4 October 2011
The Minister for Justice, Equality and Defence, Mr. Alan Shatter, T.D. today secured Government approval for the publication of the new Legal Services Regulation Bill. The Bill is expected to be published within the next week or so when printed.
Minister Shatter said, "The Cabinet’s decision to publish the Legal Services Regulation Bill 2011 is a good day for the consumer and the legal profession. The Bill prescribes substantial reform which takes account of the recommendations of the Competition Authority and the Legal Costs Working Group reports."
"It provides for greater transparency for legal costs and greater assistance and protection for consumers of legal services. It also provides an entirely independent dispute system to determine allegations of professional misconduct and a new system for legal costs adjudication where legal costs are in dispute."
The Minister continued, "It is a good day for the legal profession as well because restrictive practices which inhibit the delivery of legal services are being removed through new business models, anachronistic and unnecessary restrictions derived from regulatory rules which permeate the legal profession are outlawed and a structure is to be put in place which provides for the possibility of greater competition in the provision of professional legal training and a reduction in the cost of such training."
The proposed Bill will give effect to key structural reforms included in the Programme for National Recovery 2011-2016. In the Programme, the Government has undertaken to establish independent regulation of the legal professions, to improve access and competition, make legal costs more transparent and ensure adequate procedures for addressing consumer complaints. The Bill provides for all of these.
The new Bill will also meet a number of the State’s key commitments in the EU/IMF Programme of Financial Support for Ireland aimed at structural reform building on the recommendation of the Legal Costs Working Group and the Competition Authority
The proposed Legal Services Bill will provide for three key entities —
· A new, independent, Legal Services Regulatory Authority with responsibility for oversight of both of the legal professions,
· an Office of the Legal Costs Adjudicator to assume the role of the existing Office of the Taxing-Master which will be conferred with enhanced transparency in its functions. The legal costs regime will be brought out into the open with better public awareness and entitlement to legal costs information.
· an independent complaints structure to deal with complaints about professional misconduct – this will be supported by an independent Legal Professions Disciplinary Tribunal.
The Minister said, "Together, these provisions will promote competition and transparency in the organisation and provision of legal services in the State and in relation to legal costs. They will also create a single and independent point of call for those who wish to make complaints about legal services. The new Bill sets out to better balance the respective interests of the public, consumers and legal professionals in their respective provision and consumption of legal services."
The Bill will be published in the coming days. More detail on the Bill is included in the briefing material below.
10 Key Points
1) This Government has made a firm commitment to legal sector reform and it is also an important part of our EU/IMF commitments.
The EU/IMF Agreement states that the "Government will introduce legislative changes to remove restrictions to trade and competition in sheltered sectors including the legal profession, establishing an independent regulator for the profession and implementing the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations to reduce legal costs."
2) In the Programme for Government we make a commitment to "establish independent regulation of the legal professions to improve access and competition, make legal costs more transparent and ensure adequate procedures for addressing consumer complaints".
3) The new Legal Services Regulation Bill provides for all of these in support of national economic recovery.
4) This Government’s approach is distinguished from that of its predecessors by our unerring commitment to "independent" regulation. Previous reform initiatives side-stepped this challenge and settled merely for self-regulation by the legal professions themselves.
5) As well as establishing an independent regulator the new Bill takes account of the recommendations for reform made by the Legal Costs Working Group and by the Competition Authority. Legal services are being given the space for positive change.
6) For the first time, both solicitors and barristers will be brought under legislation – barristers were not covered by this type of law before.
7) The improved legal costs regime will be supported by a set of Legal Costs Principles and the publication of decisions when legal costs disputes are adjudicated. There will be a deeper obligation on both legal professions to provide clients with adequate and up-to-date information on how their cases and costs are going. There will be a broader obligation to provide the public with information on the key elements of the new regulatory and costs regimes.
8) People will now have an independent first port-of-call for complaints about solicitors or barristers – at the moment complaints are dealt with by the complaints structures of the professional bodies.
9) The new Bill does not see legal sector reform as a once-off phenomenon. It puts a whole framework in place to prepare and roll-out reform on an ongoing basis. For example, it prepares the way for opening the legal system up to multi-disciplinary practices; easier switching between the professions; direct access to barristers; letting solicitors and barristers employed by companies or the Government represent their employers to cut duplication and costs.
10) The interests of client consumers and legal practitioners are being balanced in this new Bill better than ever before – to the mutual benefit of both. Everyone will be clearer about what should be happening when legal services are being provided, about how much they are going to cost, and where they can go to for an independent adjudication if they have a complaint or want to settle a dispute about legal costs.
Note for Editors:
Summary of the Legal Services Regulation Bill 2011
The Legal Services Regulation Bill 2011 is an innovative reforming measure. Until now, the regulatory framework of the legal-services market in Ireland lacked clear objectives. It also had inadequate regard to the interests of consumers. Business structures for delivering legal services have changed little even though business practices in the domestic and global economy have changed significantly. The Bill creates a new regulatory framework that allows consumers a high degree of choice in how they obtain legal services and choice for lawyers in the type of business they use to deliver legal services. The Bill aims to increase access to justice through increasing competition in the legal services market by removing unnecessary restrictions on the way legal services can be delivered.
The Bill sets out clearly six objectives for the new regulatory framework. The consumer will no longer be a voiceless participant in the legal-services market. Three objectives directly concern consumers. Thus, when performing its functions, the new Legal Services Regulatory Authority must have regard to:
· 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.
The Bill also sets out objectives intended to promote high standards in the provision of legal services. The Legal Services Regulatory Authority must have regard to:
· supporting the proper and effective administration of justice;
· encouraging an independent, strong and effective legal profession; and
· promoting and maintaining adherence to professional principles.
These are balanced objectives. They cover the interests of consumers, the general public interest, the independence of the legal profession, and access to justice.
An Independent Regulatory Authority
For the first time in our legal history, there will be independent statutory regulation of both branches of the legal profession. The new Legal Services Regulatory Authority, made up of 11 members, will be an independent regulatory body. The following features reinforce its independence:
· It has a lay majority of members and a lay chairperson;
· The legal profession has a minority representation on the Authority, with 2 representatives from each branch of the legal profession;
· It is accountable to Dáil Éireann (e.g its Committees) in its own right;
· It must follow standards of sound and transparent governance by preparing strategic and business plans, reporting annually, and following proper accounting standards subject to audit;
· It must keep the public informed of its role, and their rights and remedies.
An Independent Complaints Procedure
The Bill will create an independent complaints procedure. This means that consumers will no longer have to complain directly to the law Society or to the Bar Council to obtain redress. The first step involves making a complaint to the Legal Services Regulatory Authority. The Complaints Committee will have a majority of laypersons on it. It will decide on the admissibility of the complaint. To save consumers time and money, an alternative dispute resolution options will be offered. Alternative dispute resolution is a procedure for settling a dispute by means other than going into court. An example is mediation.
For complaints that go to a hearing, there will be a new, independent disciplinary body to adjudicate on allegations of professional misconduct. In other words, the professional bodies – the Law Society and the Bar Council – will not run this body. The new body will have a range of powers to discipline lawyers found guilty of professional misconduct. The range includes the ultimate sanction involving striking off a lawyer from the roll of practitioners.
The new Legal Services Regulatory Authority will have an armoury of functions and powers that will enable it to engage in comprehensive regulation of the legal profession and the legal-services market. Thus, it will have power:
· to prepare or approve Codes of Practice to ensure high standards of legal practice;
· to propose regulations on key matters including the keeping of accounts, advertising, professional indemnity provision, the protection of clients; moneys, and so forth;
· to monitor admission policies in respect of the legal profession and to accredit education or training services of would-be lawyers;
· to review the structure of the legal profession and how legal services are provided;
· to provide information on the legal-services market;
· to conduct research into important issues relating to legal services;
· to help with the coordination and development of policy in relation to legal services and
· to inspect legal practices and independently supervise the accounts of legal practitioners.
These developments serve the interests of consumers. They also serve the interests of the legal profession, because they will no longer be accused of regulating or disciplining themselves. The costs of regulation will be borne by the professional bodies.
Liberalising the Legal Profession
The Bill seeks to achieve greater flexibility in the legal-services market, more competition and improved access to justice. It is crucial to ensure that there are no unnecessary barriers to competition created by restrictions on business models for offering legal services or by restrictive practices within the legal profession. The radical changes include the following:
· The Legal Services Regulatory Authority will review the legal professions’ monopoly in the field of legal-professional education. The aim is to open up such education to other providers in a more competitive market.
· The Legal Services Regulatory Authority will carry out essential research and engage in a process of consultation to come up with proposals to advance more complex issues such as:
o the unification of the two branches of the legal profession;
o a separate profession of "conveyancers"
o barrister partnerships, partnerships between barristers and solicitors and multi-disciplinary practices (e.g. lawyers/non-lawyers)
o direct access to barristers for contentious business.
· For the first time, solicitors will be able to become Senior Counsel as well as barristers.
· Procedures will be put in place to ease switching between the two branches of the legal profession.
· The legislation allows for solicitors and barristers to act jointly as advocates in court and other proceedings.
· Clients will be allowed nominate who should lead their case in court when members of both legal professions are involved.
· Solicitor/barrister employees of private and State entities will be allowed to act as advocates in court proceedings for their employers.
· Whistleblowers’ protection will be put in place to protect those who report in good faith misconduct in the legal profession.
These changes will enable the legal profession to operate in new, more efficient, ways. It will also enable law firms to have access to non-legal expertise in order to deliver new business models and for non-lawyers to have an ownership stake in the business.
More Competitive and Transparent Legal Costs
For the first time in our legal history, the Bill will fully spell out the Principles that guide the assessment of legal Cost. The key principle is the principle of reasonable costs for appropriate work done. How lawyers charge costs will be brought into the light of day with the intention of protecting consumers, bringing about transparency, and fostering greater competition among service providers. Lawyers will be required to notify clients in a more detailed and intelligible way about legal costs. And consumers will be able to find out what the legal costs principles require. Key changes are:
· Both solicitors and barristers will now have to provide proper costs information. A detailed Bill of Costs is required which contains specified information.
· The process of notification of costs to clients is ongoing and not just an initial once-off notification.
· Contravention of the notification requirements is "misconduct" and can be taken into account to disallow costs in an adjudication.
· Arbitrary costs practices such as imposing the 2/3 of Senior Counsel rule in charging for the services of a Junior Counsel are abolished.
· The existing Taxing-Master is to be replaced by a Legal Costs Adjudicator who will assume a modernised and much more transparent legal costs adjudication function.
· Recruitment to the role of the Legal Costs Adjudicator, previously confined to solicitors of ten years standing only, is now extended to a wider skill-set, i.e. to similarly qualified barristers and legal-costs accountants.
The Office of the Legal Costs Adjudicator (who is currently called the Taxing Master) will be made subject to the sound governance and accountability practices applied to public bodies generally. Alternative dispute resolution will be promoted to save costs.
There will be appeal to the High Court. Guidelines on legal costs will be accessible to the public and not just to lawyers. There will be annual reporting by the Office of the Legal Costs Adjudicator. The Office of the Legal Costs Adjudicator will maintain a Register of Decisions on adjudications for the first time. This will publicise the reasons behind costs adjudications and their outcomes.
The Bill reflects the current legal provisions and rules that presently apply and result in bankrupt solicitors and barristers being prohibited from legal practice. These rules were designed in a different era and with regard to solicitors were particularly targeted to ensure that clients’ funds weren’t improperly used by bankrupt solicitors and also to ensure that clients did not suffer financial loss as a consequence of a solicitor becoming bankrupt.
There are circumstances in which legal practitioners may be rendered bankrupt due to their involvement in commercial matters that have no connection to legal practice nor with their legal expertise. In such circumstances depriving a lawyer of the opportunity to continue to earn an income both to facilitate his or her own support and to create the possibility of creditors recouping money due to them can be contrary to the public interest. In the context of the work being undertaken in the development of comprehensive reform to our bankruptcy laws further consideration will be given to this issue.
In sum, the Bill is a radical step in creating a supportive, robust and flexible regulatory framework for promoting high standards of legal-professional conduct in a more efficient, transparent, competitive and flexible legal-services market. It will serve consumers’ interests, the public interests and the interests of an independent legal profession. It will also enhance the rule of law and access to justice.