I move: "That the Bill be now read a Second Time."
This Bill amends and extends the Solicitors Acts, 1954 and 1960, and provides for related matters. New legislation relating to solicitors occurs relatively rarely. The principal legislation in this area dates from 1954. The legislation in 1960 was made necessary mainly as a result of a 1958 Supreme Court decision that certain disciplinary powers conferred under the 1954 Act were unconstitutional. The present Bill, which is the product of many years work in my Department, is the third major measure in this area of the law since the foundation of the State. I am very pleased and honoured to introduce it.
The background to the Bill is that for some years past there have been continuing demands for changes in the law relating to solicitors. Specific issues and problems arising from the provision of legal services by solicitors, have been raised frequently in parliamentary questions and adjournment debates in this House. There has been persistent public criticism of the way in which complaints about solicitors are dealt with by the Law Society, and about difficulties in obtaining redress for alleged negligence of solicitors. Commitments have been given in this House by successive Ministers for Justice that legislation to amend the Solicitors Acts, 1954 and 1960, would be introduced in response to public demand and to take account of certain recommendations made by the former Restrictive Practices Commission and more recently by the Fair Trade Commission. The Bill will meet most of the demands for changes that have been made.
The Bill proposes extensive changes in the law relating to solicitors. It is a major reforming measure and is being introduced to better protect the interests of clients of solicitors, to promote the highest standards in the profession, and to enable solicitors to adapt and respond to the commercial and economic changes which they are being exposed to, as part of a wider community.
Although legislation exists to control other areas of professional practice, traditionally there has been a more extensive code of statutory measures to control the solicitors' profession, even before the foundation of the State. This has been due, essentially, to the nature of the work of solicitors which involves handling large amounts of moneys belonging to their clients. Unfortunately this can, on occasions, lead to dishonesty by solicitors and possible ruin for clients, if adequate safeguards are not provided.
I hasten to add that the vast majority of solicitors are hard-working and honest professionals, and that the money misappropriated by dishonest solicitors is very small in comparison with the total amount handled by the profession in their dealings with the public. However, it is in the interests of both the public and the profession that adequate statutory provisions are in place to prevent, as far as possible, acts of dishonesty by any member of the profession, and to deal quickly and effectively with such cases as do arise. The proposals in the Bill deal with these concerns, and address other matters where it has been shown that the public need further protection in their dealings with solicitors.
The proposals in this Bill should be viewed also against a background of a rapidly expanding profession. When the 1960 legislation was being debated there were about 1,354 solicitors holding practising certificates in the State, now there are about 3,500 solicitors in private practice. Changes in admission requirements introduced by the Law Society in the summer of 1989 have resulted in a large increase in the numbers of students being admitted to the Society's law school and this increase is likely to continue.
The impact of changes affecting the legal profession will not be confined to the domestic market. Irish lawyers are already entitled to establish practices in other European states under the terms of an EC Directive on mutual recognition of professional qualifications, which was implemented here on 2 January 1991. In fact, Ireland was the first EC state to implement the Directive. Already about 100 Irish qualified solicitors have been admitted to practise in England and Wales under the Directive. Outside the EC the current negotiations on the GATT Uruguay Round extend to the provision of certain legal services, and liberalisation in this area may lead to further possibilities for Irish solicitors wishing to provide services abroad in the future. The increasingly international climate in which lawyers operate, and the general trend towards deregulation of services, needs to be reflected in the statutory provisions which govern members of the legal profession and the manner in which they can conduct their business. This Bill pays due regard to that need.
Naturally, the main focus of a Solicitors Bill will be on domestic matters. Perhaps the most important proposals in the Bill consist of a range of measures which are designed to strengthen the protection for members of the public who engage the services of solicitors and to deal with some specific problems that have arisen in this regard. I believe that a continued policy of self-regulation with adequate safeguards to protect the interests of the public is the best system for controlling the solicitors' profession. The present law confers important powers on the Law Society to regulate and control solicitors. However, adequate safeguards must be in place to protect the interests of the public where a profession is entrusted with self-regulation.
There are major proposals in Part III of the Bill relating to complaints about solicitors. Section 8 will give new powers to the Law Society to impose sanctions on solicitors who are found to have provided inadequate or shoddy services. Heretofore the disciplinary powers under the solicitors Acts, have been confined to cases of misconduct only, which excludes allegations of inadequate or negligent services. Penalties in such cases will include limiting the costs which a solicitor may recover from a client or requiring 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. Section 9 will empower the society to order solicitors, who are found to have charged excessive fees, to refund fees paid by their clients or to waive the right to recover costs.
I am satisfied that these extended powers will provide a speedy and inexpensive remedy for many complaints against solicitors, while not affecting a client's right to seek redress through the courts.
Public concern has been expressed for some time about the lack of an effective system for dealing with complaints against solicitors, and the absence of any public involvement in the process. To meet that public concern the Bill provides in section 15 for the establishment of an independent adjudicator, to investigate complaints about the society's handling of complaints by members of the public about solicitors. Under the proposals my consent will be required for the appointment of the independent adjudicator, and it is specifically provided that the adjudicator, who must not be, or have been, a practising solicitor or barrister, will be independent in the exercise of his functions. Among his or her wide powers, the adjudicator will be able to make recommendations to the society in relation to investigated cases, and in relation to the society's procedures for handling complaints. The adjudicator will be required to report to me in relation to the discharge of his duties, and these reports will be laid before both Houses of the Oireachtas. The Law Society will be required to meet the cost of this operation.
I am aware that the Law Society are opposed to funding the independent adjudicator. I would point out that the introduction of an adjudicator has become necessary here, as it became necessary in neighbouring jurisdictions, for one reason and one reason only — that is the failure of the solicitors profession to live up to the responsibilities implicit in a system of self-regulation, by providing a system for disciplining their members in a way that commands public confidence. It is also necessary to protect the taxpayer in this matter, and it is not unreasonable to expect that, if extra measures are needed to restore public confidence in the arrangements whereby a self-regulating profession deals with complaints from the public, then the profession itself should bear the cost involved, which should not be very great in this case.
Provision is made in section 16 for the appointment, for the first time, of up to five lay members nominated by me to the Disciplinary Committee of the High Court, to represent the interests of the general public. This committee, which is appointed by the President of the High Court, is responsible for conducting inquiries into allegations of misconduct against solicitors. Another new provision, in section 21, will require the Law Society to publish information annually on the number and nature of complaints about the conduct of solicitors, and the outcome of their investigations. This should help to maintain public confidence in the investigation of complaints by the Law Society, particularly in view of the important expansion in the scope of complaints of negligent or shoddy work by solicitors, proposed in the Bill.
It is likely that for cases where serious loss arises as a result of alleged negligence by a solicitor, the client affected will seek redress through the courts. A serious problem in the past has been the absence of arrangements to ensure that funds will be available to meet the cost of damages awarded in such cases.
I understand that the vast majority of practising solicitors are covered by professional indemnity insurance at present, but an important provision is included in section 25 that will enable the Law Society to require all solicitors to be covered by indemnity insurance against losses arising from civil liability claims. The detailed provisions in this section provide a flexible framework for the Law Society to achieve this, and include a provision for arbitration on disputes arising between a solicitor and his client in relation to any claim. Every practising solicitor will have to satisfy the Law Society that he or she is complying with the indemnity regulations, before a practising certificate may be issued to him or her for any practice year. Although I have been assured that the Law Society will introduce the necessary arrangement under these provisions quickly, I have included a provision empowering me to direct the Law Society to make the necessary regulations, and to specify the terms and conditions on which indemnity cover shall be provided under the regulations.
Another problem highlighted in the past, has been the difficulty encountered by some people in obtaining the services of a solicitor for the purposes of taking an action against another solicitor. While acknowledging that the Law Society have made arrangements in recent years to assist such people to obtain the services of a solicitor, the matter is sufficiently important, in my view, to require statutory provisions. Accordingly, section 61 places a statutory obligation on the Law Society to maintain a register of solicitors who are prepared to act for any person who is unable to engage the services of a solicitor to take civil proceedings against another solicitor. The Law Society will also be required to take all reasonable measures to assist any person to obtain the services of a solicitor for such purposes.
The provisions in section 62 address some other very important issues which have come to my attention, and which affect many people who instruct solicitors. These are in the area of solicitor and client costs. A solicitor's client should be entitled to know in advance, what a solicitor will charge or is likely to charge for providing legal services to him or her. Unfortunately, this is not always the case. The Bill places a duty on solicitors to provide clients, at the outset, with particulars in writing of the basis on which clients will be charged for legal services.
In contentious business, for example in personal injury actions, a solicitor will also be required to inform the client of any circumstances in which he or she will be lible to pay additional costs to the solicitor, over and above those recovered from the losing party. At the conclusion of a successful litigated case, a solicitor will be required to provide the client with details of any fees claimed or received from the losing party, if the solicitor proposes to charge additional fees to the client. I am particularly concerned about an apparently widespread 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. Those costs should normally cover most if not all of the necessary costs incurred by the successful client's legal representatives. To deal with this problem, section 62 prohibits solicitors from deducting an amount from clients damages without the prior agreement in writing of the client, and it prohibits solicitors from charging costs to their clients on the basis of a percentage of any damages that may be awarded to a client. A solicitor who is found to be in breach of the new costs provisions will be guilty of misconduct, and will be liable to disciplinary action.
I expect these provisions are unlikely to be welcomed by some legal practitioners, but they are designed to reassure clients about the extent of their financial obligations to their solicitors, and should minimise the potential for disputes between solicitors and clients in this crucially important area.
On the principle that prevention is better than cure, certain provisions have been included in the Bill to empower the Law Society to intervene in a solicitor's practice in certain circumstances to protect the interests of clients. At present, the Law Society's powers of intervention are confined, for practical purposes, to situations where a solicitor has been guilty of dishonesty. Under the provisions in sections 30 and 31, the Law Society will be empowered to intervene in the practice of a sole practitioner who has died or who is temporarily incapacitated by illness or accident, and to take whatever action they deem necessary in the interests of the clients.
The circumstances where the Law Society may apply to the High Court for freezing orders on solicitors' bank accounts are being extended under section 27, to protect clients' moneys held by solicitors. Section 67 places an obligation on the Law Society to make regulations, with the concurrence of the President of the High Court, to require solicitors in general to maintain clients' moneys in deposit accounts, and to pay interest on such moneys to the client. I am aware that the Law Society have already made regulations in regard to this matter, but I believe that a statutory provision is appropriate to offer complete protection to solicitors' clients.
Another proposal which may, on the surface, appear restrictive but which is designed to protect the public is the proposal in section 34 which restricts newly qualified solicitors from setting up in practice, without the consent of the Law Society, as sole practitioners, or in partnership, for a period of three years following qualification. Similar restrictions apply in neighbouring jurisdictions, and solicitors affected by the restriction will have an opportunity to appeal to the High Court.
The proposals in the Bill which I have mentioned so far fall within a general heading of proposals to strengthen the rights, and means of redress, for members of the public in their dealings with solicitors, and to increase the powers of the Law Society to act to protect the interests of such persons where necessary.
There are other proposals in the Bill which will also benefit, directly or indirectly, the clients of solicitors. In this regard I should like to refer to a particular change which is being made in the statutory provisions governing the compensation fund maintained by the Law Society to compensate for losses arising from dishonesty by solicitors. That is a change introduced in section 28 of the Bill which will limit the scope of the statutory compensation fund to clients of solicitors only. The change is necessary as a result of a Supreme Court decision in 1989 which decided that, as presently drafted, section 21 of the Solicitors Act, 1960, gives access to the fund to financial institutions who incur loss as a result of undertakings given by solicitors.
It was never the intention 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 should the solicitor default in circumstances in which the financial institutions are not clients of the solicitors.
Financial institutions, such as banks, have historically relied on solicitors' undertakings for purely business reasons and did so for many decades without any expectation that they would be entitled to have recourse to the compensation fund. That possibility only arose in recent years because of a Supreme Court decision which I have referred to and which gave a particular interpretation to the existing law. Financial institutions are sufficiently strong and have sufficient expert advice available to them to enable them to decide whether to accept a solicitor's undertaking, without having to rely on the compensation fund as a form of insurance. Of course, if there is a default on the part of a solicitor, a bank incurring a loss would be entitled to sue the solicitor personally, or his firm, as at present.
A very large claim against the compensation fund in favour of a financial institution as a result of a solicitor's undertaking, of, say, some millions of pounds could so deplete the fund as to deprive clients of solicitors, whom the fund is designed to protect, of the benefit of being able to claim against the fund.
Solicitors are, of course, in a strong position vis-à-vis their clients and frequently have actual control of clients' moneys. It is in the scheme of things, therefore, that it is the clients who require protection rather than institutions who are doing business with solicitors at arm's length, as opposed to depending on a solicitor and client relationship.
Another group of proposals in the Bill is concerned with measures to increase competition in the provision of legal services and to offer greater freedom of choice to the consumer of these services.
Certain monopolies were created under the Solicitors Act, 1954, which restrict the preparation of particular legal documents for reward to solicitors. These are given legislative expression in section 58 of that Act. The principal monopolies created under the section relate to conveyancing and probate.
Monopolies and restrictive practices reduce choice to the consumer and inhibit competition among suppliers wishing to provide the same service to the public. The solicitors' monopoly of conveyancing work was substantially diluted by the enactment of the provision in section 31 of the Building Societies Act, 1989, which empowers building societies to provide conveyancing services to the public subject to regulations which I am empowered to make.
The Fair Trade Commission, in their report last year on restrictive practices in the legal profession, recommended that banks should be similarly empowered to provide conveyancing services. I agree with the commission's recommendation. It would be clearly anomalous if building societies could provide such services but banks — who compete with the societies in providing other services in connection with property purchase — could not.
Accordingly, section 74 of the Bill contains an enabling provision to empower banks to provide conveyancing services to the public. The provision is based on similar provisions in section 31 of the Building Societies Act, 1989, and includes provisions to protect the public from conflicts of interests and to ensure that adequate compensation will be available in respect of negligence, fraud or dishonesty on the part of any bank providing these services.
I also stress that in making the necessary regulations I intend to ensure that conveyancing services provided by banks and building societies will be provided under the supervision and responsibility of qualified solicitors employed by those institutions.
Finally, I emphasise that this proposal arises from the need to offer greater choice to the consumer in the area of conveyancing services. It is not motivated by any concern about the interests of financial institutions. If those institutions do not offer a sufficiently attractive conveyancing service to the public they will not gain business. If they do then the public will gain.
I believe that changes in the solicitors' monopoly position in regard to such an important matter as conveyancing should be limited for the present to allowing financial institutions to do this work. I believe that it would be premature to go further, as the chairman of the Fair Trade Commission recommended, and permit the introduction of a completely new profession of licensed conveyancer. I think we should wait and see what benefits result for the public from the changes proposed in the Bill, including fee advertising, to which I will shortly refer, before considering if there is a need for more radical measures.
As regards probate, the position at present is that the drawing up of wills for reward is reserved to solicitors under section 58 of the Solicitors Act, 1954, although anybody can make a valid will either for himself or for another person without any professional legal advice if no fee or reward is involved.
Furthermore, anybody may extract grants of probate or administration, both in the Probate Office and in many of the district probate registries, without the intervention of a solicitor if this is not done in return for reward. However, the taking of instructions to apply for a grant of probate or administration when done for reward is reserved to solicitors under section 58 of the Solicitors Act, 1954.
The proposal in section 73 of the Bill would permit banking companies and trust corporations to prepare wills and to take instructions for a grant of probate or administration, or to oppose such a grant, for reward.
Such companies are already entitled to act as executors or administrators of an estate, either solely or jointly with other persons. That is the position under section 30 of the Succession Act, 1965, and I am not aware of any problems that have arisen for the public in connection with the services provided by banking companies and trust corporations in this area since 1965. In effect, the changes proposed in section 73 of the Bill will extend the services which these companies can already provide in this area to the preparation of wills and applications for grants of probate and administration.
For the public, this will introduce an element of consumer choice and the possibility of an alternative one-stop service being provided in regard to wills and probate. Such competition should be to the benefit of clients.
By confining the degree of deregulation in this area to banking companies and trust corporations, which was the minimum measure recommended by the Fair Trade Commission, the interests of the public should receive maximum protection both in regard to redress for complaints about any service provided and the availability of resources to provide compensation where necessary.
Of course, the solicitors' profession may not welcome the prospect that very remunerative areas of legal work such as conveyancing and probate in which they have enjoyed a monopoly for so long are being opened up to others, even to the limited extent proposed in sections 73 and 74 of the Bill. However, the Law Society has been preparing the profession for some time for the need for change and I am sure that the profession will adapt quickly enough to the climate of increased competition in the provision of legal services that is envisaged as part of the policy of this Bill.
I am aware that since the publication of the Bill the proposals in sections 73 and 74 to empower banks to provide conveyancing and probate services have received a lot of public comment. I shall listen with particular interest to the views of Deputies in relation to these proposals. I consider that it would be appropriate and particularly useful to subject the detailed proposals in relation to these matters to careful examination and teasing out on Committee Stage. But I would emphasise that these proposals have been drawn up with the consumer in mind, and in light of the fact that statutory provisions have been enacted already to empower building societies to provide conveyancing services.
Following regulations made by the Law Society in December 1988, solicitors are permitted to advertise their services, subject to certain general limitations contained in those regulations. These limitations include a prohibition on specifying a fee for any service which a solicitor is willing to provide. Advertising of fees is likely to encourage competition in fees, leading to lower costs for the consumer. There is no restriction on solicitors advertising fees and charges in England and Wales. That is believed to have resulted in substantial reductions in costs for the clients of solicitors there, particularly in the area of conveyancing.
I agree with the Fair Trade Commission's conclusion that price advertising by solicitors could lead to increased efficiency, a reduction in costs and the provision of routine legal services at a reasonable cost. Accordingly, section 63 of the Bill contains a provision that would prevent the Law Society from prohibiting fee advertising by solicitors for any specified legal service. I am aware that the Law Society are opposed to this provision, but I have to say that their reaction seemed to me to be somewhat "over-the-top", and their reservations not very convincing.
While I would accept that it might not be possible or practicable to quote a fee for all legal services provided by solicitors, particularly where the service is not standardised, surely it is possible for a solicitor to quote a fee for the routine and standardised work that comprises much of the work for which a solicitor is instructed, for example in the areas of conveyancing and for drafting of wills and probate work. In most of these areas standard scales of fees have applied traditionally, and many solicitors should be able to estimate the economic cost of providing such services to the public and to quote a fee.
The Law Society have suggested that fee advertising is likely to cause confusion and lead to the public being exposed to the risk of "shoddy" or careless work and unsatisfactory legal services. I am rather surprised that the Law Society should take such a negative view of the general level of competence and expertise among qualified practising solicitors. To the extent that individual cases could arise where work done by a solicitor falls short of acceptable professional standards — for whatever reason — I would expect that the Law Society will be able to deal adequately with such cases under the extensive new powers that will be conferred on the society in this Bill. It will remain the responsibility of the Law Society to maintain acceptable general standards of professional conduct in the profession as part of the policy of self-regulation.
Before leaving the question of advertising, I would like to refer to one other aspect of solicitors advertising that is of concern to the Government, this is, the recourse by some solicitors to high profile advertising to make unsolicited approaches to the public inviting instructions in personal injury matters. It is not in the public interest that solicitors freedom to advertise should be used to generate or encourage litigation that would not otherwise arise.
The Government are very concerned about the explosion of litigation in the personal injuries area in recent years, and its impact on the cost of liability insurance. There is evidence from remarks made by judges about the extent of spurious personal injury claims coming before the courts, that a compensation culture is becoming endemic whereby people are encouraged to initiate proceedings in the belief that the most trivial accidents are deserving of compensation as a matter of course. This social development may have received added impetus with the introduction of advertising by solicitors. Specific provisions are included in section 63 of the Bill to enable the Law Society to deal with this problem by prohibiting the type of "ambulance chasing" advertising indulged in by some solicitors and, generally, any advertising that is contrary to the public interest. The type of advertising to which I have referred comes within that description. If the Law Society require any further guidance in this area, I shall be happy to provide it.
A further group of proposals in Part III of the Bill is concerned with disciplinary matters in relation to solicitors. They extend and amend the provisions in Part II of the Solicitors (Amendment) Act, 1960. I have referred already to the fact that, for the first time, the society are being empowered to impose sanctions on solicitors in response to complaints about the provision of inadequate services and excessive charges; that is under sections 8 and 9 of the Bill.
Provisions for appeals by solicitors to the High Court against the society's decisions are included in section 11. In addition, the society may require a disciplined solicitor, under section 13, to pay a contribution not exceeding £1,000 towards the cost of investigating complaints made against him.
Formal inquiries into allegations of misconduct against solicitors will continue to be the responsibility of the disciplinary committee, appointed by the President of the High Court. Under section 17 of the Bill, the disciplinary committee will be empowered to impose limited penalties where it finds that a solicitor has been guilty of misconduct. The disciplinary committee have no powers to impose penalties under the 1960 Solicitors Act. They report findings of misconduct to the High Court, and the court deals with the issue of penalties. That position arose from the Supreme Court judgment in 1958 to which I referred at the outset.
The giving of powers to the disciplinary committee to impose limited penalties, which was also recommended by the Fair Trade Commission, will enable the committee to dispose of some less serious cases of misconduct, without involving High Court proceedings. Provisions are included in the section to enable appeals to be taken to the High Court against decisions of the disciplinary committee, including a right of appeal to clients on the ground that a penalty imposed by the committee is inadequate.
I am advised that the limited powers to impose penalties proposed for the committee will not breach the constitutional requirements laid down by the Supreme Court in the "Solicitors Act" case in 1958. For more serious cases of misconduct the range of penalties which the High Court may impose is being extended to allow for greater choice. That is being done in section 18 of the Bill, which substitutes a new section 8 in the Solicitors (Amendment) Act, 1960.
The restrictions on the employment of persons who have been struck off the roll of solicitors are being tightened by the provisions in sections 19 and 20 of the Bill. The control of the Law Society over the issue of practising certificates to solicitors will be strengthened by many of the provisions in Part IV of the Bill. Section 55 extends the grounds upon which a practising certificate may be refused, or issued, subject to conditions. There are important provisions in section 53 to enable the Law Society to impose conditions on a solicitor's current practising certificate.
Under section 52 the Law Society will be entitled to apply to the High Court to have the practising certificate of a solicitor suspended where there has been a serious failure by the solicitor to comply with any regulations made under the Solicitors Acts. Another new provision, in section 51, will clarify the position about solicitors in employment.
Henceforth any qualified solicitor who is full-time employed in connection with the provision of any legal services will be deemed to be acting as a solicitor for the purposes of the Solicitors Acts. This will mean that all such solicitors will require practising certificates. They will come under the jurisdiction of the Law Society. All measures in the Solicitors Acts designed for the protection of clients will apply to them.
While the changes made by the Law Society in 1989 in the admission requirements for solicitors has eased the position for law graduates wishing to qualify as solicitors, the Bill contains further proposals to ease entry into the profession. Section 45 proposes more liberal arrangements for barristers who wish to qualify as solicitors.
The period of practice required by a former barrister will be reduced to a maximum of three years, compared with five years practice at present. The barrister will be exempted from any Law Society examinations in law which he passed as part of the examinations for the degree of barrister-at-law, and will not have to pass the compulsory Irish language examination for solicitors if he has already passed, or was exempted from the Irish language examination required for barristers.
These changes should greatly assist the general policy of freer interchange between the branches of the legal profession recommended by the Fair Trade Commission. I would hope that generous reciprocal arrangements will be offered by the professional bodies responsible for barristers, to enable practising solicitors to opt to become barristers. There are no statutory provisions regulating that aspect of inter-professional transfer.
