Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I move amendment No. 76:

In page 36, before section 33, to insert the following new section:

"PART 3
HOLDING OF CLIENTS’ MONEYS BY LEGAL PRACTITIONERS

33.—(1) Subject to subsection (2), a legal practitioner shall not hold moneys of clients unless that legal practitioner is a solicitor.
(2) Notwithstanding subsection (1) the Minister may by regulations prescribe a class or classes of solicitors who may not hold the moneys of clients, or who may hold such moneys subject to such conditions as may be provided for in such regulations.
(3) Subsection (1) shall not be construed as permitting a solicitor to hold the moneys of clients where a condition or restriction is placed on a solicitor’s practising certificate pursuant to the Solicitors Acts 1954 to 2013 or this Act.".

Government amendments Nos. 76 and 82, which propose changes to Part 3 of the Bill, advocate the deletion of all nine sections of the Part as published and the insertion of one new section dealing with the authorisation of certain legal practitioners to hold clients’ moneys. The new Part, entitled "HOLDING OF CLIENTS’ MONEYS BY LEGAL PRACTITIONERS", would therefore contain only one section. That section, section 33, provides that only solicitor legal practitioners may hold the moneys of clients. This obviously reflects and does not alter the current situation whereby solicitors, and not barristers, may hold clients' funds. It is important to note that the Part is linked to Part 7, which will also fall to be considered on Committee Stage and which will provide for public consultation on whether the restrictions on barristers holding the moneys of clients should be retained, and whether the restriction on a barrister receiving instructions in a contentious matter, as defined by the Bill, directly from a person who is not a solicitor should be retained.
The new Part 3, with its sole section, has been designed to facilitate amending legislation if it is decided through the future consultation process that barristers ought to be permitted to hold clients' moneys and to deal directly with clients on a broader range of matters than they are currently allowed to. The deletion of Part 3 as it stands in the published Bill is a reflection of the policy decision that the Law Society will retain its regulatory remit with regard to the oversight of solicitors' accounts as they pertain to the solicitors' compensation fund. The basis of the decision was my belief that the society is best placed to incentivise compliance by solicitors because it is the solicitors' profession itself which is liable for claims on the fund.
Before an annually renewable practice certificate can be issued to a solicitor, the solicitor in question must have paid an annual contribution to the compensation fund, currently set at around €760 per solicitor per annum. I am told that the net assets of the solicitors' compensation fund were valued at approximately €18 million in 2013. Approximately 400 accounts inspections were carried out by the Law Society last year, providing an important protection against acts of fraud and dishonesty by solicitors in the handling of clients' moneys. The fund has been relied upon in a number of high-profile cases in recent times. Since 2008, the fund has paid out nearly €20 million in claims. However, I wish to make it clear that disciplinary procedures in relation to acts of fraud and dishonesty, or the misappropriation of funds, will be conducted under the new and independent professional conduct regime established in the Bill. The provisions which I propose to be deleted are ones that mirror certain provisions already found in the Solicitors Acts 1954 to 2013. They should remain untouched in the Solicitors Acts in respect of the Law Society. Under Part 4 of the Solicitors (Amendment) Act 1994, the society is responsible for the protection of clients, which includes an obligation on the society to maintain and administer the solicitors' compensation fund. Where it is proved to the satisfaction of the Law Society that any client of a solicitor has sustained loss in direct consequence of fraud or dishonesty on the part of that solicitor, or his or her clerk or servant, then, subject to the relevant provisions, the society is required to make a grant to that client out of the fund. So the position will remain.
It is not desirable in any circumstances that the State should assume responsibility or potential future liability for a breach of financial regulations by practising solicitors. This would involve the State's assuming a very substantial burden that would, in the process, lessen the very serious incentive for compliance that currently exists. Under the compensation fund structures provided for under the Solicitors' Acts, and to be maintained under the Bill, the Law Society is able to respond immediately to serious financial complaints and has the right to carry out investigations without notification where justified by the circumstances. The Law Society is, under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, required to investigate compliance with anti-laundering regulations. As I have said, any matters of professional conduct or discipline that may arise from cases of fraud or dishonesty by solicitors will be dealt with independently by the authority or the legal practitioners' disciplinary tribunal, as the case may be.
Opposition amendments Nos. 77 to 82, inclusive, tabled by Deputies Mac Lochlainn and Collins to sections 33 and 34, seek to restrict the application of Part 3 to solicitors only, presumably because the Deputies have been persuaded by the arguments of the Bar Council that barristers should in no circumstances be permitted to hold the moneys of clients. As I have already stated in regard to amendment No. 76, I intend to continue with the restriction on barristers holding clients' funds, at least until the outcome of the relevant consultation process in which the new legal services regulatory authority is to engage is known. Therefore, I propose instead to delete sections 33 and 34 and insert the revised section 33 that I have tabled.