Dáil Éireann Debate, Tuesday - 10 December 2013
75. Deputy Luke 'Ming' Flanagan asked the Minister for Justice and Equality his views on whether it is now time to ensure the Law Society of Ireland is mandated to improve its procedures to deal with complaints against members for malpractice. [52655/13]
View answer83. Deputy Niall Collins asked the Minister for Justice and Equality the steps he is taking in view of concerns raised regarding compensation to victims following the conviction of a rogue solicitor (details supplied); and if he will make a statement on the matter. [52660/13]
View answer96. Deputy Mick Wallace asked the Minister for Justice and Equality in view of recent high profile cases regarding legal malpractice, if he is satisfied that there are sufficient safeguards and protocols in place; and if he will make a statement on the matter. [52667/13]
View answer351. Deputy Niall Collins asked the Minister for Justice and Equality the steps he is taking in view of concerns raised regarding compensation to victims following the conviction of a rogue solicitor (details supplied); and if he will make a statement on the matter. [52680/13]
View answerI propose to take Questions Nos. 75, 83, 96 and 351 together.
Under the Solicitors Acts 1954 to 2011 the Law Society is the designated authority responsible for the regulation of the solicitors' profession in the State. As part of that function, particularly under Part IV of the Solicitors (Amendment) Act 1994 dealing with the 'Protection of Clients', the Law Society is obliged to continue to maintain and administer the Solicitors Compensation Fund. Where it is proved to the satisfaction of the Law Society that any client of a solicitor has sustained loss in consequence of fraud or dishonesty on the part of that solicitor or any clerk or servant of that solicitor arising from that solicitor's practice as a solicitor within the jurisdiction of the State, then, subject to the relevant provisions, the Society is required to make a grant to that client out of the Compensation Fund. It is also provided that before a practising certificate can be issued to a solicitor, the solicitor in question must have paid the annual contribution to the Fund and the issuing of a practising certificate can be withheld until the payment has been made. As such, the Compensation Fund and its attendant inspection procedures under which, I am informed, around 400 inspections were carried out by the Law Society last year, provide an important protection against acts of fraud and dishonesty that may be perpetrated by solicitors in the handling of clients' monies. As Deputies will be aware, the Fund has been relied upon in a number of high profile cases in recent times. In the five years of 2008 to 2012, I am advised the Fund paid out a total of €17.7 million in claims. The total in claims actually made for that same period was nearly €48 million. There was a 9% increase in the 266 claims made against the Compensation Fund in 2012 over the previous year's 244 claims though this remains much less than the peak of 672 claims received in 2008. The net assets of the Solicitors Compensation Fund were valued at €18 million as at 30th June 2013. In the six months up to that date 165 claims on the Fund were received which, excluding invalid claims refused, amounted to €1.16 million. The annual contribution to the Fund for 2013 is €760 per solicitor. Annual insurance cover for €50 million with an excess of €5 million is also in place. Under the Compensation Fund structures provided for under the Solicitors Acts, the Law Society is, therefore, able to respond immediately to serious financial complaints and has 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. Pay-outs by the Compensation Fund have a serious impact, including in terms of ongoing costs, across its entire solicitor membership. To that extent, the Fund has a capacity to strongly incentivise financial compliance by solicitors in the public interest while simultaneously avoiding the imposition of an undesirable burden on the State or public resources. 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. Against this background, I would consider it prohibitive for the State to assume the enormous and ongoing liabilities that may arise directly or indirectly from the acts of fraudulent solicitors or the operation of the Solicitors' Compensation Fund. It would not be in the public interest to carry potential liabilities for solicitors' fraud of tens of millions of euro that would, under such an arrangement, have to be paid indefinitely out of the public purse. However, while it is my considered view that the Law Society should retain responsibility for the Solicitors Compensation Fund, I am happy to report that, under the Legal Services Regulation Bill which is at Committee Stage, any matters of professional misconduct or discipline that may arise from cases of solicitors' fraud or dishonesty are, in the future, to be dealt with independently under the aegis of the new Legal Services Regulatory Authority and the Legal Practitioners' Disciplinary Tribunal.
