In September 1976, the Honourable F J Walker, Attorney General in the newly elected Labor Government, issued a reference to the Commission requiring it to inquire into and review the law and practice relating to the legal profession. The terms of reference involved almost every aspect of the profession, including its structure, organisation and regulation, its exclusive areas of work, the maintenance of professional ethics, complaints against lawyers, the guarantee and supervision of trust accounts, and continuing legal education. It was one of the most extensive tasks ever entrusted to a law reform agency and was to occupy most of the Commission’s resources for the next six years. In December 1976, Justice Wootten replaced Justice Meares as Chairman, while Judge Trevor Martin and Mr Julian Disney were appointed as Commissioners. These three new members and Mr Denis Gressier were delegated the Commission’s powers in relation to the inquiry. Mr Julian Disney was the Commissioner in charge of the reference. Work on the inquiry commenced immediately and the Commission engaged in widespread publicity in order to obtain information from the public about their experiences with lawyers. Several public and private meetings were held at regional centres with professional and community groups as well as private individuals in order to canvass the broadest possible spectrum of views.

In keeping with the broad scope of its terms of reference and the importance of the inquiry, the Commission engaged in extensive research on the legal profession in New South Wales, other States and overseas. This included statistical analyses of samples of complaints against lawyers, surveys of the operation of the “fused” profession in South Australia, and research into the auditing of solicitors’ trust accounts. The Commission also co-operated with the Law Foundation of New South Wales in an extensive questionnaire on the training, experiences, attitudes and work of both barristers and solicitors. The results of the empirical research were published in five background papers and in publications sponsored by the Law Foundation.

As a result of the consultation and research, and examination of published literature on the legal profession, six detailed discussion papers were published between 1979 and 1981 containing the tentative views of the Commissioners. The publication of the discussion papers marked a new, more public approach by the Commission, since their aim was to stimulate discussion and encourage responses from a wide range of individuals and groups. Unlike the working papers previously published by the Commission, they were deliberately written so that they could be understood by persons without legal training. They attracted unprecedented media attention.

The first three reports on the legal profession, dealing with general regulation and structure, complaints and discipline, and advertising and specialisation, were published in April and July 1982. The fourth, on solicitors’ trust accounts, appeared in December 1984. Although several of the principal recommendations were rejected by the Law Society and Bar Association and were not eventually implemented, the inquiry played an important part in the modernisation of the legal profession. As the first comprehensive and critical examination of the organisation and work of lawyers, it resulted in review from within the profession and many changes were brought about by the Bar Association and Law Society in response to criticisms which had been aired by the Commission’s discussion papers.¹⁹

While the legal profession inquiry necessarily occupied most of the Commission’s resources between 1977 and 1982, work on two other important references was undertaken during this period. Significant progress was made on the longstanding reference on the law of evidence, principally by Professor J D Heydon. A report on the hearsay rule was produced in 1978, recommending the relaxation of the strict common law rule in favour of an approach which allowed evidence to be admitted on grounds of reliability. The report received considerable public attention. After his term as Commissioner expired in 1978, Professor Heydon continued to work with the Commission as a consultant on this reference. Between 1978 and 1980, six other preliminary papers were produced on various aspects of the law of evidence. In February 1977 a reference was received to review the law of unincorporated associations. After publishing a discussion paper, the Commission made its report in January 1982, recommending the enactment of draft legislation which would allow non-profit associations to become registered and incorporated as legal entities.

In 1979 the Commission considered changes to its structure and organisation. The need for change became apparent as the functions of law reform bodies shifted towards the handling of subjects requiring detailed consideration of social policy. This was confirmed by the Commission’s experience of inquiries which involved extensive research and deliberations. In seeking a more efficient and streamlined structure, the Commission drew on the experiences of other law reform bodies, particularly the Australian Law Reform Commission. Proposed amendments to the Commission’s Act were considered by the Government in consultation with Commissioners and the resulting bill was introduced into Parliament in February 1981, receiving the Royal Assent on 20 March. Its major features are set out below.

• The Chairman was no longer required to be an active or retired Supreme Court judge, although legal qualifications and attainments were still necessary.
• Persons without legal qualifications could be appointed as Commissioners if in the opinion of the Attorney General they were suitable for appointment by reason of their special qualifications, training or experience.
• Part-time Commissioners could now be appointed, and the upper limit of six Commissioners was removed.
• Instead of each reference being formally considered by the full Commission, the Chairman could now constitute divisions of the Commission, consisting of at least three Commissioners, to deal with references separately.