Better value, legally speaking

Alan Shatter’s legal sector reform bill will bring a ‘sheltered’ profession under control, writes Dan Buckley

FOR generations, Irish lawyers have faced accusations of anti-competitive practices that favour the profession at the expense of the consumer.

The provision of legal services in Ireland has been examined on numerous occasions by such bodies as the Restrictive Practices Commission in 1982, the Fair Trade Commission in 1990, the Organisation for Economic Co-operation and Development in 2001, and the Competition Authority in 2006; the latter making 29 recommendations for reform.

More recently, the Government has come under pressure from the troika funding Ireland’s bailout to reform legal services and reduce costs in “sheltered sectors” such as law.

In response to this, Justice Minister Alan Shatter has introduced a comprehensive proposal to make a root-and-branch changes in the provision of legal services in Ireland. The Legal Services Regulation Bill 2011 aims to be consumer driven, create an independent regulatory authority, and cut legal costs.

Current situation

At present the cost of legal services is often cloaked by obscure rules and practices, with limited advance information available about fees. This lack of transparency makes it difficult for consumers to shop around for legal services.

Anti-consumer and anti-competitive practices include:

* Failing to set out actual or estimated charges at the start of a case.

* Charging fees based on a percentage of the value of the case.

* Junior counsel charging two thirds of the senior counsel’s fee, regardless of the work done.

However, while that may be the practice, it is not the proper legal position and potential clients may not be aware that even under the current situation:

* They have a right to a letter from their solicitor outlining the estimated cost of the legal services to be provided.

* That it is illegal for a solicitor to charge them a fee based on a percentage of the award the client receives (for example, an injury).

* That the consumer is not obliged to pay a solicitor a fee for a conveyance based on the property’s value, and that such a fee arrangement will not be enforced in the courts.

Legal Services Regulation Bill 2011

The bill’s purpose is to make the legal profession more consumer focused. As such, it seeks to:

* Promote choice for those wishing to train as lawyers.

* Empower consumers by providing them with greater choice.

* Promote competition between lawyers.

The bill is structured in three ways.

One: The Legal Services Regulatory Authority will be given control over regulation of the legal profession, including training. It will have 11 members, seven of them lay, and will be appointed by the Government. It will report to the justice minister and various Dáil committees.

Its prime function will be:

* To promote competition and protect the public interest.

* To promote public awareness and disseminate information to the public, including the cost of such services.

* To establish and administer a system for the supervision of the accounts of legal practitioners who may hold the moneys of clients.

* Establish complaints committees to mediate disputes between lawyers and clients.

Two: The Office of the Legal Costs Adjudicator will take over the functions of the Taxing Masters’ Office.

The role is predicated on the desire to drive down legal costs and make legal fees more transparent for consumers. As well as making determinations in disputes over the fees, the adjudicator will publish guidelines on fees that will be available to the public as well as legal practitioners.

Lawyers will also be barred from deducting any amount of an award unless by prior written permission.

Lawyers will also be obliged not only to set out reasonable advance estimates of costs, but to notify a client if a change arises in those costs.

Three: A disciplinary tribunal will adjudicate on alleged misconduct by a legal practitioner. The tribunal, to be appointed by the justice minister, will have the same power as the High Court to compel witnesses and the production of documents.