Wednesday, 24 October 2012
Ceisteanna - Questions - Priority Questions
To ask the Minister for Justice and Equality his views on concerns around rising costs due to changes recommended by the Council of the Law Society's Conveyancing Conflicts Task Force with regard to the use of multiple solicitors in conveyancing contracts; and if he will make a statement on the matter. [46577/12]
I previously addressed this matter in my written reply to Question No. 450 of 16 October 2012 which I will, therefore, substantially revisit on this occasion.
As the Deputy will be aware, the matters raised relate to the conveyancing conflicts of interest regulation which was adopted by the council of the Law Society of Ireland on 7 September 2012 with a view to its coming into effect on 1 January 2013. The Law Society of Ireland is the independent statutory body for the regulation of the solicitor profession in the State. Section 5 of the Solicitors Act 1954 provides for the society to make regulations that are necessary for the carrying out of its functions and requires that such regulations be laid by the society before each House of the Oireachtas, such as occurred with the regulation raised by the Deputy on 2 October under statutory instrument No. 375 of 2012. The new regulation, which prohibits the same solicitor from acting for both vendor and purchaser in conveyancing transactions, was made by the Law Society of Ireland on foot of the recommendations contained in the Conveyancing Conflicts Task Force Report published by the society in July last. The task force was specifically established to look at the existing guidelines and regulations relating to solicitors acting for both parties in such transactions. The report, publicly available on the website of the Law Society of Ireland, details the arguments put forward in favour of and against the introduction of this regulation and explains the reasons behind the decision to propose its adoption. It sets out how the task force undertook extensive consultations with members of the solicitor profession and other relevant interested parties and stakeholders and took account, inter alia, of the joint HSE and UCD report Abuse and Neglect of Older People in Ireland, published in November 2010. The task force also researched and reviewed the regulatory regimes in other jurisdictions and analysed judicial and academic commentary relevant to all issues considered.
I am aware that, while the focus of the Law Society of Ireland task force was centred upon preserving the probity and integrity of the conveyancing regime, the task force gave some consideration to the issue of costs and the perception that a package-deal approach to family group conveyancing represents an opportunity for savings to be made. This perspective has been reflected to some degree by Deputy Collins in his question. However, while there may be some substance to this perception, I expect, on the basis that legal fees should arise only in respect of the actual work done by any solicitor involved, that the relevant costs would even out across the parties.
Additional information not given on the floor of the House.
More fundamentally, any savings made should be weighed up against the avoidance of a conflict of interest, the duty upon solicitors to refer additional clients in voluntary transfers for independent legal advice and the security and protection of one's own interests and title to property that derive from separate legal representation. None the less, I am happy to see the costs aspect of the implementation of the new regulation monitored in real time, including in the context of the new and more transparent legal costs regime to be introduced under the Legal Services Regulation Bill 2011.
We should acknowledge the lessons of previous litigation in this area and of our erstwhile property boom, which point to the fundamental need to avoid conflicts of interest in the conduct of conveyancing transactions, whether on the part of solicitors or on the part of their clients, and including cases in which multiple family members or elderly or otherwise vulnerable family members may be concerned. While it would be better if such protections were not necessary, there can be no doubt that the new regulation affords better protection to solicitors and to their respective clients from any claims, now or in the future, that the issue of undue influence arises in respect of any conveyancing transaction. Similarly, in non-family conveyancing transactions, the interests of seller and purchaser seem to be better represented and protected in their own right under the new regulation. On balance, and notwithstanding the inconvenience and possible additional cost that may arise from individual legal representation in family group conveyances, it is difficult to argue that the quality and efficacy of a conveyance transaction is not better assured in the longer term by that means.
It is fair to point out that the State's regulatory role has been conspicuous by its absence in respect of the Law Society of Ireland and its solicitors on several levels. There was no obvious referral to the Oireachtas or public representatives in the passing of this regulation by the Law Society of Ireland. The effect has been that of a price-increasing mechanism; immediately, the public is being faced with an increase in legal fees. This is contrary to what we are trying to do in the Oireachtas with the Legal Services Regulation Bill. It is fair to point out that for uncontested conveyances, this will lead not only to a doubling but to a multiplication of legal fees. There will be scenarios in which a parent might leave a property to several children, perhaps three, four or five. Each sibling will have to have separate legal representation and it will not be possible for two solicitors to be involved. Also, this was not a unanimous decision by the Law Society of Ireland. I understand a certain amount of division existed in its reaching this decision.
We should bear all of this in mind and we should bear in mind what we are trying to do, which is to bring greater transparency to this decision and achieve greater value for money for people in conducting their legal affairs, which have been rather expensive over the years. The Minister is in charge of revisiting the Legal Services Regulation Bill. What is his view? Was this not a wrong and unfair decision which will impose increased legal costs on people undertaking transactions? The Minister proposes to amend the Legal Services Regulation Bill. Could we revisit this as part of the process? It is a genuine issue of concern. The point has been made by the Law Society of Ireland that this is on foot of several recommendations in the report. However, if rogue solicitors are in operation there should be robust mechanisms to deal with those people, especially if they are not giving their clients proper advice or services. The way to deal with this is not by forcing families to use a plethora of solicitors when they engage in simple family transactions. It is ridiculous. What is the Minister's take on it?
I put it to the Deputy that central to this issue are conflicts of interest. Central to this issue are certain legal practices that we saw during the boom years. The Deputy referred to some of those who were opposed to this. They were the larger legal practices, as opposed to the mid-range or smaller practices. They were opposed to it because they were doing work representing clients in circumstances in which there were substantial conflicts of interest. Where a conflict of interest exists, it is not always a case of a rogue solicitor. It may simply be a case in which a solicitor is cutting corners and not adequately ensuring that the necessary comprehensive work is undertaken. One of the great difficulties we discovered when the banks collapsed was caused by what we saw many years ago as a great reform. One solicitor was able to represent the purchaser of a property as well as the financial institution providing the mortgage loan. The solicitor could simply write a certificate to the bank to confirm that everything was in order. This was introduced many years ago because people objected to having to incur additional expense in circumstances in which the bank had to engage solicitors. We should bear in mind the disaster this has brought about in the context of the complex difficulties that have arisen for banks which are now owed substantial sums of money in cases in which legal work was not adequately done and the banks have inadequate security through title of property for moneys lent. This is a problem for individual financial institutions and, I understand, it has also resulted in substantial expense for NAMA.
The aim of this is to ensure that we have a proper legal system and that people get independent advice. Any savings made by allowing one lawyer to undertake work where there is a serious conflict of interest must be weighed against the necessity of avoiding general conflicts of interest, the duty upon solicitors to refer additional clients in voluntary transfers for independent legal advice and the security and protection of a person's interests and title to property that derive from separate legal representation. This is crucial, and I hope the Deputy will acknowledge it. Situations such as those to which I refer occurred - I am not being party political - under the noses of the Deputy's colleagues in government. We must acknowledge the lessons of previous litigation in this area and of the property boom, which point to the fundamental need to avoid conflicts of interest in the conduct of conveyancing transactions, be it on the part of solicitors or on the part of their clients, including in cases involving multiple family members or elderly or otherwise vulnerable family members. Substantial litigation has taken place in our courts over the years in which elderly family members have found themselves in difficulties after signing over property to sons or daughters and were at risk of being out on the street or, where a property has been signed over and used to raise additional borrowings, that property is in difficulty and repossession is sought.
It is not simply a cost issue. I would be glad to see real-time monitoring of the costs that are incurred due to the new arrangements. If an issue needs to be addressed it will be addressed, but we will have a more transparent legal cost system when we have enacted the Legal Services Regulation Bill. Given everything I have seen as a lawyer over 30 years and the difficulties I have had to deal with as a constituency representative, I believe it is crucial, in dealing with conveyancing matters - whether people are young or elderly and whether it is within families in which there may be a substantial breakdown in relationships at a later stage - that individuals get independent legal advice. The Deputy referred to the fact that if a person wishes to leave property to three or four children, all of the children must get legal advice. That is not true. If a person is leaving property in the sense of making a will, it is the individual who makes the will who should get legal advice.
The children do not need legal advice in those circumstances. If the circumstances involve a parent conveying a property to several children, it makes sense that the parent is represented by a lawyer who is entirely independent of the children.
That makes sense because there is a risk an elderly parent could, in circumstances within a particular family, be under some level of duress to transfer property in circumstances where it is not in his or her interests to do so.
If a parent is transferring a property to five siblings, each of them must have his or her separate legal representation. That is the point. That amounts to a money grab by the Law Society.
The examples the Minister cited in solicitors acting for a person on a mortgage with the bank should not happen. There should be a mechanism to deal with that but this, by targeting the small people, is not the way to deal with it. It is honest solicitors, who will give a good service and a good job, who are being lumped in on the back of a couple of rogue practitioners. The ultimate effect of that is everybody must pay, and that is wrong.
I come back to what I stated. Where there is one solicitor representing all, apart from the fact that the persons concerned do not get independent legal advice in those circumstances, the solicitor earns additional fees because he or she is representing all. In circumstances where there are different solicitors representing separate individuals, it guarantees those concerned that they will get independent legal advice and there will not be a conflict of interest. There should not be substantial additional expense because the legal work is shared around.
In so far as there is any suggestion that legal costs could be excessive, shortly I hope to be in a position to progress the Legal Services Regulation Bill 2011. We will have a new transparent cost structure in place and on the complaint that the Deputy made at the start that the Law Society in some areas is not accountable or does not deal with Members of this House, there will be a legal services authority that is separate from the Law Society and independent of solicitors, that is accountable in the manner in which it works to this House and that will have to report directly to this House, and whose members will be open to question on its annual report by the Joint Committee on Justice, Defence and Equality.