenses and HP says that barristers limping along on $300,000 a year can save $25,000 if incorporated.
There’s a tiny question. Where is the public benefit?
This is all about saving money, via the tax system, for people who are already, generally, well-off.
It’s not a brilliant look for barristers to be pleading for tax breaks when legal aid and other justice-related services are on their knees.
Barristers and their tax issues had an unfortunate splash in the press in 2001.
If corporate entities are to carry the liability of barristers that would be the final blow for the immunity from actions in negligence – already hanging by a thread.
Some leading briefs are saying that there could be a downside to incorporation, since it will require tax to be paid on an accrual basis – on money billed, rather than money received.
THE issue sees a head-on clash between HP, who is a new arrival on the bar council, and the old guard, led by president Phillip Boulten.
Boulten has told the rank-and-file that the proposal to limit tax liabilities is “ethically questionable”.
Should enough members at the EGM be lured by a few miserable tax concessions, then it presents problems for the inner-sanctum kahunas who fought against it.
Do they resign from the council on principle and leave running the shop to a wild-eyed new guard? Boulten told the membership:
“There are important ethical considerations to be borne in mind. It is entirely misguided to pursue proposals that are singularly designed to minimise barristers’ tax exposure.
The bar should seek to provide ethical leadership and set high standards wherever possible and the pursuit of legislative change in order to reduce tax exposure for barristers is, in my view, ethically questionable …
I will not support any change involving incorporation which would undermine the standing of the bar in the eyes of the community which we serve.”
Already there is resentment that HP’s personal assistant, rather than the man himself, had been on the blower to members, pressing them to sign the petition.
Boulten mentioned “legislative change”. In other words, even if the membership does vote to amend the bar rules, would the parliament be so obliging as to change the Legal Profession Act?
That is unlikely. Why should the pollies legislate to give a particular class entrée to tax advantages they didn’t previously enjoy?
In any event, it should not be forgotten that in an earlier life Premier Barry O’Farrell worked for the Fahey government, which was responsible for converting silks into nylons by scrapping the appointment of QCs.
Other possibilities also arise once barristers trade as companies. Next step will be business models that allow partnerships with other professions, fusion and other high-falutin’ adventures that will end-up god knows where.
Why shouldn’t judges trade as companies, contracting their services to the courts?
The possibilities are exciting.
In The Education of a Young Liberal, HP said that he would think no more about taking over someone’s branch of the party, “than eating steak for dinner”.
In a review of the book in 2006, The Sydney Morning Herald state political editor, David Humphries, said:
“He saw the presidency of the Young Liberals as his destiny. He seemingly would have done anything to get there – treachery, bribery, harassment, intimidation, exploitation. And he wrote this book only after failing the quest. Had he won his one-year stint of glory, would he have been silenced?”
So deep was he in the political mire that the young HP wrote:
“I was coming to loathe almost every part of my day, and a lot of the time I loathed myself as well … [yet] the only thing greater than my fatigue was my ambition.”
One further quote from the young Machiavelli:
“People who are active in organisational politics undergo a loosening of their morality and ethics.”
A further official announcement on the crisis is scheduled for Thursday or Friday. The most recent ukase from Prez Boulten is here.