A study by The Australian has revealed how the powerful and well-connected in Australian corporations can get away with a lot of dodgy business practices.
The report by consultancy firm Credo found that the top corporate law firms in Australia are the ones that get away from the rules that apply to ordinary citizens.
Credo analysed the corporate laws of over 300 Australian companies and found that more than half (54 per cent) were in breach of Australian laws.
The study also found that in the case of those companies that are registered with the Australian Securities and Investments Commission, the law firm is not required to register with ASIC.
“We know the vast majority of these firms operate without the requisite governance structure,” said Credo partner Stephen Parnell.
“They don’t even have corporate officers, they have lawyers, they don’t have a board of directors.
And so they’re in compliance with their own laws.”
The law firm also found many of the top law firms were run by people who had little or no experience in the law.
“The big problem with these law firms is they have a number of people who are in the same business as them,” Mr Parnett said.
“If you’re in a law firm that’s in the top half of the Australian law firms, you’ve got a lot more power than if you’re at the bottom half of Australia’s law firms.”
Mr Parnitt said the problem is not only in the Australian business community, but also in other jurisdictions where the laws are different.
“There’s a number who are very successful and very well-paid in their industry and they’re not held to the same standard in other countries, so there’s an opportunity for them to be doing things that are completely unauthorised and untenable,” he said.
The Credo study found that, of the 300 Australian law firm firms, about 60 per cent were run in Australia.
Mr Pernell said the top lawyers in these firms are not held accountable by ASIC for breaches of their laws.
“So they’re effectively acting on behalf of a whole host of other lawyers and they are not accountable to the Australian public,” he explained.
“It’s just very difficult for people to get their money back, they’re often not held liable and so it’s very difficult to hold them to account.”
Mr Credo conducted the study to expose the hidden power of the law firms and to help other Australians get their own back.
“You have to ask yourself why you would want to pay your own lawyer if you don’t want to get your money back from that law firm,” Mr Credo’s Mr Pernett said, adding that there is also a real risk that lawyers and their clients could be misled.
“Some of these lawyers are not trained in the particular areas they’re doing work for, they may not even have an understanding of the legal matters they’re dealing with,” he added.
“This is an area that’s going to be increasingly important in the future.”
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