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

Let us deal with a number of issues first. This Bill, as the Deputies will recall, made provision, as was necessary and appropriate in the public interest, that the Law Society would continue to administer the compensation fund. The legislation in place in that regard was largely unaffected. The Bill envisaged that the financial inspectorate, currently attached to the Law Society that conducts the type of inspections that I detailed earlier, would transfer to the legal services regulatory authority as well as the function of investigating allegations of misconduct. There was a substantial case made that the compensation fund and the inspectorate should not be separated in the sense that the inspectorate has substantial experience in inspecting the accounts of solicitors, that as solicitors fund the compensation fund and, annually, the amount they have to pay into it may be determined by the liquidity of that fund, it creates a pressure on the Law Society. I am not suggesting it would not otherwise do the job but the council of the Law Society must be concerned about the position of its members to ensure that the inspectorate fully fulfils its functions. It was argued that the inspectorate should remain with the Law Society and we gave further consideration to legal issues in that context. I had a concern that, in fact, if the inspectorate came within the legal services regulatory authority, it could create a situation whereby, even when the inspectorate performed to the Nth degree and engaged in its job with absolute professionalism, any time there was a loss of moneys by a client because the solicitor had defrauded him or her, there would be an incentive on the part of somebody within the legal profession to recommend to his or her client that he or she now sue the State and as well as looking for compensation from the compensation fund, the State could become a mark. It was important that did not happen.

The amendments we have tabled today are designed to enable the Law Society, as, indeed, the society sought, to retain the inspectorate. I made that decision, not because I was lobbied on the issue but because, on reflection with regard to the legal difficulties that could arise in the context of the inspectorate being part of a State body, I considered it was advisable that the Law Society retain that function, that where there are allegations of fraud the inspectorate be asked to investigate accounts and that the Law Society continues to perform the important function it performs, which is, to do spot-check audits on a specific number of solicitors' firms on an annualised basis in circumstances where there are no allegations of fraud or misconduct but to ensure that the appropriate accounting rules are being complied with, client accounts and office accounts are being appropriately maintained, clients' moneys are not being improperly used, and there is not, in so far as it can be ever policed, a repetition of the type of instances that we have seen which have resulted in prosecutions being successfully taken against some solicitors.

As a consequence of the changes, the Law Society will retain the inspectorate. I expect that such function will be fully fulfilled by the Law Society in accordance with its statutory obligations and that the inspectorate will do its work in a manner that is appropriate to protect in the public interest clients of the legal profession, to ensure that solicitors' accounts regulations are fully complied with and to ensure that compensation is not unnecessarily having to be paid because the inspectorate functions in a negligent manner - I am not suggesting that the inspectorate is doing so. I do not want to be misinterpreted. I am merely saying I could see there is a synergy between the Law Society maintaining the compensation fund and retaining the inspectorate function but that is where it stops.

What is interesting now, in the context of some of the material that has been made available to me, is what I would describe as "mission creep". We are going from a position where there is a good case for the inspectorate being retained to special pleading that some of the disciplinary functions should now be retained also by the Law Society, and I fundamentally disagree with that. I want to be clear on that. Under this legislation, we will have in the public interest an independent disciplinary and regulatory regime.

That effectively means that where there is misconduct alleged or discovered with regard to the manner in which a member of the legal profession, be he or she a solicitor or a barrister, conducts him or herself, this misconduct issue will be addressed through the appropriate structures of the legal services regulatory authority. To come back to Deputy Mac Lochlainn's case, there is no public perception of any description that the body dealing with this is anything other than independent.

The case that has been made pertains to what happens if something comes to the notice of the Law Society's inspectorate that requires immediate intervention, that is, that requires an emergency court case, for example, to freeze a solicitor's accounts, in some shape or form. As I understand it, what would happen now is that the information that comes to the Law Society would result in an application being made to the courts, presumably, except in highly exceptional circumstances, on foot of an affidavit that is sworn detailing the circumstances as to why a court order should be made. Where one has an independent regulatory regime or structure under the new legal services regulatory authority, with statutory provisions that the Law Society retains the inspectorate function, there is absolutely no reason a mechanism could not be in place that ensures that where there is a need for an emergency court application to be made, it is made by the legal services regulatory authority on foot of information the Law Society furnishes. That does not mean it is furnished and it then takes people weeks to deliberate on what has been furnished where there is an emergency. The same judgments can be made as are currently made and it ensures that the disciplinary function and the regulatory function are separated from the inspectorate function.

If, in the context of that issue, any further amendments are required to be made to the Bill on Report Stage, they can be made. There is no particular reason there could not be, for example, a memorandum of understanding put in place between the legal services regulatory authority and the Law Society with regard to ensuring the speed with which these matters are addressed. Consequently, there are various ways of dealing with this. I very much welcomed the support the Law Society has given for having an independent disciplinary structure dealing with allegations of misconduct. It would not be appropriate to have some issues of this nature now retained by the Law Society and then other pieces of it being dealt with by the legal services regulatory authority. It is not beyond human initiative to ensure that these matters can be dealt with seamlessly and efficiently by absolute co-operation, where it is necessary, between the inspectorate that identifies something about which to be concerned communicating this immediately, followed by an immediate response and appropriate, if need be, court application made.

I appreciate that what the Deputy has raised is on foot of submissions he has received on this issue. It is an issue that has only arisen because of the changes that are being made to the legislation. I of course am open to ensuring that anything additional that needs to be inserted in the Bill as it passes through both Houses is inserted, to ensure that such matters can be dealt with seamlessly and in a manner that is in the public interest. However, I do not wish to create now a separate piece of regulatory or disciplinary process that is similarly retained by the Law Society, not for any reason other than there should be a readily identifiable and simple structure. The inspectorate undertakes a particular function, the regulatory authority undertakes the other functions and I consider this to be entirely workable.