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Legal Services Regulation Bill 2011: Second Stage (Resumed)

Thursday, 9 February 2012

Dáil Éireann Debate
Vol. 755 No. 1

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Question again proposed: “That the Bill be now read a Second Time.”

Deputy Joanna Tuffy: Information on Joanna Tuffy Zoom on Joanna Tuffy I wish to make a further point in my remarks about access to the professions. In my experience the Law Society of Ireland has many mature students, including people who have reached retirement age, who then train as solicitors and this is to be commended as there should not be any limitations on who can enter a profession. It is preferable for entry to the professions to be as open as possible.

When proposed legislation is to have a significant impact on some of the stakeholders and when that legislation is controversial, it is crucial to have proper consultation with the stakeholders. There should have been consultation with the stakeholders prior to the publication of this Bill. I refer in particular to the Bar Council of Ireland and the Law Society of Ireland. It is all very well to say that consultation can take place once the Bill has been published but the Minister has already decided to take one route, which is with regard to the Competition Authority. The Competition Authority report recommended a model of a regulator with oversight of the regulation by the professional bodies. The Minister’s proposals will make for a significant change and he should have entered into consultation before publication of the Bill.

In that regard, in the United Kingdom following the publication of the Clementi report, the UK Government responded by publishing a White Paper in October 2005 entitled, The Future of Legal Services — Putting Consumers First. A draft legal services Bill was published in May 2006, along with explanatory notes, a regulatory impact analysis and commissioned research from PricewaterhouseCoopers on the cost of the proposal. The Bill was then submitted for legislative scrutiny to a joint committee of the Houses of Parliament established specifically for that purpose. This committee made 50 recommendations on the draft Bill and the Bill was introduced in 2006 and enacted in 2007. The Legal Services Board was established in 2008. This is the way to go about it. There is talk of a need for genuine participation by Members of the Oireachtas in drafting legislation. I acknowledge that the Minister has proposed that committees may consider the heads of Bills but I ask the House to consider the way this type of legislation was dealt with in the UK and that is what should happen here. Let us imagine what would have happened if the Bill had been presented to a committee of the Houses where there [20]could be 50 recommendations made by the committee on amendments. Instead, the Minister has brought the Bill straight into the House. He referred to amendments but we have no idea how much consultation or engagement he envisages on the amendments or how much he will take on board from the various stakeholders.

First, the Minister should have held consultations beforehand, because the Bill moves on significantly from the Competition Authority report in that it does different things to those proposed in the report. Second, I recommend that future legislation of this nature, which will radically affect stakeholders, should be dealt with in the way it was done at Westminster. That seems to me a model for dealing with such legislation. In this country there has been no pre-regulatory impact assessment or analysis of costs, whereas in the UK a report was carried out by PricewaterhouseCoopers on the cost of the proposal. I urge the Minister to take his time with the legislation and to engage with the interested parties.

It is all very well to go along with what has become part of Irish discourse and to dismiss what certain groups say on the basis that they are vested interests. We are all vested interests in society but we all have something to contribute and to say. If one chooses law as a career, one cares about the law as well. One cares about the independence of the legal profession and that things are done in the best possible way. I will refer to the competitive angle later.

As the Minister is aware, concerns have been expressed about a number of proposals. One issue of concern is the proposal on multidisciplinary legal practices and legal partnerships. Concerns have been expressed by the Bar Council about them and also by FLAC. Again, the Bill deals very differently with the situation compared to how it was done in the UK. The Competition Authority took a particular line on allowing multidisciplinary practices for reasons of competition but it did not carry out analysis. My understanding is that the equivalent UK legislation was different. Not only does the Bill say there should be an investigation into whether there should be multidisciplinary practices but it provides in the legislation that there must be multidisciplinary practices. Legitimate concerns have been raised by FLAC and the Bar Council.

I do not think the system is ideal and should not be reformed. It should be reformed; perhaps more radically even than what is proposed in the Bill. The view has been expressed that the current system based around sole practitioners in the Bar makes barristers accessible to the general public, whereas adopting the “bigger is better approach” could reduce access to services and potentially distance people’s access to barristers as compared to the way they currently have access through solicitors to individual barristers. That legitimate fear has been expressed. Perhaps the Minister should consider amending the legislation so it could be paused. Let us see what the independent regulator decides in terms of whether the new system will work and what are its benefits and drawbacks and then legislation could provide for the necessary changes.

Reference has been made to the independence of the proposed authority. It is not just the Bar Council and the Law Society that have raised fears about the lack of independence of the proposed authority. The Council of Bars and Law Societies of Europe has raised concerns, as have the International Bar Association and the American Bar Association. In a recent opinion piece in The Irish Times, Ms Carol Coulter expressed concerns. She contrasted what the Minister proposes with the regulation of the medical profession. She indicated:

Of 56 operative sections in the Bill as a whole, 21 require ministerial approval. The extensive powers proposed for the Minister are unprecedented in Irish law and in sharp contrast with the law regulating another important profession, itself the subject of a recent extensive overhaul.

[21]Other people have made similar criticisms. For example, Prof. Colin Scott, professor of EU regulation and governance at UCD, comments on the issue. He takes a different approach to that proposed by the Minister in the Bill. He suggests: “The debate is not about whether there should be a public regulator, but where the balance lies between the regulator and self-regulation.” The Competition Authority opted for the oversight regulation model, which seems to be the model in many other countries.

The Minister has made much of the fact that the Law Society has recently changed its policy on the handling of complaints procedures. The Law Society recently wrote to the Minister in that regard. It notified him of a major change of position decided on by the society’s council on 20 January 2012. The council decided that it would not seek to have the society retain control of the handling of clients’ complaints for reason of the need to address the public perception that solicitors should not adjudicate upon complaints about members of their own profession. It maintains the society has the highest of standards for the handling of complaints by members of the public but the change would be for reason of public perception. That is not a new statement by the Law Society. In a recent address by the president of the Law Society, Mr. Donald Binchy, outlined:

I would submit that, insofar as the public is concerned about these matters, its concern is in the main that complaints against solicitors should be handled independently of the Law Society. Insofar as there may be a public demand for change, I would submit that that is where the demand lies, and also in the area of costs.

I concur with that view from my experience as a public representative more so than a solicitor. That is the area about which the public is mainly unhappy in terms of the professions regulating themselves, in particular on the issue of solicitors’ fees, which is the area I have dealt with. It is not just a matter of public perception. The public has legitimate concerns. I provided assistance as a public representative to a couple who were charged an outrageous fee for a conveyancing matter. Their difficulty was that they could not get another solicitor to represent them in their complaint to the Law Society about the person who had charged them the excessive fee. When they raised the matter themselves the reduction they got was minimal. Having experience as a solicitor, but in my capacity as a public representative, I helped them put forward a submission to the Law Society in appeal. It was only at that stage that a significant reduction was made to the fee for the people concerned, who were my constituents. Even then I thought the Law Society could have gone further. I still felt the people were being charged an excessive amount.

Section 68 is not sufficiently enforced even though it is drummed into one when one is training with the Law Society. I have much anecdotal evidence from people I know and constituents that people are not given a section 68 letter when they engage a solicitor. They are not given any indication and then suddenly they are landed with an excessive bill. As a public representative I advise anyone going to a solicitor to make sure they ask at the outset what the cost will be or on what basis the fees will be charged. There needs to be more awareness and more education of the public in terms of their rights in that regard. That is something the Law Society could perhaps examine. There is no section 68 applying to barristers. I welcome the fact that barristers are required to do something similar under the Bill. It is important that clients of solicitors and barristers, including solicitors who engage barristers, are clear on what fees will be charged or how they will be worked out from the start.

The regulator will consider the question of education. The Law Society and Bar Council do a good job in terms of the education of solicitors and barristers, but some elements could be improved. When I was a solicitor, the education I received was too intense. More time could be spent on training solicitors in the reading of titles, etc. The Law Society is better placed to [22]train solicitors at that stage of their education. Someone might attend a university, institute of technology or similar to learn about the law. I did not learn about the law, as I did a different degree, but I studied for the Law Society’s entrance exams. When one begins one’s apprenticeship as a solicitor, one learns about the practical implementation of the law. I am not sure that a straightforward college could provide the same quality of training as is provided by the Law Society. Would a college spring up just for this purpose, who would be involved and from where would the expertise come? While improvements are necessary, so is caution.

A more radical step taken by the Bill is the proposed unification of the two professions. A report on unification is to be carried out by the regulator, but that unification is not legislated for in the Bill and no presumption is made prior to the investigation in terms of the outcome, the merits of the idea, how it would work, its pitfalls, how it should be phased and so on. I favour unification. My opinion is not set in stone, but the idea should be investigated.

The public is used to watching legal dramas from the US where everything is more informal. There is too much pomp and ceremony in how barristers operate. The clothes, dinners and so on make the Bar off-putting to wider participation by people from different socioeconomic backgrounds, including solicitors. I was always scared stiff whenever I was sent into the Four Courts because the manner in which everything there was carried out was daunting. Some archaic elements, for example, the Master's Court, need to be re-examined.

Competition is not the be all and end all. The Minister might not be aware of it, but there was cut-price conveyancing in my area of west Dublin during the Celtic tiger housing boom. It probably destroyed some solicitors. I never made money in the short time that I practised as a self-employed solicitor. I was always at a loss and the cost of insurance was crippling. This is another issue that needs to be examined.

Deputy Mick Wallace: Information on Mick Wallace Zoom on Mick Wallace This is an important Bill and many decisions will be made. The legal profession impacts on many people’s lives. The cost element needs to be tackled. When the legal profession comes to mind, the first thought that occurs to people is that availing of it costs too much. Prices have fallen in the past while. I remember how it was impossible to get a barrister for my business for less than €2,000 per day. More recently, I have got barristers for €800 and €500. Prices are moving in the right direction. Costs still need to be controlled, but no element of control exists. Section 90 requires legal practitioners to set out the basis upon which costs are to be calculated. This is a good idea, but strict controls are necessary. In the construction industry, for example, a contractor might price a job well in advance and provide a breakdown, but it is frightening how often the final price will be much higher. To avoid such situations, there must be tight pricing controls.

The notion of fixed price bills seems more popular than the notion of hourly rates. Solicitors or barristers being allowed to charge a certain amount per day depending on the court involved is not workable, given that some cases require more preparation than others. The hourly rate idea is a good one, as people could compare like with like, especially if there was a maximum chargeable rate. If extra work was required during the preparation, lawyers would be able to invoice for it.

The merging of the professions seems contentious. I have spoken to a number of barristers and solicitors who are not convinced that a merger will lead to a better service for the consumer. Some large firms will garner most of the better barristers and it might prove difficult for some people to gain access to the best professionals. Currently, a small solicitor can access any barrister provided he or she can afford it. However, if barristers go to work for large firms, employing them will become more expensive because big firms are inclined to charge more.

[23]If they have the best people, they will also garner the most work, including major commercial and Government business. Recently, we have seen how Governments have been keen to give a great deal of work to their favourite firms. For example, the amount of money that the likes of Arthur Cox receives from the State for work relating to the banking crisis has been pointed out numerous times. The 2008-11 figures are frightening. The firm received €1.6 million, €5.9 million, €4.8 million and €1.3 million in 2008, 2009, 2010 and 2011, respectively. It did not even tender for some of the work at the initial stages. A blind eye has been turned to the fact that Arthur Cox advised both the former Government and Bank of Ireland during the banking crisis.

I am not sure that big is beautiful. We would have a more honest profession were there smaller groups. That banks were too big to fail was a global problem during the financial crisis. Likewise, I would hate to see legal firms growing so large as to be uncontrollable. The Government should spread its work out further and not give everything to the likes of Arthur Cox.

  12 o’clock

There is no doubt that action is required to safeguard the independence of the profession. Self-regulation is not the ideal system for legal professionals, no more than it was in the building industry. In the case of that industy, a system under which the consultant engineer and the architect signed off on work proved to be a disaster in cases such as Priory Hall. Likewise, in the case of the legal profession, the introduction of an independent body to oversee and regulate is a welcome change. Having said that, transferring the duty of regulation from the profession to complete Government control may not be the best solution. Given that the Minister’s fingerprints will be all over the new regime, it would be better if the regulatory body were to include a greater number of representatives from various citizens’ groups and non-governmental organisations. Even if the Minister adopts a completely healthy, honest and effective system, he is making laws for others to follow. We do not know whether he will even be in the same office next year. As such, he must legislate for the future. Putting so much power in the hands of one individual may not be the best idea in the world.

Another issue to consider is that some 50% of litigation involves the State, which has implications when considering what is encompassed by the notion of an “independent” body. The new authority amounts to yet another quango and will be expensive to administer. The Minister will argue that it must be paid for by the legal profession, but the dogs in the street know the cost will be passed on to the consumer. Moreover, such bodies can become a law unto themselves, as we have seen in the case of the Health Service Executive, the National Roads Authority and so on. There should be greater diversity in the membership of the boards of all such bodies, together with a reduction in the size of the board. Larger boards will involve larger costs and, as I have said, it will be consumers who ultimately face the bill.

A properly functioning society requires that the Government be held to account. As such, giving so much power to the Government in this instance is a cause for concern. The State already has a serious level of control over the judicial system in terms of its responsibility to appoint judges. We saw what happened in the United States some years ago when it was left to the Supreme Court to decide who had won the presidential election in Florida. Given that the Republican Party had nominated most of the judges, it was no great surprise when the court came down in favour of George W. Bush who went on to become President. Some 400 people in the State have applied to be appointed to seven or eight judicial vacancies. It will be interesting to see how that works out. The Judicial Appointments Advisory Board makes recommendations to the Government on such appointments, but there is a lack of transparency arising from the absence of criteria by which an applicant is deemed fit for appointment as a judge. While the board can make recommendations, the Government makes the ultimate decision and is thus in a position to appoint its friends. We have seen enough of this in the [24]past and it is time to move away from it. There should be fewer Government appointees and more people appointed on merit rather than on who they know.

Deputy Seán Conlan: Information on Sean Conlan Zoom on Sean Conlan I welcome the opportunity to speak to this important Bill. I will begin by declaring an interest in that I am a member of the Law Society of Ireland. The aim of the Bill is to reform the regulation of the legal profession and remove restrictions to trade in the provision of legal services. It also seeks to increase competition by changing the method by which the profession is regulated and introducing new education and training arrangements and new business structures in the form of legal partnerships and multidisciplinary practices. The Bill provides for independent complaints-handing procedures and new cost adjudication mechanisms.

I have listened closely to the arguments made by the Minister in support of the new arrangements. I welcome his invitation to make constructive suggestions to enhance the regulatory framework set out in the Bill and achieve its key objectives. I also welcome the Taoiseach’s comments that the only decision taken thus far by the Government on the Bill was the one to publish it. I will support any measures which will increase transparency in regard to costs, enhance complaints-handling procedures, improve the regulatory framework governing the professions, increase competition and lower the cost of legal services to the consumer.

However, I have serious reservations about aspects of the Bill, as drafted. I am concerned that it may fail to achieve its key objectives in a number of instances and may instead lead to less competition, higher costs to consumers and a diminution in access to justice for the public. I have spoken to representatives of the Law Society of Ireland, the Dublin Solicitors Bar Association, the Bar Council of Ireland and my local Bar association in Monaghan, all of which have raised serious concerns about aspects of the Bill. The Law Society of Ireland’s main concerns centre on the threat posed to the independence of the profession by excessive Government control. It is also concerned that the running costs of the proposed new regulatory authority could lead to higher costs to practise for solicitors and barristers which will ultimately be passed on to consumers. It has further concerns regarding fair procedures in the area of complaints handling, the provisions relating to misconduct and the absence in the Bill of provisions to transfer staff from the Law Society of Ireland to the new authority.

The Bar Council of Ireland, while supporting the measures dealing with increased transparency in regard to costs, has major reservations that aspects of the Bill go against the recommendations made in the Competition Authority’s report of 2006. The council contends that fundamental and far-reaching reforms of the type proposed should be properly evaluated and shown to be in the public interest prior to enactment. It points out that no regulatory impact assessment was carried out before the Bill was published.

All of the representations I have received express major concerns about two aspects of the proposed legal services regulatory authority, namely, its lack of independence and its cost. Given that the proposed body will not be independent of the Executive, there could at some time in the future be a level of Government control over the body which runs directly contrary to the core value of independence in the administration of justice. The Bill has been widely criticised by various international groups, including the Council of Bars and Law Societies of Europe, CCBE, the International Bar Association and the American Bar Association. These concerns must be addressed.

The professions have queried the proportion of the authority’s members to be nominated by the Minister — seven out of 11 — in comparison with similar statutory professional bodies. For example, the appropriate Minister nominates five out of 25 members to the Medical [25]Council, nine out of 21 to the Council of the Pharmaceutical Society of Ireland, four out of 19 to the Veterinary Council of Ireland, and five out of 37 to the Teaching Council of Ireland

The establishment of the legal services regulatory authority could introduce a new and enormous level of cost to the legal system. It is effectively a new quango and the bureaucratic regulatory superstructure proposed by the Bill seems likely to lead to an increase in costs. As it stands, the legal profession will have to bear the entire cost of this new quango and that cost will inevitably be passed on to consumers. Direct regulation of the legal professions by an enormous quango is not an efficient or effective way to regulate. It is also inconsistent with the independence of the legal professions. The Competition Authority recommended independent oversight regulation, a model involving an independent regulator overseeing the front-line regulators, namely, the Law Society of Ireland and the Bar Council of Ireland. This model is consistent with international best practice and arguably far more effective and cost efficient.

The business structures for the delivery of legal services proposed in the Bill such as multidisciplinary practices and legal partnerships will damage rather than enhance competition in the delivery of services. The proposed business structures are likely to lead to increased costs and a reduction in choice. The proposals have the potential to make the profession more elitist and prevent people entering or developing a practice by concentrating the best lawyers in a small number of large city firms. The proposed structures will undermine small solicitors’ firms throughout the country who rely on ready access to the independent Bar to compete on a level playing pitch with the large city firms. FLAC has expressed concern about the proposed structures. Legal partnerships and multi-disciplinary practices were not recommended by the Competition Authority, the Legal Costs Working Group or the programme for Government. Of major concern is that no independent economic assessment of this or other models of business structure for the delivery of legal services was undertaken prior to publication of the Bill. Chambers, legal partnerships, LPs, and multi-disciplinary practices, MDPs, were not recommended for Northern Ireland, which has a more comparable legal system and population to the Republic of Ireland than does England or Wales. The views of the Northern Ireland review group are as relevant to the Republic of Ireland as they are to the North.

The US once planned to expand multi-disciplinary practices. However, issues such as sharing profits with accountants and other professionals and possible conflicts of interest arose. This movement ended abruptly with the fall of Arthur Andersen as a result of its association with Enron. Arthur Andersen was alleged to have given dubious legal, tax and accountancy advice to Enron. The US Sarbanes-Oxley Act 2002 was introduced following the collapse of Enron and corporate accounting frauds, which effectively ended the trend of multi-disciplinary networks established by the “Big 5” accounting firms in the US.

The Bill, as drafted, presumes or presupposes that chambers, LPs and MDPs will be introduced, which is regrettable. The Bill would be better if it provided for full and proper consideration by an independent body of the consequences of the introduction of these new structures. Such a huge regulatory change needs to be properly considered before implementation. In so far as public consultation is required regarding the establishment of the multi-disciplinary practices and so on, there is a requirement under this Bill that the authority consult with the public. It is merely enabled to consult with the legal professional bodies if it deems it appropriate to do so. Why is there such need to shun the professions in this manner? There are obvious alternatives to the type of regulation proposed in the Bill which would comply with the requirements of the troika, including an independent regulator of the nature and type recommended by the Competition Authority in its 2006 report. The regulator would be independent of the legal professions and of Government and would oversee and supervise regulation by the Law Society and the Bar Council. This would be a more efficient and effective form of regulation than that proposed in the Bill. It would also be considerably less costly. The Bar Council has [26]suggested that the independent regulator would carry out research into business structures for the delivery of legal services in the State. This would enable the Oireachtas to be provided with a comprehensive assessment of the types of business structures that should be allowed to operate the delivery of legal services in the State in the interests of the public, not the legal profession.

I have a number of specific concerns about this legislation. The proposed new complaints system, by removing a filtering section, could lead to gridlock of the complaints committee and disciplinary tribunal.Regarding complaints generally, there is no limit on the category of persons entitled to complain. In theory an aggrieved witness, member of the public sitting in the gallery in the court room, relation or friend of an aggrieved litigant or any person could make a complaint. The Bill does not appear to contain any provision with regard to retrospective application. Does this legislation provide for the making of complaints with regard to past conduct? Furthermore, no limitation period governing the time within which a complaint must be made is included.

A levy is to be introduced to fund the authority. This will be met by the profession, with 10% to be paid by the Bar Council, 10% by the Law Society and the remaining 80% on a pro rata basis between the Bar Council and the Law Society in proportion to complaints made against each and expenses arising. This levy will make continuing to practice or entry to the profession much more expensive for solicitors and will result in increased costs for practitioners and, in turn, the client. On funding, the authority is to have 43 appointed members, including a chief executive, committees to assist and advise, advisers, consultants, inspectors and a significant number of staff, which the Minister will have the power to appoint. The Bill contains no ceiling in regard to costs that may be incurred by the LRSA, its staff or consultants engaged, thus providing no incentive for control of costs. The view of the solicitor profession is that this will give rise to an enormous and unnecessary super-structure surrounding the regulation of the legal profession and legal services, which may become somewhat analogous to other fraught Government bodies.

The authority will have the power to appoint such members of staff as it thinks fit to be inspectors. These inspectors will under section 28 have the power to attend, with or without prior notice, at the place of business or places of business of a legal practitioner. These powers will be exercised without any warrant from a court of law or any independent review prior to execution. Misconduct is broadly defined in section 45 of the Bill. Apart from obvious misconduct, it includes any act or omission likely to bring the profession into disrepute and includes, unusually, issuing a bill of costs which is excessive. What is an excessive bill of costs? Is it a bill that is reduced on taxation or a bill that is significantly reduced on a percentage basis by, say, more than 15% of the costs claimed? If one is fighting a costs issue, what is the determining feature of “excessive”? This is not defined and there are no guidelines in this regard.

An appeal lies to the High Court from the disciplinary tribunal, with various sanctions ranging from censure or restriction to being struck off. The right to appeal lies to the Supreme Court. I need clarification on this. There appears to be no appeal from the complaints committee.

I am not convinced that legal costs will decrease as a result of this Bill. Rather, the big city firms and established senior and junior counsel will be the big winners to the detriment of the consumer, small practices and newly qualified solicitors and barristers.

Deputy Patrick O’Donovan: Information on Patrick O'Donovan Zoom on Patrick O'Donovan I welcome the opportunity to contribute to the Second Stage debate on this Bill. Change in any industry, be it business, education, health, legal or otherwise will always generate a degree of controversy. Change does not come easily to any profession, [27]including the legal profession which is one of the oldest professions. As such, this legislation has generated a great deal of concern. Like other Members, I, too, have concerns about this legislation. I am sure the Minister will take on board our concerns.

It is important that we differentiate between what is being provided and what we expect. It is easy to adopt the media line that legal practitioners are all on the take. Far from it. Given the collapse in the house construction sector and in the area of conveyancing, many legal practitioners are only scraping out an existence. Many rural practitioners who routinely contact me for advice and so on are experiencing difficulties. We all know that a few people have caused a great deal of damage to the reputation of the legal profession. In this regard, one need look no further than to some of our Sunday newspapers, some of which are referring to the Four Courts as the Four Goldmines. There was much discussion in this House on the recently held referendum on judges’ pay. Rightly or wrongly, the perception is that justice is not available to people who cannot afford to access it, which is a serious indictment of the system. However, it is up to the legal profession to set the record straight from its point of view.

The issue of cost was referred to by previous speakers. It is important to bear in mind that the pursuit of justice can be a costly business. Much depends on the amount of investigation and work that must be undertaken by a legal practitioner. Unlike a mechanic, who can fix a particular price for repair of a car and so on, legal practitioners cannot fix a price for their services because they will not know the total outlay involved until a matter has been resolved. Many of the legal practitioners who have contacted me are concerned that this legislation will set what should be the cost of a particular legal service.

As regards the legal services regulatory authority, it is time such an independent body was put in place. I am aware that previous speakers have taken issue with what the Minister is doing. However, it is necessary to put in place a regulatory authority to set standards for professions be it in respect of education, medicine or civil engineering. Also, such a regulatory authority must be accessible to the public who, in turn, must be confident that said authority is on their side and is monitoring those standards on behalf of consumers. While I do not wish to cast a cloud over the existing system, if it is perceived to encompass internal regulation and light touch regulation from within, a legitimate concern is whether it ultimately achieves results for the consumer.

It is unfortunate that, in common with a great deal of other legislation published since the Government took office, this legislation has been published in response to the contents of the memorandum of understanding between Ireland and the EU-IMF-ECB troika. As this probably constitutes the biggest change the legal profession will undergo within a lifetime, it is unfortunate the country has again been dragged, kicking and screaming into making a change of this nature. Such a change should have been undertaken and this debate should have been held previously. Moreover, there should have been greater interaction during the years. However, as I have stated in the Chamber previously, regardless of the troika’s expectations regarding Ireland, the Minister for Justice and Equality has not been shy in bringing forward proposals that are needed, which I welcome.

One point of concern to me is that many younger people who are trying to enter the legal profession find it prohibitively expensive. Having completed one’s undergraduate studies in law or another discipline in, say, the NUI, the costs associated with trying to get into Blackhall Place or the King’s Inns are undoubtedly very high. Similarly, the costs are extremely high for many who try to gain access on a part-time basis. The price of books is high and many people returning to the profession may also be trying to hold down a job, have family commitments and so on. The very fact that such costs are high means that almost straightaway those whom one can expect to be solicitors or barristers are being taken from a certain stratum. One must [28]question whether solicitors and barristers are truly reflective of Irish society and whether entrants are being drawn from all social strata. One must ask whether there is an issue of access for persons who may come from socially disadvantaged areas. Moreover, the concern is how can we induce people from the margins to enter the legal professions, become practitioners therein and perhaps ultimately go on to become judges.

My colleague and the previous speaker, Deputy Conlan, raised the issue of the perceived quangoisation of the legal profession. There is undoubtedly a concern about whether the Minister’s proposed regulatory authority will become another quango. That said, the present set-up is not accessible per se and is perceived to be aloof. Consequently, to establish what is required by the troika and the public, the new set-up must be accessible, easily understood and uncomplicated in registering issues, complaints and so on. However, I agree with Deputy Conlan that it is important it not become a cranks’ charter, whereby persistent complainers and cranks make life difficult for people on an individual basis. As public representatives, Members know only too well the types of people who seek to become serial objectors and complainers without legitimacy. The establishment of legitimacy in the lodging of a complaint must be taken on board.

I have referred to the educational aspects of the Minister’s proposals and reiterate it is important that the system be perceived to be accessible to people from a variety of backgrounds, regardless of their means. The perception is that it is a very expensive process to qualify as either a solicitor or a barrister and in itself, this creates problems. I differ with Deputy Conlan in respect of his comments about the multidisciplinary aspect of the Bill’s proposals because other jurisdictions have had a different experience from that to which the Deputy referred.

Ultimately, as I noted, change to the system will not come easily and obviously people will be anxious about its impact on the service user and the practitioner. The vast majority of practitioners are small-scale solicitors and barristers who are struggling. Consequently, Members should avoid overdoing the bureaucratic burden on those who are in danger of being squeezed even further.

I welcome the opportunity to speak to the legislation. There is an opportunity to engage further with consumers, practitioners and the Oireachtas. I understand there are time constraints on the legislation’s enactment, but, ultimately, I welcome the opportunity for Members to have this debate and suggest the modernisation of an institution as old as the legal profession. I hope the Minister will take on board some of the points I have made.

Deputy Marcella Corcoran Kennedy: Information on Marcella Corcoran Kennedy Zoom on Marcella Corcoran Kennedy I thank the Chair for giving me the opportunity to contribute to this debate. I welcome the Bill and acknowledge that the legal costs working group and the Competition Authority have been advocating for a Bill such as this for a number of years. I have a personal interest in consumer rights and the Bill will be positive for consumers of legal services in Ireland. I note some concerns have been expressed by the Law Society of Ireland and the Bar Council of Ireland, many of which have been articulated. I note further that concerns regarding multidisciplinary practices have been raised. In addition, the potential impact on rural solicitors and barristers and the question of whether the proposed authority will be sufficiently independent also have been raised. The approach adopted by the Minister has been to listen to everyone involved in the debate. I sincerely hope he will take on board the opinions expressed to assure the best possible outcome is arrived at. However, the current proposals strike the balance that needs to struck between the profession and consumers. It is welcome that some of the organisations have moved position from the initial stages of the [29]debate. I note the Law Society of Ireland welcomes the Bill and has acknowledged the need for independent regulation.

The proposed legal services regulatory authority will be a key feature in this regard because it is evident from other walks of life that self-regulation and internal disciplinary procedures do not work because they are not public. It will be important to have a good balance in the composition of the board authority, as this will give confidence to those concerned in the profession. The board’s make-up should include members of the Law Society of Ireland and the Bar Council of Ireland, as well as consumer advocates, representatives of the council of the free legal aid centres and other such individuals drawn from different walks of life. If the correct balance can be achieved in this regard, it will address these concerns. When setting up the authority, the Minister should consider allowing it to introduce its code of practice without requiring consent from him, as this is another matter about which concerns have been expressed.

I noted with interest the point Deputy Mick Wallace made about the Judiciary. Judges are appointed by the Government and one must have confidence that they are independent. While I was uncertain what the Deputy was suggesting, as a citizen I am certainly confident that judges are independent. Moreover, given the existing example of the Judiciary’s independence, I am confident that on its establishment, the legal services regulatory authority also will act independently of the Government and not be something that will be used by a Minister.

I will not dwell too long on this subject but reiterate that I welcome the Bill. It will be positive for consumers and provide young people who wish to enter the profession a better opportunity. Moreover, for those already in the profession, better opportunities will arise from the Bill’s introduction. Those who seek to have an input into this process should take their opportunities to so do. This is their chance as the approach to date has been highly inclusive. All those who wish to contribute will be listened to. I look forward to studying the amendments the Minister will table on foot of this debate.

Deputy Paudie Coffey: Information on Paudie Coffey Zoom on Paudie Coffey I also welcome the opportunity to contribute to this important debate. It signals a fundamental change in the public perception of legal services that will instil greater confidence in the public, which is a welcome development. Consequently, I also welcome the Bill.

The legal profession has served this country and its citizens very well. The Bill will give effect to key reforms in the area of legal services. These reforms were included in the Programme for National Recovery and they were identified as some of the structural reforms required under the EU-IMF programme to which the country has signed up. The establishment of independent regulation of the legal profession through the new legal services regulatory authority is extremely important. Heretofore, the Incorporated Law Society acted as a self-regulating authority for the legal profession. There is a perception that where there is self-regulation there is not full transparency in decision-making. In the interests of ensuring public confidence, it is no longer acceptable that self-regulation should continue. The Bill will certainly address that.

The Law Society has done a great deal of work during the past 150 years. It has changed its position and no longer seeks to deal with client complaints about the legal profession. It has indicated that, in the main, it has taken this approach to address the public perception of the profession. That mature decision on the part of the Law Society is welcome. I understand the Law Society has welcomed many of the changes in Part 9 of the Bill which deal with the issue of transparency in the context of legal costs. These changes will ensure that citizens will be able to predict, to some extent, the costs they will be charged and there will be a modern costing system in respect of legal services.

[30]There are three fundamental pillars in our democracy, namely, the Oireachtas, which is also known as the Legislature and which makes the law, the Executive, which comprises the Government and which enforces the law, and the Judiciary and the legal profession, which interpret the law. That system has stood the test of time and has served our country and many others well. The Oireachtas and the Executive are subject to scrutiny, in the context of transparency and accountability, by the Houses of the Oireachtas Commission and the Standards in Public Office Commission. It is only right that matters relating to the legal profession will be fully transparent and that the profession will be independently regulated, particularly from the point of view of public perception and confidence.

It is important to have transparency in the charges imposed by the legal profession in respect of services provided. In a recent high-profile case — in respect of which there had been a successful outcome in court — there was a serious breakdown in the relationship between the clients and solicitors involved as a result of the costing structures imposed. One can imagine the intricacies that come into play and the lack of clarity involved with regard to matters of this nature. The Bill, by means of the regulatory authority it will establish and the structures it will put in place, will bring the clarity required. I hope it will also help to improve the relationships between clients and solicitors and give the former — who are, after all, customers — more confidence in the legal services with which they are being provided. That is an extremely important aspect of the Bill. The provisions relating to information on costs and putting in place the structures to which I refer will automatically give rise to fairer competition in legal services.

Families in rural areas have traditionally retained the same firms of solicitors over many generations without ever questioning either the costing structures imposed or the level of service provided. This is because a level of trust has been built up — and rightly so — through the provision of a good level of service by the solicitors over many years. In the context of the modern society in which we live, I suspect that the position may change as a result of much more transparency in respect of the costs of service provision. Clients will become more discerning and will seek to discover who provides the best service at the best price. That is a welcome development.

To date, legal costs have been excessive. Previous speakers referred to the tribunals. The costs relating to the Mahon tribunal have almost reached €100 million. There is a great deal of concern regarding access and the cost of hiring barristers for the purposes of clients obtaining the best defence in legal cases. It can be extremely costly to obtain legal opinions. Access to good legal services is very important. The Bill will certainly assist in improving the level of access.

I was disappointed with the result of the recent referendum whereby Oireachtas committees were not given the power to investigate matters and make findings. When one considers the cost of tribunals, there could have been serious savings to the State — it would have been in the interests of citizens — if the referendum had been passed. I suspect it was not passed because the reputation of politicians, who are themselves professionals, has been badly damaged in the eyes of the public. As politicians, we must acknowledge that the damage to which I refer came about as a result of the problems that have afflicted our country and our economy in recent years. Many of these problems arose because of a lack of regulation and on foot of bad decisions made by politicians. The referendum result is understandable to some degree. However, if the referendum had been passed there would have been a great deal more transparency in the context of the delivery of public services. In addition, the costs relating to the provision of such services would have fallen.

[31]I have rarely had occasion to visit the courts. However, the courts environment seems quite intimidating and archaic, particularly in the context of the wigs and gowns which members of the Judiciary and the legal profession are obliged to wear. I accept and respect that a tradition but, the courts system, with its dress codes and so on, can be intimidating to the ordinary citizen. A great deal of money is spent on the provision of services in our courts. Will the Minister indicate if judges and barristers are paid allowances in respect of wigs, gowns, and so on? The Bill provides options and allows discretion in respect of wearing of wigs and gowns.

Members of the legal profession have raised with me the independence of the new authority. Under the Bill, the Minister and the Government will have the power to appoint the majority of members of the authority. The Minister already referred to this but I ask him to address it further when replying to Second Stage. We need clarity on the Government’s intentions and we must fully respect the independence of the Oireachtas and the Judiciary.

Deputy Noel Harrington: Information on Noel Harrington Zoom on Noel Harrington I welcome the fact the Minister is in attendance for this debate. I compliment him on his resolve in introducing the legislation, particularly in light of his background and the resistance with which he has been obliged to deal. The legal profession is quite intense in nature and it has been the subject of comment within this State and, more recently, from the troika. The troika does not see it in a very favourable light.

I welcome the introduction of the Bill in principle. Does it go far enough? The main reason for its introduction relates to public concern in respect of the costs which apply to legal services provided by solicitors and barristers. It would be fair to describe it as a legal costs Bill. Let us consider circumstances where a legal counsel could charge €20,000 for five hours spent in court. I accept that there might be a great deal of work involved but the figure to which I refer is twice the amount people receive annually in the form of the State pension. It is an enormous sum. We need greater scrutiny and competition when it comes to legal costs.

The Bill sets out new procedures and rules and establishes new bodies for those involved in the legal profession, which consists of barristers and solicitors, and the many others who work in the legal area. In that context, it gives effect to one of the main provisions in the programme for Government and is aimed at establishing independent regulation of the legal profession to improve access and competition, making legal costs more transparent and ensuring adequate procedures for addressing complaints. The Bill meets part of the State’s commitments under the EU-IMF-ECB programme of financial support for Ireland. Not all of its provisions are regressive from the point of view of citizens. The Bill before the House is a positive development for the country and its people.

Almost all citizens will be involved in some form of transaction with the legal industry during their lifetime. The most common of these transactions would relate to the purchase or sale of a family home or other property. Other transactions would involve drawing up wills and dealing with probate issues. We should encourage more people to make wills. Most citizens will be lucky enough never to be obliged to deal with barristers. People who have dealings with barristers fall into two separate categories, namely, those who become involved in civil cases and those who become involved in criminal ones. An increasing number of cases relate to financial transactions. I understand the Minister will soon introduce another Bill to deal with this issue. In drafting the Bill, will the Minister consider whether there is a need for senior and junior counsel to represent financial institutions when the case involves a lack of funds? This increases the debts of a person who already does not have the capability to pay back the debts. I accept the need for a barrister when a legal point is in dispute and I note in recent judgments on such matters that the judge has refused to award costs where a client has been co-operative with the financial institution.

[32]With regard to criminal cases, will the Minister consider the amount of adjournments sought by State counsel and or defence counsel which add to the costs borne by the taxpayer? Will he consider, where both sides are agreed a case is not ready to proceed, allowing them to arrange with the court clerk to set back the date? One has only to spend the first hour in any court to see the amount of witness, court and prison staff time wasted, with the costs borne by the taxpayer. This is our responsibility and we should note it and take account of it. This is why we are here.

The explanatory memorandum states, “Together, these provisions are intended to promote competition and transparency in the organisation and provision of legal services in the State and in relation to legal costs.” This is welcome. In stating its aim is to reduce legal costs, this includes the State’s legal costs, as the State is the biggest customer of legal services in the country. Ultimately, this comes back to the taxpayer. We have a joint role here. Not only are we drafting legislation, we are also making our best efforts to minimise the impact of legal costs on the taxpayer, as the State is the greatest contractor of legal services. The State, that is, the taxpayer, pays at least half the costs of all prosecutions. Far too often when costs are settled and agreed, the scrutiny is less than it should be. Again, this exposes the taxpayer to needless costs.

The State, through the Departments and their agencies, has a reputation of rarely settling cases until reaching the steps of the court or after the hearing of the case has started. Perhaps the Government could examine the greater use of mediation and arbitration facilities. This would save the taxpayer considerable funds. With this in mind I would like to see every Minister appoint a delegated person in the Department to be a mediation or arbitration officer to examine the possibility of avoiding these legal costs, if possible.

Recently I read a report about a family seeking approximately €25,000 damages for the death of their son while on active service for the State. Obviously I am not qualified to judge the merits of the case but I am sure the legal costs of trying the case will be much greater than the amount claimed and there may be a role for mediation or arbitration in this. We must consider the taxpayer and State funding.

Penalty points involve an administrative system of sanction which frees up the courts. I would welcome the expansion of this scheme to many other areas of criminal prosecution where the legal profession seems hell bent on furthering its own boundaries and where administrative sanctions simply administered would effectively punish wrongdoing and save State funds. It would also be less traumatic for victims and those accused. In most cases, a person will really feel the heat and take note if one hurts him or her in the pocket. Often, the gardaí prosecuting a case where there is no administrative sanction find the person in question is home before they are back at the station, even where a sentence is imposed. This is unfortunate and is an unnecessary expense for the State.

I know I am deviating from the legislation before the House, but will the Minister examine with his colleague, the Minister for Agriculture, Food and the Marine, the case for using administrative sanctions for very minor sea fisheries offences where the minimum penalty is a hearing before the Circuit Criminal Court? This is a matter of close to my heart. It crushes a nut with a sledgehammer and administrative sanctions might be more appropriate in such a case.

The State, which is the biggest customer of legal services in the country, is the taxpayer, and any efforts to reduce its costs should be welcomed by everyone in the Chamber and in the State. The institutions must be prudent in their expenditure on legal costs and, in doing, so we must ensure the courts work in the most efficient way. Therefore, I welcome the creation of [33]a body to represent judges. I hope we will be able to start a debate on court procedures and practices.

I recognise that while changes have been made in the operation of conveyancing through the digitisation of the property register, the fact that when a property is bought solicitors on both sides must search back centuries to ensure title is correct creates cost. I would welcome any efforts to reform this in the legislation. These records and certificates should be incorporated and digitally recorded in order that when the property is sold again, the only search that needs to take place is during the period since the previous sale. It does not make any sense that when a property is transferred or conveyed, one must go through an entire search when one should only have to go back as far as the most recent transaction. It defies logic, adds needless work to the legal profession, takes up its time and also causes expense to the taxpayer and the client.

Our legal system is very protected and expensive. We must welcome any legislation that would encourage transparency and any effort to bring scrutiny and accountancy, in a legislative framework, to the legal profession.

With regard to personal guarantees and abuse of a position of trust, we have seen positions of trust being abused, not only in the legal profession but also in many professional trades including the political profession. This should be a criminal act where great moneys have been expended, and this is the case in other countries. In the United States, people are leaving the prison system at present after serving time for crimes committed in the past ten years for failed Ponzi or pyramid investment schemes. We are very poor in this regard and seem to give people a free hand. We should tighten up on white collar crime and the legal system should be encouraged to assist in this.

Inflicting unnecessary cost on the taxpayer should be cited as a crime if it could be proved. This would be very difficult and perhaps many politicians could be charged with it. We saw it in previous regimes and perhaps this regime may be the same ultimately. If one blatantly inflicts unnecessary costs on the taxpayer, one should be sanctioned in some way through legislation. The phrase “my word is my bond” is thrown out very casually in transactions, and we do it ourselves. Unfortunately, all it is is one’s word, and often after a transaction goes pear-shaped there is no sanction, and this should be dealt with. The 98% of citizens who are honest and good people have paid unfairly for this principle and we must deal with it.

With regard to the Priory Hall debacle, there were legal people involved in that as well as the architects, builders, developers and planners. Some politicians might have been involved in it also. More sanctions must be imposed in that regard to avoid situations arising such as those that happened in Priory Hall, although many more of those may come to the surface. It all stems from a lack of scrutiny, regulation or examination of services and, more importantly, a lack of sanction.

The practice of joint accounts of solicitors is worrying also. How far does one go in that regard? Everyone accepts that 95% or 98% of solicitors' firms, legal operatives and barristers are honest, but this is this source of temptation and there may be a better way of dealing with funds through the solicitor’s office.

Regarding individual advice to a client, I highlight a case that may not be fair to the legal profession but is worth noting. I came across a case recently in my constituency of Cork South-West, specifically in Castletownbere, where a claimant who had lived in the United Kingdom sought legal advice from a solicitor on pension rights and was advised that they had no entitlement to a pension from this State. The matter came through the political system, as it were, for a second opinion and it was found subsequently that they had entitlements to a pension but, unfortunately, they lost out on four or five years of entitlements because of the legal advice [34]they had received, which was wrong, and they had no way of seeking any redress from that office. That is unfortunate, and legislation should address that.

The complaints procedures available to the citizens of the State appear to be used only in very serious or significant cases against legal firms, but there is a myriad of individual small issues involving citizens who, rightly or wrongly, feel aggrieved or dissatisfied with the legal advice they have received. In some cases the advice they were given may have been in regard to a crime. I would like to see a system whereby if a firm or a solicitor had a bank of small complaints, for example, a trend could be followed whereby they would indicate that there may be a problem. It might not be a significant case or a headline maker for the press but, in a particular field or regarding an issue, a reasoned claim could be made that a firm or a solicitor is either doing the work incorrectly, is incompetent or may need to be dealt with by a board. If such a system was in place, it would give greater credibility to the legal system, the individual solicitor or the firm, greater assurance to the client and, ultimately, to the citizen.

We are all aware of the way legal professionals deal with charges. They have a computer logging system to record every minute of the work done for the client in the case. Those records should be available to an adjudicator. We hear much anecdotal evidence, and much of it might be incorrect, about a solicitor coming in to a case, thinking of a number and trebling it and charging that as the fee. They might also assess the client’s situation and his or her background and decide on a fee appropriate to that client irrespective of the work they do, the expense the firm has taken on or the ultimate judgment. I am lending credence to it here but that kind of story is out there and this legislation must go a long way to deal with that and give an assurance to our citizens that we have a legal system we can depend on and that is ultimately beneficial for our country.

Costs arise outside the individual solicitors, firms and barristers but third party witnesses and experts giving testimony in courts seem to be an industry in themselves. Some of those issues might be addressed as part of this legislation in that the legal costs adjudicator or the Taxing Master could be given more teeth to assess those costs.

Ultimately, the main message is that the legal system has served us well but it is a very expensive profession. It is a protected profession. It has been recognised by the EU-IMF-ECB troika as something that must be dealt with. It is an issue that is adding to the costs for business and the individual and is one we must urgently address. I fully support the Minister in his efforts to reform that element of the legal services sector. Doing it from without and within is a difficult job and he should be commended on that. I commend the legislation and hope it will get broad support that will lend credence and give assurance both to legal service providers and the citizens of this country.

Acting Chairman (Deputy Ciarán Lynch): Information on Ciaran Lynch Zoom on Ciaran Lynch I call Deputy Dowds. The Deputy has ten minutes but the debate will adjourn at 1 p.m. and resume next week. He has a few minutes remaining and will be in possession when the debate resumes.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds That will be Tuesday afternoon, is that right?

Acting Chairman (Deputy Ciarán Lynch): Information on Ciaran Lynch Zoom on Ciaran Lynch I assume so.

Deputy Robert Dowds: Information on Robert Dowds Zoom on Robert Dowds I have no difficulty with any of the aims of the Bill and welcome in particular the provisions relating to legal costs which are long overdue and to which Deputy Harrington, among others, referred. However, I am concerned that the Bill as currently drafted will decrease competition and increase costs in some respects for reasons I will outline. The [35]system is far from perfect but in its current form the Bill could diminish much of what is good at the Bar.

There is no shortage of competition among the majority of practitioners at the Bar, and there is no shortage of competition for the services needed by the majority of litigants. Criminal legal aid fees have been cut by 35% in the past three years. The economic climate has ensured that solicitors shop around, and barristers have also cut their fees accordingly. Many practitioners have considerable difficulties getting paid at all.

Where costs are high it is in the provision of legal services to State agencies and civil litigation, and this has as much to do with the tendering process as anything else. For example, regarding the provision of legal services to NAMA, the tenders precluded firms with a turnover below €25 million from applying. Only the biggest firms in the country were eligible and therefore they were free to charge whatever they wanted. The Bill does not address that and I ask the Minister to address that in the debates on subsequent Stages of the Bill.

  1 o’clock

The Bill proposes to change radically the way barristers do their work, introducing for the first time partnership and multidisciplinary practices and allowing barristers employed by firms to practise in court. That is being done without any meaningful consultation with barristers themselves and has huge implications not just for the profession but for the public. Until now, irrespective of whether one was a multimillionaire or a single parent, one was entitled to choose one’s own barrister and it did not matter whether one was living in Dublin 4 or the remotest part of Mayo or whether one’s solicitor worked on his or her own, in a small country or city practice or in one of the top five firms. One was entitled to seek out and retain the best barrister working in that area. If barristers are employed in firms, that will no longer be the case. Access to barristers will be severely curtailed.

It stands to reason that if the top firms can retain the most experienced barristers specialising in a particular area, they may be able to charge accordingly and consumers will have no option but to pay more for the privilege. The proposal also has implications for small solicitors’ practices that until now have had access to the top barristers in the country.

Debate adjourned.

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