Irish Government's timidity on legal services reform
Reform at governance level in Ireland comes at glacial speed if at all. After decades of delay and in the final months of the 31st Dáil Éireann parliamentary term, the current Irish Government hopes to see the enactment of timid legal services reform proposals with further procrastination provided for in the legislation.
The Honorable Society of King’s Inns is the oldest institution of legal education in Ireland. It's membership includes barristers/ senior counsel and judges and it operates the Law Library where its members work.
King’s Inns was founded in 1541 during the reign of Henry VIII of England who gave the society the lands and properties on which the Four Courts in Dublin was later built. A Dominican monastery on the site had been confiscated by the Crown.
Also in 1541, the Irish Parliament bestowed on Henry the title ‘King of Ireland’ — the writ of this so-called parliament only extended to an English fortified enclave around Dublin known as the Pale (from the Latin palum: stakes used in boundary fences).
Prof Colum Kenny of DCU University has said that the King's Inns' Latin motto, 'Nolumus mutari,' dates from the 1790s and can mean either "We do not wish to change" or "We do not wish to be changed"
King's Inns says on its website: of "10 taoisigh (prime ministers) since the founding of the State, six trained to be barristers: John A Costello, Liam Cosgrave, Jack Lynch, Garret FitzGerald, Charles Haughey and John Bruton.
Mary Robinson, Ireland's first woman president, was also a successful barrister before pursuing a career in politics and then human rights. Her successor, Mary McAleese was also a barrister and law lecturer."
Here is a 1964 presentation by Liam Cosgrave (b. 1920; taoiseach 1973-77) on the King's Inns, to the Old Dublin Society.
According to the Bar Council's annual report 2014/2015, its membership has grown from 995 in 1995 to 2,210 in 2015 — when 51% of the membership have less than 10 years experience.
The number of practising solicitors in Ireland increased by 31% between 2005 and 2014 and a report by Fitzpatrick Associates, a consultancy, which was commissioned by the Law Society of Ireland, showed that the largest 15 firms in Ireland employed twice as many solicitors in 2014 than in 2007.
The number of solicitor members of the Law Society in 2014 was 10,241.
In November 2010, the Government signed a Memorandum of Understanding (MoU) with the EU/IMF on the international bailout. The MoU included a commitment that by the end of the third quarter of 2011 an independent regulator would be appointed while outstanding recommendations of the then Competition Authority would be implemented. In October 2011 Alan Shatter, then justice minister, published the Legal Services Regulation Bill.
While next month will be the fifth anniversary of the commitment on reform, Enda Kenny, taoiseach, will celebrate 40 years as a national politician.
Kenny is not known for interest in reform with the exception of abolition of Seanad Éireann, the Upper House, of the Irish parliament known as the Oireachtas. When a constitutional referendum was held in 2013 on the proposed abolition, Kenny didn't campaign for it and refused to debate the issue on national television. The proposal was defeated.
Earlier this year the UK government was judged to be the most open and transparent in the world, according to a global rankings on the basis of public access to official data. Ireland and Greece at a 31st ranking were among the lowest in Europe with Hungary at 33 — the lowest of all European countries including Russia.
In the final days of the 30th Dáil Éireann parliamentary term in January 2011 the Dáil Public Accounts Committee published a report which showed that public bodies are the largest procurers of legal services in the State with an estimated annual spend of anything up to €500m.
The Committee said it heard evidence to suggest that the cost of legal services in Ireland was amongst the highest in the developed world and it was suggested that the State itself was one of the primary drivers of high legal costs. The Committee also reported that five of the barristers working for the Mahon (Planning) and Moriarty tribunals earned in excess of €5m, with two of them earning almost €10m.
This month the Comptroller and Auditor General in a chapter in his annual report detailed the cost of the bank rescues since 2008. Fees paid by the State to Arthur Cox, Ireland's biggest law firm, amounted to €33m. EY (Ernst and Young), the Big 4 accounting firm, received €21m — in an illustration of the power of such big firms, EY can earn such a sum while being sued on behalf of the State for claimed negligence as an auditor of Anglo Irish Bank. EY has also worked for Irish Water while preparing its defence against the State.
The Irish Times reported this week that there have been 235 amendments to Shatter's original Bill — and it will be subject to more changes before it is signed into law.
Shatter had said his Bill was aimed at bringing the legal profession “out of the 19th century and into the 21st century.”
The Bill provides for an independent legal services regulatory authority, with responsibility for overseeing barristers and solicitors; a legal practitioners’ disciplinary tribunal to deal with professional misconduct, and a legal costs adjudicator to address costs in a more transparent way.
However, key issues such as multi-disciplinary practices are subject to further consultation.
Twenty five years ago the then Fair Trade Commission in its 1990 report recommended that as the ban on direct access to barristers was a restrictive practice, it should be deleted from the Code of Conduct.
A quarter of a century later Enda Kenny's government cannot support the ending of the rule that a barrister has to receive instructions from a solicitor.
A report on the issue will have to be submitted to the justice minister within 12 months of the legal services regulatory authority being established — this is timidity on a grand scale from a government with a huge parliamentary majority.
It also reflects the historical links of Fine Gael, the senior governing coalition party, with the legal professions — understanding the effect of these links including the Irish Farmers Association (IFA) veto on land development reform, goes a long way in explaining the sclerotic governance system, that has not kept pace with the UK changes in the British model that was inherited in 1922.
Proposals for a new profession of conveyancer have also been long-fingered to the new legal services authority.
In 2006 the Competition Authority said in a report:
"The Law Society, the Bar Council and the King’s Inns have not sufficiently promoted the interests of consumers of legal services. They have failed to provide consumers with necessary information for dealing with the legal profession. They have also placed unnecessary limits on how consumers access legal services and on who can become a solicitor or barrister. They have presided over restrictions on competition which may have benefits for lawyers, by sheltering them from competition, but which harm consumers. The overall effect of the myriad restrictions on competition in legal services has been to limit access, choice and value for money for those wishing to enter the legal profession and those purchasing legal services."
In fairness as we Irish say, in recent decades there have been advances in remedies for the public in respect of fraud or negligence by members of the legal professions. My late mother who was no shrinking violet when it came to dealing with authority, had none when dealing with a solicitor — it wasn't a shock that he was dodgy but that a cousin of the local bishop could be so callous! The case of an Irish judge in recent years being jailed for falsifying a will when she was a solicitor, is not typical today, but it's likely fair to say that in rural Ireland stories from the old days about Irish solicitors becoming rich by falsifying wills, are not rare.
National Competitiveness Council's Costs of Doing Business 2014 report
In the World Bank's Doing Business 2015 report on 189 economies — EU regional profile here — legal costs accounted for 26.9% of the cost of enforcing a business contract in Ireland; average attorney costs accounted for 18.8% and the process took 650 days.
The UK data are striking: 39.9%, 35% and 437 days; Germany: 14.4%, 6.6% and 394 days; Finland: 13.3%, 12.5% and 375 days.
An OECD 2013 paper shows that the court budgets in Ireland and England and Wales were 0.1% of GDP (gross domestic product) and across the sample of countries salaries accounted for 65%. However, in Ireland salaries accounted for 36% of the 2010 budget and a similar level was spent on property costs. See page 26 here.
In the UK, the Legal Services Act 2007 authorised what the Irish Government is proposing to be put out to further consultation.
In Oct 2011 the Council for Licensed Conveyancers (CLC) licensed the first ABS (alternative business structure; which can mean 'Tesco law' or 'Walmart law' type services where big brands provide regulated legal services, or multi disciplinary partnerships ), Premier Property Lawyers, the conveyancing arm of property business, Myhomemove.
In Jan 2012, the UK Solicitors Regulation Authority (SRA) started accepting applications from prospective Alternative Business Structures (ABS).
According to Prof Mari Sako of Oxford University, there were 375 ABS structures licensed by April 2015. They comprise public limited companies (PLC), limited companies and limited liability partnerships.
375 out of 10,316 solicitor firms are ABSs and compared to the wider market, ABSs are larger in size.
The Economist in March 2015 in a piece, Attack of the bean-counters, details how accountants are eyeing the legal market while some law firms are preparing for tech disruption:
"In 2011 Allen & Overy, a Magic Circle member, set up a service centre in Belfast to handle routine aspects of big deals. It now employs almost 400 people there, including 70 lawyers, at a fraction of London salaries and rent. At the other end of the market, in recent years groups of mid-tier firms across the globe have linked up to form loosely integrated networks. In January Dacheng of China joined a Western confederation, Dentons, to create an alliance that employs 6,600 attorneys."
The Law Gazette reports that the cost of conveyancing in a home purchase has risen less than fees charged by estate agents and surveyors in the past decade, research has revealed.
The average cost of conveyancing services for a purchase was £1,419 in 2014, amounting to around 12% of the total outlay on house-buying charges, according to a study compiled by Post Office Money and the Centre for Economics and Business Research. That represented an increase of 37% compared with 2004, when the average conveyancing cost was £1,039.
But the rate of increase was significantly less than for other costs associated with moving home.
Stamp duty rose 87% to £3,620 in 2014, estate agent fees increased 61% to £5,214 and surveyors’ fees were up 51% to £607.
Last year, the conveyancing service My Home Move Limited led the way in the UK followed by Stevensons, Countrywide Property Lawyers, O'Neill Patient, and Olswang. They are all ABS firms.
The UK justice ministry is currently reviewing proposals for further changes and adjustments in the laws on legal services.
Law firms in Hong Kong may soon be permitted "to operate as alternative business structures (ABS) under reforms similar to those that have transformed the UK legal market."
In Canada Axess Law opened a law office in the Markham Walmart in January last year. "They now have at least four branches with plans for another seven by the middle of 2015 and then a possible nationwide rollout. Axess offers wills for just $99 and real-estate deals for $1,288, tax and other expenses included. The branches are open seven days a week until 8pm."
With the development of online services, some conveyancers are facilitating clients to check documents online and while conventional solicitors may recoil at seeing routine procedures handled by for example non-legal professionals, the 'The Times They Are A Changin,' as Bob Dylan wrote in his 1964 song.
The conservatives in the Irish Government can delay the inevitable but like King Canute, they cannot stop the tide. Meanwhile Charles Lysaght, who lectured on competition law at London University, and is the author of a study of the Competition Authority Report on Solicitors and Barristers (2006), wrote in The Irish Times on Wednesday on the baby-steps being taken by the Government: 'New legal regulations will not hurt lawyers’ fees - Our system protects lawyers and by so doing inflates the going rate for legal fees.'
Pic above: "Four Courts Conflagration" by National Library of Ireland, at outbreak of Irish Civil War in 1922 Source: Wikimedia Commons. Irish public records dating back centuries were destroyed.
David Morley, senior partner of Allen & Overy and winner of the FT Innovative Lawyers special achievement award for 2015, talks to Lindsay Fortado, FT legal correspondent:
On the 10th anniversary of the first FT Innovative Lawyers report, Lindsay Fortado talks to Reena SenGupta of RSG Consulting and FT associate editor Michael Skapinker about a decade of innovation