This Bill amends and extends the Solicitors Acts, 1954 and 1960, and provides for related matters. It is 40 years since the principal legislation, the Solicitors Act, 1954, relating to the solicitors' profession was enacted. The Solicitors (Amendment) Act was made necessary mainly as a result of a Supreme Court decision that disciplinary powers conferred on the Law Society by the 1954 Act were unconstitutional.
This Bill is a product of a thorough assessment of the experience of the basic legislation in practice. The Bill also recognises developments in the legal services field and changing conditions under which legal services are provided by solicitors to their clients. It also represents a major reworking of the Solicitors (Amendment) Bill, 1991 which lapsed following consideration by a special committee on the dissolution of the 26th Dáil.
The Bill introduces major reforms and is intended to provide a modern legislative framework for the solicitors' profession. Many of my predecessors have signalled their intention to introduce legislation amending the Solicitors Acts. For my own part, I am happy to have the opportunity to bring this legislation before the House. In addition, the Bill meets the commitment in the Programme for a Partnership Government to provide greater protection for clients of solicitors. It also take account of a number of recommendation made by the former Fair Trade Commission.
The Bill proposes a wide-ranging reform of the law relating to solicitors involving almost every aspect of the regulatory framework of the profession. It provides for four broad categories of reform. The first of these ensures that clients of solicitors are better protected by the law in their dealings with solicitors. Second, it requires the profession to maintain the highest standards of conduct and a strict disciplinary system. Third, it provides for more competitive conditions regarding the provision of legal services. Finally, it updates the training and educational arrangements for solicitors. Of course, these broad objectives are in many ways complementary. For example, clients clearly stand to benefit from a tightening of standards of conduct in the profession.
The first major area of reform relates to the rights of the consumer of legal services provided by solicitors. My main concern is to ensure that the client's interests are fully protected in the client/solicitor relationship. This aspect of the Bill, perhaps more than any other, is driven by changing circumstances, especially in the legislative area, since the inception of the principal legislation 40 years ago.
Consumer's rightsper se were not generally recognised in legislation of that period. Today, however, there is in place a substantial body of what I would refer to broadly as consumer law. It is entirely appropriate that the legislation regulating solicitors' conduct and practice builds on and contributes to the development of consumers' rights in law.
The Bill contains many consumer driven measures. Solicitors' clients will have the right to redress where a solicitor provides inadequate services or where charges for services are excessive. For the first time solicitors will have to be fully insured against damages awarded to clients arising from civil liability claims against their solicitors. The Bill increases the power of the Law Society and of the High Court to intervene in the practice of a solicitor in the interests of clients. Solicitors will have to provide clients with clear information regarding the cost of their services while percentage charging is being prohibited.
One of the most significant provisions is the setting up of a scheme for the investigation of complaints by an independent adjudicator regarding the Law Society's handling of complaints about solicitors. The Bill was introduced against a background where there had been persistent public concern about the way in which complaints concerning solicitors are dealt with by the Law Society. The setting up of an office of independent adjudicator is an innovative approach to this problem and will, I am confident, do much to restore public confidence in complaints handling procedures.
With regard to disciplinary matters, the supervisory powers of the Law Society and of the High Court are enhanced. New tighter controls with heavy sanctions where client's funds are not handled in accordance with regulations are also being introduced.
To improve the competitiveness of solicitors' services, the Bill contains new initiatives regarding advertising of legal services and the provision of probate services. In addition, Part V of the Bill updates and streamlines the training and educational provisions of the existing legislation, amending extensively the Law Society's functions in this area.
I now propose to elaborate on some of the details of the Bill. Section 8 gives the Law Society new power to impose sanctions on solicitors who are found to have provided inadequate or shoddy services. The society will be empowered to limit the cost which a solicitor may recover from a client, or require a solicitor to refund costs paid by a client and to rectify any error at the solicitor's own expense arising from the inadequate services. Under section 9, the society will be empowered to order solicitors to refund fees paid by their clients or to waive the right to recover costs where those solicitors have been found to have charged excessively. These are practical and accessible measures which will provide a speedy and inexpensive remedy for many complaints against solicitors and they do not affect the client's right to seek redress through the courts.
The Law Society is empowered under section 10 of the Bill to require a solicitor to produce any documents relating to a complaint made against him or her which the society is investigating. This is intended to facilitate investigations under sections 8 and 9. Under section 12, the society will have new powers to enable it to recover from a solicitor some of the costs which it may incur in investigating complaints made under sections 8 or 9 of the Bill. To ensure fairness in the law, the new powers being conferred on the society by sections 8, 9, 10 and 12 may be appealed by solicitors under section 11.
In recent years public confidence in the manner in which complaints about solicitors are handled has reached a very low ebb indeed. There is widespread dissatisfaction about the profession's complaints procedures. What is needed is an effective and transparent system for dealing with complaints against solicitors. In response to this, section 15 provides for the setting up of an independent adjudicator to investigate complaints about the society's handling of complaints against solicitors.
The adjudicator will have wide powers, including the power to fully reinvestigate the original complaint made to the society about a solicitor if he or she is dissatisfied with the society's investigation of any complaint made to it. The adjudicator may also direct the society to reinvestigate a complaint if he or she is not happy with the society's original investigation.
The Minister's consent will be required for the appointment of the adjudicator who, it is specifically provided, will be independent in carrying out his or her functions. Additionally, the adjudicator must not be a practising solicitor, a member of the society or practising barrister. I am satisfied that the independence of the adjudicator is further ensured by the requirement to report annually to the Minister. These annual reports of the adjudicator will be laid before both Houses of the Oireachtas.
I am aware that the society is opposed to the funding of the adjudicator scheme. I have little sympathy with that viewpoint. The introduction of this new complaints apparatus has become necessary because of the failure of the solicitors' profession to live up to the responsibilities of self-regulation. That failure should not give rise to a cost on the taxpayer. The profession itself should bear the cost involved and section 15 provides precisely for that.
To further enhance public confidence in the profession's disciplinary system, section 16 provides for the appointment, for the first time, of up to five lay members nominated by the Minister to the disciplinary committee of the High Court to represent the interests of the general public. This committee, which from now on will be known as the disciplinary tribunal, is appointed by the President of the High Court and is responsible for conducting inquiries into allegations of misconduct against solicitors.
Section 17 empowers the disciplinary tribunal to impose limited penalties where it finds that a solicitor has been guilty of misconduct. This will enable the tribunal to dispose of some less serious cases of misconduct without involving High Court proceedings which are necessary under the present legislation. This was a course recommended by the Fair Trade Commission and I am satisfied that it will improve the efficiency of disciplinary procedures. I referred earlier to the Supreme Court decision in the "Solicitors' Act" case that powers conferred on the Law Society by the 1954 Act were unconstitutional. I am advised that the new powers being conferred on the disciplinary tribunal under section 17 will not breach the constitutional requirements laid down in that case. The tribunal's new powers include directing a solicitor to pay up to £5,000 to the compensation fund and to pay up to £5,000 as a restitution to an aggrieved party.
Section 18 extends the existing powers of the High Court to impose penalties on solicitors where the disciplinary tribunal reports a finding of misconduct against a solicitor. Section 22 will oblige the Law Society to publish information annually on complaints received about solicitors and the outcome of investigations by the disciplinary tribunal of complaints alleging misconduct. This move improves the transparency of these procedures. I hope that making this information generally available will help to restore public confidence in the manner in which the Law Society handles complaints.
In the past, funds were not always available to meet the cost of damages awarded to clients arising from negligence on the part of their solicitors. Section 26 addresses this by enabling the Law Society to require all solicitors to be covered by indemnity insurance against losses arising from civil liability claims. The vast majority of practising solicitors are, in fact, covered by professional indemnity insurance but this provision constitutes an important additional safeguard. Practising solicitors also will be required under section 54 to satisfy the Law Society that they are complying with the indemnity insurance requirements before practising certificates are issued to them. This question of solicitors' insurance is an urgent matter and the Law Society has assured me that it will introduce the necessary arrangements under section 26 as quickly as possible.
The Law Society can intervene in a solicitor's practice in limited circumstances. Experience has shown that the grounds for intervention should be extended to protect the interests of clients. Under the provisions of sections 31 and 32 the Law Society will be empowered to intervene in the practice of a sole solicitor who has died or who is incapable of managing his or her affairs through illness, or because of an accident, or who is adjudicated a bankrupt, or who abandons his or her practice. In such circumstances, the society will be empowered to take whatever action it deems necessary in the interests of the clients. Where the conduct of a solicitor is likely to give rise to the payment of grants out of the compensation fund, the High Court may authorise the society to sell that solicitor's practice under the provisions of section 33.
Section 28 extends the society's powers to apply to the High Court for an order to freeze bank accounts where it believes that a solicitor has been guilty of dishonesty. It also gives the society a new power to apply for an order to freeze the assets of a solicitor.
Section 37 restricts newly qualified solicitors from setting up in practice, without the consent of the Law Society, as sole practitioners for a period of up to three years following qualification. A newly qualified solicitor will be able to enter a partnership but only if a prospective partner has been engaged fulltime in the provision of legal services for at least three years. Clients stand to benefit from this provision, the purpose of which is to ensure that young solicitors develop sound practice habits during this period.
Issues relating to solicitor and client costs are addressed in section 68. I am particularly concerned that this Bill ensures maximum transparency in this aspect of solicitor/client dealings. Clients should be informed in advance about a solicitor's charges or likely charges for providing legal services. As it stands it is quite usual for clients to be left in the dark about the cost of the solicitor's services. There can be great uncertainty and often it is only when the business is over and done with that clients learn of the full liability to their solicitors. I feel sure that Senators will agree that this situation badly needs to be changed. Not all legal business lends itself to a ready calculation of actual charges in advance; I have in mind especially contentious matters. However, section 68 offers a very flexible structure for providing statements of charges, and solicitors should have little or no difficulty in complying with it. Solicitors will have to provide clients, at the outset, with particulars in writing of the actual charges or, where this is not possible, an estimate or, if neither is possible, the basis on which they will be charged for legal services.
In contentious business, such as personal injury actions, solicitors will also be required to inform clients where they will be liable to pay additional costs to the solicitor over and above those recovered from the losing party. When the contentious business is disposed of, solicitors will be required to provide clients with details of the legal services provided, damages and costs recovered and, separately, the charges for the solicitor's services.
I am confident that this section alone goes a long way towards assisting clients in their dealings with solicitors. Section 68 ensures that the client gets the maximum information possible, at the outset and at the conclusion of business, about the costs of a case and the costs of dealing with solicitors.
I mentioned earlier that this Bill will prohibit percentage charging. I want to explain the case for this provision. The practice among solicitors of deducting a substantial premium — often 10 per cent or more — from the damages awarded to their clients in personal injury cases, over and above the costs payable by the losing party, is apparently widespread. One objection to this practice is that clients have no way of knowing what they will eventually have to pay as the charge is based on a fixed percentage of an unknown quantity of damages. In any event, party and party costs — that is the costs that the losing party pays the successful party — should normally cover most if not all of the necessary costs incurred by the successful client's legal representatives.
Section 68, therefore, prohibits solicitors from deducting an amount from clients' damages without the prior agreement in writing of the client. The section also prohibits solicitors from charging costs to their clients on the basis of a percentage of any damages that may be awarded to a client. Again, this provision will help the client to decide what he or she is getting into when taking a legal action.
Section 76 faces up to the difficult issue of serious dishonesty in the solicitor's profession. Senators will not need me to tell them that the reputation of the profession has been harmed by a small number of solicitors who have misappropriated or absconded with clients' funds. That is both unfortunate and regrettable. Solicitors are often entrusted to handle very large amounts of money belonging to their clients. That is in the nature of the work that solicitors are required to do. But that is not, of course, any excuse for dishonesty on the part of the solicitors. On the contrary, this should establish a special relationship of trust between solicitors and their clients, and in fact the law recognises that there is a fiduciary relationship between solicitor and client.
This special relationship of trust is abused by solicitors who misappropriate their clients' money. I must first stress my belief that the vast majority of solicitors are hard working and honest professionals. It is a fact that the money misappropriated by dishonest solicitors is very small in comparison with the total amount handled by the profession in its dealings with the public.
There is a problem here nevertheless, and I know that the society is as determined as I am to tackle this abuse. To deal with this problem, section 76 creates criminal offences for breaches of a number of new requirements in relation to the handling by solicitors of clients' moneys. Solicitors will be required to keep clients' funds in bank accounts prescribed by the society and to maintain an accurate record of transactions involving those funds. The society will also be empowered to enforce these provisions. A maximum fine of up to £10,000 will apply where these requirements are breached and I am confident that strict enforcement of these provisions will make significant inroads into this problem.
Section 76 provides for a quick and more effective system of dealing with such cases of dishonesty as they arise. The major impact of this section will be to act as a significant deterrent against abuse involving clients' moneys.
Section 73 obliges the society to make regulations with the concurrence of the High Court requiring solicitors in general to maintain clients' funds in deposit accounts or to pay them the interest on such moneys. The Law Society has already taken action in this area but I am convinced it is appropriate in the public interest to make statutory provision for these matters.
Section 29 of the Bill dealing with the compensation fund will also benefit the clients of solicitors although perhaps less obviously than some of the provisions to which I already referred. The fund is maintained by the Law Society to compensate for losses arising from dishonesty on the part of solicitors. The Bill introduces two major changes in the provisions governing the compensation fund. The first concerns section 21 of the 1960 Act which provides that any person suffering loss can be compensated from the fund. A Supreme Court decision in 1989 interpreted this as giving access to the fund to financial institutions incurring loss as a result of undertakings given by solicitors. Section 29 of the Bill will limit the scope of the compensation fund to clients of solicitors only, an important refinement. It was not the intention in drawing up the 1960 Act that financial institutions engaged in large financial transactions, in pursuit of their own business and relying on undertakings from solicitors, should be able to claim against the compensation fund if the solicitors default in circumstances where the financial institutions are not clients of the solicitors.
Banks and other financial institutions have always relied on solicitors' undertakings for purely business reasons and without any expectation that they would be entitled to have recourse to the compensation fund. They are in a very strong position to protect their own interests. These institutions should not have to rely on the fund as a form of insurance considering the resources at their disposal and the expertise available to them in deciding whether to accept a solicitor's undertaking.
The second change affecting the compensation fund is the application of a cap or maximum grant limit of £350,000 in respect of a claim made on the fund. I am satisfied that this limit will provide more than adequately for the vast majority of claims for compensation made against the fund by private individuals and small businesses whom the fund was primarily designed to protect.
Nevertheless, if a claim in excess of £350,000 arises, section 29 provides that the society may grant an amount in excess of £350,000 in cases of grave hardship. I am also empowered to increase the cap of £350,000 in line with inflation. I should point out that I have set the cap at a level well in excess of the maximum amount that has ever been paid in respect of a claim on the fund by a non-corporate client of a solicitor. I am satisfied there is a compelling case for this cap.
Without these amendments, there would be the continuing risk of large financial institutions lodging claims against the fund of the order of perhaps several millions of pounds. Such huge claims would, inevitably, deplete the fund and it would become impossible for the Law Society to make good losses suffered by clients of solicitors for whom the fund was designed to protect in the first place.
Regulations made by the Law Society in 1988 permit solicitors to advertise their services, subject to certain general limitations, including a prohibition on specifying a fee for services. Section 69 provides for the removal of that restriction and prevents the Law Society from prohibiting fee advertising by solicitors for any specified legal charge.
The society is not happy about this provision. One objection to it is that clients are not in a position to assess in advance the quality of the service being offered and are likely to be misled if they make decisions solely on price. This is not a valid objection.
First, the Bill gives the society powers to deal with false and misleading advertising. Secondly, I have more faith in consumers than perhaps the society has. Consumers make important financial decisions for themselves in relation to services and products on a day-to-day basis. Users of legal services are accustomed to making decisions about the quality of services offered by solicitors who have advertised their services since 1988 although fee advertising continues to be prohibited by the society. Price is clearly a key factor that consumers take into account but there are also other factors such as the reputation of the supplier, dependability and quality of service. Withholding information about the price of the service denies the consumer the opportunity of making the optimal choice.
I am not suggesting that it would be possible to advertise the prices of all services provided by solicitors. I have already touched on this point in relation to the information that a solicitor will have to provide to a prospective client at the outset of business. However, there are services of a more routine and predictable nature which will be suitable for price advertising, such as conveyancing and probate. There is no evidence to suggest that price advertising in England has had the dire consequences predicted by the society. In fact it is understood to have resulted in substantial reductions in costs, particularly in the area of conveyancing.
The society also suggests that price advertising is likely to expose the public to the risk of shoddy work from unscrupulous solicitors. However, they are very much in the minority and I take it that the society is not suggesting otherwise in its objections to this provision. The Oireachtas has delegated to the society the responsibility to maintain a high general standard of professional conduct under the Solicitors Acts. Moreover, sections 8 and 9 of the Bill give the society new and additional powers to deal with shoddy or inadequate services while the Bill generally strengthens the society's regulatory functions.
The society, therefore, will have sufficient powers to deal with false or misleading advertising and to crack down on unscrupulous solicitors who provide less than quality services to their clients. No doubt the society will deal vigorously with any such cases that may arise.
While I am confident that the consumer stands to benefit from fee-advertising, I am aware that concerns have been expressed about this provision in the Bill and I accept that they are genuinely held. Therefore, I have decided to include in the Bill a failsafe provision which will allow the experience of fee-advertising to be reviewed over time. This will enable the society to prohibit fee-advertising in respect of given services but only with the consent of the Minister where she is satisfied that prohibition is in the public interest.
Section 78 opens up will-making and probate services to competition from credit unions. I am a proponent of greater competitiveness in the provision of services generally as I believe that invariably the consumer stands to benefit. In relation to the relatively specialised services such as those in question, however, we should proceed very cautiously down this road. It is reasonable to allow credit unions to compete with solicitors for this business as they are generally small organisations operating at local or community level and function on an nonprofit making basis for the benefit of their members. They should be enabled to provide will-making and probate services subject to the comprehensive safeguards in section 78. One of these is that credit unions will not be allowed provide these services until they are subject to the scheme of investigation of complaints provided for in section 79 of the Bill, or a similar scheme.
The Solicitors Acts contain restrictions on the organisation of solicitors' practices. Incorporation by solicitors, multidisciplinary practices involving solicitors and members of other professions and multi-national practices involving Irish solicitors and lawyers from other jurisdictions are not permitted under the Acts.
Clients may benefit from changes in the structure of working arrangements in the profession. I do not think that we should rule out the possibility of future developments in these areas and, accordingly, sections 70 and 71 enable the Law Society to bring forward regulations — which will require the concurrence of the Minister — to provide for these new forms of working arrangements.
Incorporation by solicitors is currently prohibited which may be over restrictive nowadays. The professions in England, Wales and Scotland are no longer prohibited from engaging in such working arrangements. Similarly, inter-professional marketing developments here may dictate the pace of development of multi-disciplinary practices involving solicitors. Developments in the EU and further afield suggest that movement towards multi-national practices may be inevitable. Again, both multi-disciplinary and multi-national practices are permitted in England and Wales. These sections are framed so that the Minister will have sufficient powers to ensure that the interests of clients are adequately protected, if such new working arrangements are ultimately introduced.
Part V of the Bill contains the final major area of reform. It provides for a number of significant changes relating to the education and training of solicitors. The subject of legal education is currently being debated by both branches of the legal profession. The central issue here is rationalisation of the present system, including resources and the structure of legal training.
An advisory committee on legal education and training comprised of representatives from the Law Society, the Bar, the universities, IBEC, ICTU, the Union of Students in Ireland and the Higher Education Authority is currently considering proposals for rationalisation. The Minister is also represented on that committee which is chaired by the Honourable Mr. Justice Ronan Keane. I hope to see progress in this area before too long. Section 49 of the Bill provides that the Law Society may join with other bodies in holding examinations leading to a joint or common qualification. This has been designed to anticipate arrangements for joint vocational training which I hope will result from rationalisation of the current position. I expect, in time, that suitable use will be made of these new provisions.
Changes in admission requirements for intending solicitors, which were introduced by the Law Society in 1989, have resulted in a large increase in the number of students being admitted to the society's law school. Since then, law graduates no longer have to sit the society's entrance examination once they have passed exams in certain subjects prescribed by the society as part of their degree course.
There is a problem, at present, for intending solicitors seeking admission to the society's law school in obtaining apprenticeships. Apprenticeship is a prerequisite for entry to the society's law school and, ultimately, to the profession. There are a number of provisions in the Bill which will assist the profession in providing apprenticeships.
Section 47 allows a solicitor to have two apprentices instead of one and to have an apprentice for every two assistant solicitors. Section 42 reduces the period of apprenticeship from a maximum of five years to a maximum of two years. Section 44 reduces the minimum period of continuous practice required before a solicitor may take on an apprentice from seven to five years and section 53 enables the society to make regulations providing that apprenticeships may be served in Northern Ireland, England and Wales.
I am confident that the cumulative effect of these provisions will be to ease the pressure on obtaining apprenticeships. This will allow many well qualified graduates to get a foot hold in the profession. In particular, increasing the number of apprentices which a solicitor can have will allow a solicitor with the capacity and the work to take on extra employees.
Section 51 of the Bill will facilitate freer interchange between the barristers' and solicitors' professions and was a course recommended by the Fair Trade Commission. This section provides for exemptions from the society's examinations for barristers wishing to be admitted as solicitors. It reduces from a maximum of five years to a maximum of three years the period of practice at the Bar required by such persons. I sincerely hope that the Bar Council can reciprocate to enable practising solicitors to move more easily into the other branch of the legal profession.
Part VI of the Bill strengthens the control of the Law Society over the issue of practising certificates. Section 61 extends the grounds upon which a practising certificate can be refused or issued subject to conditions, while section 59 empowers the society to give a direction imposing conditions on a current practising certificate. In addition, section 58 allows the society to apply to the High Court where the society considers there has been a serious failure on the part of a solicitor to comply with the Solicitors Acts or with conditions imposed on a practising certificate. The court may suspend a solicitor's practising certificate in such circumstances.
Part VII contains a number of miscellaneous provisions. I will mention section 67. From time to time in the past, members of the public have experienced considerable difficulties in engaging the services of a solicitor to take an action against another solicitor. The Law Society can, and does, make arrangements to assist persons contemplating actions against solicitors, but I think it is more appropriate in the public interest to ensure that adequate statutory arrangements are in place to cater for this situation. Accordingly, section 67 of the Bill requires the society to maintain a register of solicitors who are prepared to act for any person who is unable to find a solicitor to take civil proceedings against another solicitor. The society will also be required to take reasonable steps to assist a person to obtain the services of a solicitor for such purposes.
The main challenge posed in formulating these proposals was the need to strike a balance between protecting the public in their dealings with solicitors and providing for a regulatory framework giving the solicitors' profession latitude to provide a range of high quality legal services. I am confident that this Bill gets that balance right.
This Bill is, more than anything else, a blueprint for reform which provides for the needs of clients of solicitors while, at the same time, revitalising the profession as it faces changing conditions now and in the future. The proposals in the Bill are consistent with the overall policy of self regulation by the profession. However, that policy of self regulation needs to be counterbalanced and supplemented with safeguards to protect the public interest. This Bill provides for such safeguards. Many provisions in the Bill call for change and innovation on the part of solicitors. I am confident that this old and honourable profession will adapt to the changes proposed in the Bill and will continue to prosper.
I look forward to an interesting and lively debate on the many issues which arise and I will be happy to provide further explanation to Senators of any particular provisions they may wish to raise.