Frances Fitzgerald (Dublin Mid West, Fine Gael) | Oireachtas source

I am pleased to be before the Seanad today to present the Legal Services Regulation Bill 2011 which completed its Dáil Stages on 22 April. The Bill has come a long way since its publication in 2011 when it began its life as a structural reform under the EU-IMF-ECB troika programme. The Bill is now the subject of a country-specific recommendation under the EU semester process which has succeeded the troika. The Commission will continue to monitor the progress of the Bill as an ongoing deliverable under the semester process. The Government's continued commitment to the Bill's wide-reaching structural reforms is also reflected in the fact that the Bill is a key component of the Action Plan for Jobs, the medium-term economic strategy 2014-2020 and of the national reform plan.

In our consideration of the Bill before this House, we have a unique opportunity to ensure that the Bill's structural reforms are firmly put in place with an appropriate balance between the interests of legal practitioners and those of their clients alike. This will provide a basis for sustained national recovery and competitiveness in the provision of legal services in the years ahead. As a platform for modernisation and reform, the Legal Services Regulation Bill has been much enhanced during its consideration before and passage through the Dáil. I have no doubt this will apply in the Seanad also.

The Bill, as amended and enhanced during its passage through the Dáil, now comprises 158 sections spread over 13 Parts, which makes it a very large Bill. It provides four main levers of change. First, the Bill provides for a new, independent. legal services regulatory authoritywith responsibility for oversight of both solicitors and barristers. While the Law Society of Ireland has successfully discharged the function of statutory regulator under the Solicitors Acts up to now, barristers have not been subject to similar legislation. As I will set out in further detail, an array of amendments has been made to ensure the independence of the new authority in both its appointment and in its functions.

Second, the Bill provides for an independent complaints systemto dealwith public complaints including those relating to professional misconduct. There will also be an independent legal practitioners' disciplinary tribunal todeal with both legal professions, thereby replacing the two separately operated tribunals that exist at the moment. The public will now make their complaints directly to the new authority and not through the professional bodies. In addition to formal misconduct procedures, provision has now been made for the informal resolution of more minor and consumer-type complaints such as those about inadequate services, which is a useful approach.Third, the Bill provides for a new and enhanced legal costs regime that will bring greater transparency to legal costs and will apply to barristers as well as to solicitors. The Bill sets out for the first time in legislation a set of legal costs principles at Schedule 1. The Bill also provides that a new Office of the Legal Costs Adjudicator will replace the existing Taxing-Master to deal with disputes about legal costs, will prepare guidelines and maintain a public register of determinations. A range of technical enhancements have been made to the legal costs provisions of the Bill taking account of expert views received.

Fourth, the Bill provides for a framework for alternative business models.It facilitates new forms of legal services provision such as legal partnerships and multi-disciplinary practices that take account of the emergent new business models in other common law jurisdictions and the huge advances made in business technology. It does not seek to impose the new models on legal practitioners, rather the intention is that the new models will operate successfully alongside the existing modes of business used by legal practitioners, including small solicitors' firms and, for barristers, the Law Library. The new models will facilitate legal practitioners by removing current restrictions on the way they deliver their services, it will facilitate consumers by providing more choice, better access and, in due course, lower costs, and will facilitate the removal of barriers to competition in the legal services market which were identified by the Competition Authority nine years ago. I introduced a number of key amendments on Report Stage in the Dáil relating to these new business models which further enhance their regulation and governance. Part 8 of the Bill refers.

I will go through each section briefly. Obviously I cannot give a comprehensive account of the Bill in all its detail but I hope to highlight the key issues.

Part 1 of the Bill headed "Preliminary and General"comprises five sections dealing with the Short Title and commencement; interpretation and construction, regulations and orders, expenses and repeals, respectively. There will be ongoing development of this part of the Bill before the Seanad when, for example, key definitions will come to be settled. In addition, the commencement dates for a number of the Bill's key provisions will be settled under section 1.

Part 2 of the Bill headed "Legal Services Regulatory Authority"deals with the establishment and functions of that new body. This Part of the Bill also sets out the powers of the authority in terms of codes of practice and professional codes and makes provision for its chief executive and staffing, its accountability structures, the powers of inspectors and the prosecution of offences.

There will be 11 members of the new legal services regulatory authority, six of whom will be lay persons and five of whom will be nominees of the legal professional bodies. The authority will have a lay chairperson. The members of the authority will be nominated by independent nominating bodies reflecting the authority's remit. Members will be appointed after a resolution approving such appointment has been passed by both Houses. Provision is made to ensure gender balance in nominations for the regulatory authority and its appointment will be staggered to ensure continuity.

Additional safeguards now apply to the possible removal of a member of the authority including a requirement for a resolution before both Houses with the added safeguard of the High Court, so the independence is locked in by these various provisions. The ban on public comment by the chief executive officer of the authority on policy has also been removed. These numerous safeguards are underpinned by the affirmation under the terms of the Bill in section 12(3) that the new legal services regulatory authority "shall be independent in the performance of its functions". It should also be noted that there will no longer be any ministerial role in the processing or approval of professional codes of practice. Those changes have been made since publication of the Bill.

This is also the Part of the Bill that enables the new regulatory authority to conduct a series of public consultations on such matters as the education and training of legal practitioners in the State, the possible unification of the solicitor and barrister professions, the creation of a new profession of conveyancer and possible other matters. This is a range of issues under which the authority could have consultations. Provision is also made for interim reporting. I draw the attention of the House to section 33 of the Bill which sets out these matters and the reporting periods that will apply. I have changed some of those reporting periods. All in all, I think Senators will agree, upon consideration of the Bill as it now stands, that the new Legal Services Regulatory Authority, as now set out in Part 2 of the Bill, is robustly independent.

Part 2 of the Bill is also important because it balances the interests of lawyers and clients in a fair and more transparent way. Section 12 sets out six objectivesto which the new Legal Services Regulatory Authority must have regard in performing its functions. Three of these are in the public-consumer interest - protecting and promoting the public interest, protecting and promoting the interests of consumers relating to the provision of legal services, and promoting competition in the provision of legal services in the State. The remaining three objectives support high standards in the provision of legal services, including supporting the proper and effective administration of justice, encouraging an independent, strong and effective legal profession, and promoting and maintaining adherence to the professional principles. These are the broad high level objectives which fit very effectively for the work of the authority.

The Bill also gives clear statutory expression to the core professional principles under which legal practitioners must act, namely, with independence and integrity, in the best interests of their clients, and by maintaining proper standards of work. They must also comply with the duties that are rightfully owed to the court and, they must, subject to professional obligations, keep the affairs of their clients confidential. These objectives and core principles will provide the policy bedrock for regulation and operation of the legal services market as we go forward with this new legislation. The professional and client interests at play in the provision of legal services are being mutually upheld under Part 2 of the Bill. This balance informs the entire Bill.

Part 3 of the Bill, as reflected in its Title, consists of section 36 which makes provision for the holding of clients' moneys. The holding of such moneys is, under existing law and regulation, confined to solicitors. It should be noted, however, that elsewhere in the Bill, that is, under section 104 of Part 8, this may change in the future. Provision is made under section 104 for the holding of public consultations on certain issues relating to barristers.

Part 4 of the Bill entitled "Matters Relating to Protection of Clients of Legal Practitioners",which are under ongoing consideration, provide for the making of regulations in relation to interest on clients' moneys as well as on professional indemnity insurance, respectively, while also setting out the parameters of the limitation of a legal practitioner's liability by contract.

Parts 5 and 6 deal with the new and independent framework being set up to deal with public complaints about legal practitioners. Part 5 deals with the informal resolution of complaints relating to inadequate legal services and charging of excessive fees as its title denotes. Covering sections 40 to 46, this Part of the Bill allows for the processing of consumer-type complaints which would not amount to misconduct as such and, therefore, lend themselves to more informal resolution. This is an important provision and it avoids putting every single complaint received through the more formal and costly misconduct procedures where an informal resolution can be more appropriate and proportionate to the case involved. It should be noted, however, that more serious overcharging of fees by a legal practitioner, that is to say where those fees are grossly excessive, will amount to the type of serious misconduct that will be dealt with under the more stringent procedures of Part 6 of the Bill.

Part 6 sets out the Bill's regime for dealing with professional misconduct by a legal practitioner whether a solicitor or a barrister. I draw attention to section 47 which sets out where an act or omission by a legal practitioner may be considered as constituting misconduct. Chapter 1 of Part 6 also includes provision for the making of regulations in regard to the processing of complaints, for the admissibility of complaints and for the possible resolution of a complaint by mediation. Chapter 2 of Part 6 provides for the establishment of a complaints committee and sets out the modalities for the investigation of complaints. It also provides for the publication of reports by the new regulatory authority in relation to these functions. Chapter 3 of this Part sets out the terms of establishment and membership and functions of the new legal practitioners disciplinary tribunal.This single tribunal, which will deal with solicitors and barristers, will replace the two tribunals operated by the Law Society and the Bar Council respectively. This chapter also sets out, in section 70, the sanctions that may be imposed by the tribunal where misconduct has been determined. Provision is also made for appeal to the High Court as well as to the Supreme Court under the terms set out in the sections concerned.

Part 7 of the Bill sets out the terms of the levy which will be imposed on those legal practitioners who will be regulated by the new Bill under sections 80 to 83. Following amendment during its passage through the Dáil, this part of the Bill now distinguishes, for the purposes of collecting the levy, between solicitors practising under the Law Society regime, barristers practising in the Law Library under the Bar Council regime, and those barristers who choose to practice outside the Law Library but are now to be regulated by the new legal services regulatory authority. The provisions of this part of the Bill have been refined to ensure that non-practising legal practitioners are not levied.

There have been important amendments made to the Bill since its publication on the proposed alternative business structures for the provision of legal services. Part 8 of the Bill now provides that legal partnerships and multi-disciplinary practices will be more effectively regulated, each in its own right. At the same time, section 86 of the Bill allows direct professional access to a barrister on non-contentious issues. This means that, in such cases, a client need not necessarily engage a barrister through a solicitor as generally happens at present.

The changes I introduced on Report Stage in the Dáil to the new legal business models have three main elements now embedded in the Bill. A series of new provisions will strengthen the regulatory powers of the new authority and make additional prudential provision for any future participation in legal partnerships and multi-disciplinary practices. These business models will also be subject to periodic review. Legal partnerships, that is to say partnerships between barristers and solicitors or between barristers themselves, will be subject to a public consultation process to be completed within six months of the establishment of the new regulatory authority, and are then to be introduced within six months of those consultations being completed. Multi-disciplinary practices, that is to say practices in which legal practitioners provide their services alongside other non-legal service providers, will now be supported by detailed research. This will focus on the likely effects their introduction may have on competition, on the legal services market and on the legal professions. The findings of this research on multi-disciplinary practices will then inform the six-month public consultation process already envisaged under the Bill and will also be laid before the Houses. The commencement of the provisions governing multi-disciplinary practices will then become a matter for the Minister following these processes and on foot of their outcomes and recommendations.

Under Part 8 of the Bill as it now stands, legal partnerships and multi-disciplinary practices will have to notify the new legal services regulatory authority when they commence or cease operations. Both will require professional indemnity insurance cover and a public register will be maintained. The managing legal practitioner in a multi-disciplinary practice must now be an actual partner and not merely an employee. A letter of engagement will have to be provided to clients specifying the services to be provided by the multi-disciplinary practice concerned and distinguishing which of these services are other than legal services. Refinements have also been made on who may participate in a multi-disciplinary practice without placing undue restrictions on the participation of legitimate business interests. While it may be allowed at a future date when the new legal services regulatory authority has been firmly established, corporate participation or investment in a multi-disciplinary practice is prohibited at this time. Taken together, these enhancements to the roll-out of multi-disciplinary practices are intended to obviate the need for any further primary legislation that might otherwise arise.

Multi-disciplinary practices do not only concern those legal practitioners who may choose whether or not to opt into them. They also have to be considered from the point of view of consumers and the protection of their interests or moneys. I want the new framework to facilitate a public consideration of the concerns of all sides and stakeholders in these practices, while nonetheless holding fast to the core deliverables of the Government's structural reform process. I am confident the measures now in place can combine to ensure the new legal business models being facilitated by the Bill can be better informed, better established, better operated, better regulated, better for customers and enterprise and better for the economy.

Part 9 of the Bill sets out the regime for the roll of practising barristers which will be maintained by the new legal services regulatory authority under sections 106 to 110. As I have said,.a distinction is now made between Law Library and non-Law Library practising barristers for that purpose.

We now come to the provisions of the Bill on legal costs. The Bill makes extensive provision, in Part 10, for a new and enhanced legal costs regime that will bring greater transparency to how legal costs are charged. Legal practitioners, whether solicitors or barristers, will be obliged to provide more detailed information about legal costs from the outset of their dealings with their clients. A cooling-off period is to be allowed for the consideration of costs by the client. When there are any significant developments in a case which give rise to further costs, the Bill provides that a client must be duly updated and given the option of whether to proceed with the case in question. In addition, the Bill sets out that it will not be permissible for legal practitioners to set fees as a specified percentage or proportion of damages payable to a client from contentious business and that it will no longer be permissible for barristers to charge junior counsel fees as a specified percentage or proportion of senior counsel fees.

Under the Legal Services Regulation Bill the current functions of the Taxing Master will be taken over by the new office of the legal costs adjudicator and the establishment, governance and modernised functions of this office are now set out. The Bill also sets out, for the first time in legislation, a series of legal costs principles, which are contained in section 1. They enumerate the various matters that may be taken into account in the adjudication of disputed legal costs. The Bill also provides for the establishment of a public register of determinations which will disclose the outcomes and reasons for decisions made by the legal costs adjudicator. The Bill seeks to achieve greater flexibility in the legal services market along with more competition and improved access to justice, and will pave the way for the introduction of new business structures for legal practitioners, including in partnership with non-legal service providers.

Part 11 of the Bill contains two additional provisions on legal costs including the upholding of the principle that costs follow the event.

Part 12 of the Bill sets out the framework for the application, grant or revocation of a patent of precedence, that is to say, the conferral of the status of senior counsel to a solicitor or a barrister.

Part 13 contains a number of miscellaneous provisions including provision that a barrister in employment may provide legal services to his or her employer; the regulation of movement between the professions of barrister and solicitor; and the regulation of the advertising of legal services under section 158.

We are at a very important point in the development of this legislation. I consider the Legal Services Regulation Bill to be at a very advanced stage of development, having taken on board a range of concerns and observations received in light of current Government policy. This has included our responses to those fundamental concerns which had been initially expressed about the independence of the new regulatory regime.

I also consider, particularly in light of the latest amendments made, that the new regime for new legal business models is very well balanced in terms of their regulated and considered introduction. The range of legal business options that will be offered by the Bill upon enactment must be openly facilitated and received. Legal practitioners will be able to choose the model through which they practice, whether that is the Law Library, the traditional solicitors' firm, the new legal partnerships or, in due course, multi-disciplinary practices. The new and existing legal services models will complement each other, as has been the case in other countries where these structures have been introduced. Equally importantly, consumers of legal services will have greater choice and access to justice. We are dealing with a more competitive cost structure.

We will have discussions in the Seanad, and I anticipate that further amendments will arise on matters such as the inspections and complaints regime which needs further refinement. I will table further amendments on the operation of the legal practitioners' disciplinary tribunal. I look forward to further discussions with the Law Society on the interface between its retained compensation fund functions and the independent operation of the new professional conduct regime that will cover solicitors and barristers.I also intend to bring forward provisions to allow limited liability partnerships as well as provisions to allow barristers to sue for their fees. These are both matters whose legal and other aspects are under ongoing detailed consideration.

As I have confirmed in the other House, I will continue to negotiate the staffing of the new regulatory authority, with the Minister for Public Expenditure and Reform, with the firm intention of resolving the issue of those existing staff of the legal professional bodies who deal with public complaints. I will also be enhancing the provisions of the Bill dealing with advertising by legal partnerships, including in terms of compliance with the EU services directive. In response to concerns raised, further attention will be given to the Bill's disclosure provisions, including as they may impact on client privilege and confidentiality. Other intended amendments will relate to pre-action protocols for medical negligence cases and e-filing in the courts. Extensive work is also being done on repeals and transitional provisions, and further technical amendments can be anticipated. This is a very large and complex Bill and we have further work to do on it. The key terms of interpretation contained in Part 1 of the Bill will be settled in the completion of the relevant Parts concerned.

Subject to its ongoing consideration before this House, it is my intention that the Legal Services Regulation Bill be completed so that the new legal services regulatory authority can come into operation without delay this year. An allocation of €500,000 has been made available under the justice Vote to support the establishment of the authority. This will be provided on a recoupable basis as the new regulatory framework is to be self-funding by means of a levy on the legal practitioners concerned.

Work on the Bill is ongoing in conjunction with the Offices of the Attorney General and the Parliamentary Counsel, and this will be reflected in the relevant amendments that I will be bringing before the Seanad. I thank the Attorney General and the Parliamentary Counsel for the detailed work in which we have been involved in recent weeks and during the course of the passage of this legislation through the Dáil. Needless to say, I will be consulting further with the various stakeholders concerned so that the Bill can be brought to finality.

I commend the Bill to the House and I look forward to hearing the views and exchanges of Senators on its provisions.