Written answers

Tuesday, 1 October 2013

Department of Justice and Equality

Legal Services Regulation

Photo of John O'MahonyJohn O'Mahony (Mayo, Fine Gael)
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513. To ask the Minister for Justice and Equality if it is intended that the Law Society will continue to have a dual role both representative and regulatory in the provisions of the Legal Services Bill 2011; and if it is intended that there will be a provision on the Bill to provide for a fair, just and appropriate review system for solicitors in respect of any complaints that they individually or collectively might have against the regulator whether it be the Law Society or the regulator for legal services; and if he will make a statement on the matter. [41143/13]

Photo of John O'MahonyJohn O'Mahony (Mayo, Fine Gael)
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514. To ask the Minister for Justice and Equality if he has decided to leave the financial investigation of solicitors practices to be handled by the Law Society; and if he will make a statement on the matter. [41144/13]

Photo of John O'MahonyJohn O'Mahony (Mayo, Fine Gael)
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515. To ask the Minister for Justice and Equality if he has decided to remove the complaints jurisdiction currently exercised by the Law Society to a new Legal Services Regulator; and if he will make a statement on the matter. [41145/13]

Photo of Alan ShatterAlan Shatter (Minister, Department of Justice, Equality and Defence; Dublin South, Fine Gael)
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I propose to take Questions Nos. 513 to 515, inclusive, together.

As I have publicly stated on a number of occasions, there has been a change in approach to the regulation of solicitors’ accounts since the publication of the Legal Services Regulation Bill 2011. I have been persuaded by the view that the regulation of accounts, including the investigation of possible acts of fraud and dishonesty which could lead to a claim on the Solicitors' Compensation Fund, should continue to done by the Law Society and its Financial Regulation Section. This decision has been based on the fact that it is not desirable that the State should assume responsibility or potential future liability for the breach of financial regulations by practising solicitors. This would involve the State assuming a very substantial burden which would, in the process, lessen the very serious incentive for compliance which results from the solicitors' profession being liable for claims on the Fund themselves. It would also substantially increase the staffing requirements and running costs of the Legal Services Regulatory Authority which is to be self-financing.

The annual report of the Independent Adjudicator of the Law Society of Ireland for the year ending 30 September 2012 notes that the net assets of the Solicitors' Compensation Fund were valued at €16 million in 2012 and the annual contribution by each solicitor to the Fund during that period was €700. In 2011 244 claims were received by the Compensation Fund in the amount of €7.6 million and €2.5 million was paid out in that same period. In the six months up to the end of June 2012 162 claims were received amounting to €1.9 million with €0.7 million paid out in claims. A number of these recent claims have attracted public and media attention. The Law Society is, therefore, able to respond immediately to serious financial complaints and reserves the right to carry out investigations, without notification, where justified by the circumstances. The Society can also apply to the High Court for orders to protect clients' funds when serious irregularities arise. It should also be borne in mind that, following the enactment of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, the Law Society is required to investigate compliance with anti-laundering regulations. The proposed retention of the Law Society’s functions with regard to the Compensation Fund is, therefore, a recognition of the fact that the Society has an established and rigorous financial regulation regime which, of its nature, strongly incentivises financial compliance by solicitors in the public interest while simultaneously avoiding the imposition of an undesirable burden on the State. I will, therefore, be proposing amendments to Part 3 of the Legal Services Regulation Bill to reflect this policy position.

While the Law Society will continue to exercise responsibility for the financial regulation of solicitors it will no longer deal with complaints from members of the public or misconduct proceedings, including those that may arise from fraud and dishonesty. In tandem with the establishment of a new Legal Services Regulatory Authority that will be independent of the Government and the two legal professions in its appointment and in the discharge of its functions, the Bill will establish an independent complaints framework to deal with allegations of professional misconduct by both solicitors and barristers. The public will have direct access to this new framework - at present such complaints are made through the Law Society or the Bar Council. There will also be an independent Legal Practitioners’ Disciplinary Tribunal to deal with allegations of serious misconduct by both solicitors and barristers - they have two parallel disciplinary and tribunal structures at present. In relation to possible complaints by legal practitioners about the new Legal Services Regulatory Authority, the Bill contains an array of provisions which would provide redress in such circumstances including, where appropriate, access to the High Court for judicial review. The Legal Services Regulatory Authority, which will have a lay majority and chair to be appointed by nominating bodies, will also include representatives of the legal professions in its membership.

Some elements of regulation are set to remain with the Law Society and the Bar Council under the new Bill. For example, they will be able to continue to set rules, regulations, practice notes and codes of conduct for their members subject to the provisions of the new Bill. They will retain certain of their own committees, working groups and task forces. They will maintain a role in the field of legal vocational education and training, though this area will be subject to a review by the new Regulatory Authority. However, there will be a far clearer distinction between their representative and regulatory functions by virtue of the fact that complaints from members of the public will be dealt with independently thereby avoiding any perceived conflicts of interest and enhancing public confidence in the new regulatory regime. These changes are being augmented by a more modern, consumer friendly and transparent legal costs regime under the Office of the Legal Costs Adjudicator that will take over the duties of the existing Taxing-Master. The Bill sets out, for the first time in legislation, a set of Legal Costs Principles and the determinations of the Legal Costs Adjudicator, who may also issue legal costs guidelines, will be made public. The Bill will also open the legal services sector to new business models that will provide new opportunities for legal services providers while also providing greater choice and competition for the benefit of consumers.

As the Deputy will be aware, Committee Stage of the Bill commenced on 17 July and I can confirm that detailed work on the Bill, including in relation to some of the issues raised, continues in my Department in conjunction with the Offices of the Attorney General and of Parliamentary Counsel. Committee Stage is to resume as soon as possible in the current session with a view to achieving the earliest possible enactment of the Bill and the timely implementation of its reforms.


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