There is direct evidence of institutional racism in Australia's criminal justice system, one of the country's most prominent lawyers believes.

Fiona McLeod, the outgoing head of the Law Council of Australia, said over-incarceration rates of Indigenous Australians pointed to a failure in both imagination and political will.

Ms McLeod expects to see significant changes to laws and sentencing practices that she considers embed racist practices, once an Australian Law Reform Commission report is implemented.

"What we were seeing was the sentencing and incarceration, mostly of young men but increasingly of women as well, of people from minor offences," she told the National Press Club in Canberra on Wednesday.

Incarceration rates of Aboriginal and Torres Strait Islander people have soared 88 per cent in the past decade.

Indigenous Australians represent less than 3 per cent of the population but account for 27 per cent of its prisoners.

More than one-third of adult women behind bars are Aboriginal and Torres Strait Islanders.

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Morry Bailes, the new Law Council president, says there is a pressing need for justice targets to correct the "shocking" Indigenous incarceration rates.

"It is absolutely critical that we map out what we think the right number of people ought to be incarcerated and work towards it," he said. "To put it another way - who shouldn't be in jail?"

Ms McLeod said there were obvious solutions to curb Indigenous incarceration rates.

"If you're jailing people because they're disqualified from driving, but they need to drive, they're going to continue to drive," she said.

"If you assist them to get a licence then you solve the problem."

Rather than jailing a child in NSW for stealing a bottle of soda water, install drinking fountains instead, she suggested.

"These solutions are so obvious that they have to be seriously taken."

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'He doesn’t say much but his eyes are very ruined, his voice is very different, there is no confidence, there is no self-esteem,’ says the mother of one of the three detainees (one Maori, two Aboriginal) who remained in the isolation unit at Banksia Hill Juvenile Detention Centre for more than 300 days, according to Amnesty International.

Ms McLeod said there was also a need for consultation with First Nations communities, so traditional customary laws could operate alongside "white people's law".

"So that the solutions actually engage those young people who come before the criminal justice system in a way that's meaningful for them and diverts them away from criminal offending," she said.