Amendments Nos. 85 and 86 are related and may be discussed together.
SECTION 29.
Amendment No. 84 not moved.
I move amendment No. 85:
In page 39, line 3 to delete "£250,000" and substitute £350,000".
This section allows the Law Society to cap the compensation fund. It was originally envisaged it would be a fund to which members of the profession would contribute and that it would provide redress or compensation, on behalf of all solicitors, to people who had suffered through the activities of a rogue solicitor or fraud.
There have been numerous claims on the fund and over the years it appears that the society has become concerned that the level was unsustainable in that one big claim might drain the fund. The premise behind the fund was that the solicitors' profession would, in a mutual way, agree to contribute every year and that the compensation fund would be a source of redress to individual clients who had suffered as a result of the fraud or the criminal activities of solicitors. It never related to negligence claims, only to "rogue" solicitors, as they came to be called.
I understand that for many years the society has been trying to reduce the ambit of the compensation fund to the individual client of the solicitor because it was found it was being drawn on by big concerns, such as solicitors' undertakings and large corporate clients like banks. This legislation will reduce the ambit of the fund to at least the individual client and provides a cap of £250,000 on grants to any one client of a solicitor from the fund in respect of matters arising from the relationship between the client and the solicitor.
The provision essentially means that the maximum amount which the society will be obliged to pay to any one client of a solicitor will be £250,000. The purpose of my amendment is to express concern that to limit this sum to £250,000 would not be sufficient. This amount might not adequately cover the loss to an individual client, even in the reduced way in which a client is defined or envisaged under the Bill. This matter is causing considerable concern to the general body of solicitors because they are contributing to the fund, indeed the fund is made up solely of their contributions.
It is important that the compensation fund remains and in this respect solicitors argue that no other professional body is expected to provide such an indemnity against the fraud of its members. However, the solicitors' profession creates an especially important position of trust as that trust relates to their clients. It is, therefore, in the public interest that there should be an indemnity or a mutual fund to support people badly damaged by rogue solicitors.
The reason for the limit of £250,000 is that all the claims to date against the fund regarding individual clients have been less than that amount and it is, therefore, felt that this is an appropriate figure at which to cap the level of claims on it. Perhaps the Minister will comment on this aspect? However, £250,000 is not enough to protect and guard against what may be the reality of damage to an individual client which may well exceed £250,000. For example, the proceeds of a farm may exceed £250,000 and, given the high price of houses in Dublin, proceeds of a house may exceed this amount.
The Bill provides a discretion to the Law Society to examine individual cases and goes above this limit, and it is in the public interest, not least to ensure that the public have a sense of security on the matter, to retain the compensation fund. However, a limit of £250,000 is not enough to cover all possible claims, even those involving the individual client, which is the ambit to which the fund has been reduced.
Capping puzzles me. If whoever I sue is found guilty of embezzling my money and the guilty party takes £500,000 from me, am I entitled to compensation of only £250,000, as would be the case under this proposal? I am not convinced of the benefit of capping, although I note my party has put down an amendment to increase the cap to £350,000. In this respect, a cap of £250,000 could cause an injustice to some.
The principle of capping is wrong, but if there is to be a cap, £250,000 is too little. My party proposes a cap of £350,000, but I await the Minister's views on the concept of confining any compensation to £250,000, regardless of the way it would work in reality.
I agree with this amendment. How is it fair to award a maximum of £250,000 in the case of a person who has lost a large farm which may be worth £1 million through a solicitor's negligence, or a large business or property the value of which is double, treble or quadruple the value of the proposed cap?
In the interests of fairness and justice there are probably difficulties on this issue, otherwise the Minister would not introduce a cap. However, the whole idea of capping must be considered seriously in the interests of justice. A person going before other adjudicating bodies can be awarded an open-ended amount based on the value of the damage caused, compensation owed or retribution due to the person.
I support the principle of not capping, but I accept that if it is in place there must be a serious problem with abolishing it. I appeal to the Minister to consider the matter carefully. I am not well enough informed to adjudicate which amendment is more meritorious. However, I have serious problem with the principle of capping.
The Government, the Fine Gael Party and the Progressive Democrats all agree with the principle of capping. The only party which disagrees with this principle is Democratic Left, none of whose Deputies is represented on the committee today.
There is a good reason for capping. We wish to protect individual clients and the smaller type businesses who may have to depend on the fund. The section provides that the Law Society of Ireland will have discretion in certain cases to pay by instalments or to postpone payment. This envisages a situation where the society cannot raise all the money it would have to meet in a given year from contributions to the fund.
If I lose £30,000 as a result of my solicitor's misconduct, it is more valuable to me to obtain £250,000 from the society fairly quickly rather than having to wait many years to get back my £300,000 in dribs and drabs, which would happen if there is to much pressure on the fund.
The idea of capping is to maintain the viability of the fund to ensure that solicitors will be in a position to contribute sufficiently to it each year. This will mean that if somebody loses their money, whether it be their life savings, the proceeds of their business of whatever, at least to ensure that solicitors will be in a position to contribute sufficiently to the fund each year. If somebody loses their life savings or the proceeds of their businesses, at least they will have the security and peace of mind of knowing they can receive up to the maximum amount without any great delay, hassle or grief. It is one thing to say there is no capping and the amount payable is unlimited but it is another thing if one is waiting for one's money and cannot be paid by the Law Society this year or next year because of pressure on the fund. This is about maintaining the viability of the fund and giving people peace of mind up to a certain limit.
I wish to make some points about the maximum grant of £250,000 which can be paid to clients of solicitors. Deputy O'Donnell is right in saying we have had no case where an individual was paid more than £250,000. There was one case where a corporate client was paid in excess of this sum. There is provision for the updating of this amount in line with inflation. This is not an absolute maximum and the Law Society can decide to give more in cases of grave hardship.
I am not hung up on the sum of £250,000 in view of the fact that the two main Opposition parties feel it should be more. I am prepared to increase it. I will not announce a figure today, but I will consider the matter and bring in an amendment on Report Stage to increase the sum.
I welcome the Minister's response and will wait until Report Stage. It is unhealthy to have a Dutch auction about what figure should be. Capping is a bad idea. However, grants from the fund will not be for negligence but for fraud and unlawful behaviour. Negligence claims could not be capped because this would be an infringement of constitutional rights as far as I can see, although there is an attempt to do so.
It is being debated.
I accept what the Minister says but do not see the difference between negligence and fraud referred to by Deputy O'Donnell. If I was deprived of £0.5 million I do not think I would be too worried about whether this was due to negligence, fraud or contempt. I still feel for those who will lose money. I accept the Minister's point that it is better to get £0.25 million immediately rather than waiting for tenners over 150 years. An injustice is done if people are deprived of their money and there must be some other way of compensating them. In the long run honest solicitors will pay for the dishonest. They cannot continue paying for something from which they do not benefit. On the other hand, the client who has been deprived of money also has rights and must be looked after. I welcome the Minister's decision to increase the maximum grant which can be made to any client of a solicitor from £250,000 to £500,000.
The logic of what the Minister said is irrefutable and I would not be able to challenge it. I withdraw the assertion I made earlier. I am happy that the Minister is considering raising the capping, which was provided for in the Bill. This is necessary if the Bill is to work as effectively as the Minister wants.
Amendment, by leave, withdrawn.
Amendment No. 86 not moved.
Section 29 agreed to.