Files reveal campaign by legal professions to safeguard privilege

Bar Council and Law Society determined to water down Legal Services Regulation Act

After an effective lobbying offensive by two of the most powerful professional bodies in the State, the final package was rather different to the original. Photograph: The Irish Times

After an effective lobbying offensive by two of the most powerful professional bodies in the State, the final package was rather different to the original. Photograph: The Irish Times

 

A few weeks ago, President Michael D Higgins signed into law a long-delayed but contentious overhaul of the legal professions. These measures, which aim to cut high legal costs, had been resisted very strenuously by barristers and solicitors. After a four-year campaign, however, their professional bodies secured big concessions which preserve many of their main powers.

The Bar Council and Law Society never made any secret of their distaste for large tracts of the Legal Services Regulation Bill, introduced in October 2011 by then minister for justice Alan Shatter. In public and in private, the defence of their territory was forceful. Quite how forceful is clear from voluminous Department of Justice records, released to The Irish Times under the Freedom of Information Act.

These files reflect an unrelenting campaign by professions to safeguard their privileged position. They had continual access to high-level department officials and were informed of key Government decisions well before they were public. At one point, the Bar Council was given draft amendments to the legislation before they were presented to Cabinet. The council found some of these amendments “controversial” – and declared they should not be taken by Cabinet as the “consultation” with it was incomplete.

All told, the council made a dozen formal submissions to the department. There were scores of letters and emails from the Law Society on policy and technical matters. At assorted meetings with the department, the two bodies set out a litany of complaints about the scope and structure of the proposed overhaul.

Although the department’s records point to concern within the State system that the original proposal did not go far enough to curtail high legal costs, the final package was substantially watered down via amendments. After centuries of self-regulation, the essence of it all is that the new system provides independent regulation of barristers and solicitors. Even though the new regime will blunt the influence of Bar Council and Law Society, they saw off what they regarded as the most damaging elements of the plan.

It has already been established, from a Cabinet memo seen by this paper, that some concessions the Government granted in late 2015 were made under the implicit threat of a Bar Council legal challenge. It is also known, from separate FOI records, that the Law Society brought its anxieties directly to Taoiseach Enda Kenny in December 2011 and that the Bar Council directly lobbied Mr Kenny in May 2013.

Ultimately, the Bar Council retained the right to refuse membership of the Law Library to barristers in employment, partnerships or new business models. The Law Society retained financial and accounting oversight of solicitors. Such developments were acknowledged within Cabinet to raise questions over the potential to reduce costs within the new regime.

Reform

Long criticised for high fees and high barriers to entry, the legal professions had faced demands for reform for decades. A major Competition Authority report in 2006 made the case for change, but its most fundamental recommendations went nowhere. In the EU-IMF bailout of late 2010, however, a requirement for a far-reaching reform was built into the deal.

When Fine Gael and Labour took office in 2011, they promised independent regulation to improve access, foster competition and make costs more transparent. The task fell to Mr Shatter, a family law solicitor attuned to the arcane ways of the law. Succeeded in May 2014 by Frances Fitzgerald, he was long gone from the justice portfolio by the time the President signed the new law on December 30th, 2015. Mr Shatter’s original Bill was published in October 2011. The previous July, according to FOI records, he met the Bar Council and Law Society to discuss the forthcoming legislation.

A preparatory note for Mr Shatter highlights the Law Society’s many problems with the Competition Authority proposals. It also cites the Bar Council saying it had addressed the question of fees by putting in place a “mandatory requirement” that barristers must provide estimate of costs.

In August 2011 Bar Council director Jerry Carroll sent a “private and confidential” letter to Mr Shatter with which he attached a submission on the proposal to eliminate rules under which barristers must practice as sole traders instead of in partnerships. A further submission addressed proposals to allow direct access to barristers for clients, instead of indirect engagement via a solicitor. He said the council’s position was to “the benefit of competition, the client and the administration of justice”. Sample headings from the submission illustrates his point: “Disadvantages for legislating for direct public access; Cost reduction claims misguided; Public interest in retaining present business structure; The Law Library is a cost-effective model.”

Weeks after publishing the Bill, Mr Shatter met a Bar Council delegation on November 4th, 2011. Present with Mr Carroll were council chairman Paul O’Higgins SC, vice-chairman Declan Doyle SC and David Barniville SC.

The department’s note of the meeting cites Mr O’Higgins expressing concern about the costs and structure of the new regulatory body, the lack of consultation and provisions for multidisciplinary practices in which lawyers could work alongside accountants or other professionals. “He also expressed the view that barrister partnerships would not be conducive to lower costs to clients.”

Disputed

Divisions are clear from the council’s own note of the meeting, sent to the department in December with a 63-page “initial submission”. On the disputed model of direct regulation, this note cites Mr Shatter saying he and the council would “have to agree to disagree”.

The submission itself found serious fault with the Bill for going beyond the Competition Authority’s recommendations and beyond bailout terms agreed with the troika.

It also took issue with Mr Shatter.

“Such communications with the minister as have been afforded to members of the Bar Council have not provided any opportunity for meaningful discussion of the proposed reforms; indeed, at the meeting on July 11th, 2011, the minister sought to understate the nature and extent of the reforms which would be included in the Bill and indicated that he had not made up his mind on any of the issues and that nothing was set in stone.”

Mr Carroll wrote again in March 2012 to Mr Shatter, enclosing a 48-page document with proposed numerous amendments to the Bill. The council also sent the submission to the Oireachtas justice committee, at the committee’s request.

Mr Barniville spoke for the Bar Council at the Oireachtas committee on March 21st, 2012, and said: “We believe that the type of regulation proposed in the Bill is not efficient, effective or in the public interest because it is likely to increase the cost of the provision of legal services.”

There was a similar sequence of engagements with the Law Society. Its then president Donald Binchy, now a High Court judge, complained about the Bill when he spoke that day at the Oireachtas committee. “I am concerned there may be an ill-advised drive to push through this legislation without proper consideration for its practical implications and its interaction with the existing legislation.”

The FOI records show a delegation from the society – including its director general Ken Murphy – had met Mr Shatter and justice officials on January 16th, 2012.

The department’s note says Mr Binchy questioned why Mr Shatter chose the regulatory model, not what the Competition Authority recommended, but the Minister refused to be drawn into explaining.

Mr Binchy wrote a “private and confidential” letter to Mr Shatter on February 17th, 2012, enclosing a 100-page submission which aimed to “set out the serious concerns the society has regarding a number of provisions in this Bill, the reasons for such concerns and proposed amendments”, he said. A sample of headings from the submission, which also went to members of the Oireachtas committee, give a sense of the society’s many anxieties: “The myths of ‘self-regulation’ and regulatory failure; independence issues; introduction of Government-controlled regulation; serious threats to legal professional privilege.”

Although the society also wrote in January 2012 to Attorney General Máire Whelan SC, the correspondence was deemed exempt from FOI release.

For all that, these opening exchanges set in train a long sequence of contracts with the society. The FOI records cite 32 separate items of correspondence between December 2011 and November 2015, one of which includes a 214-page compendium of 51 emails exchanged in the course of 17 months in 2014-2015.

Once the Bill was introduced in the Dáil, attention shifted to the long process of amending the legislation as it made its way through the house and the Seanad. The views of the professional bodies were clear from the outset. But there was pressure within the State system to stay the course with the legislation, or to go further.

The records include a memo in February 2012 from Eunice O’Raw, legal counsel to the Health Service Executive, on the “vital assistance” the Bill would provide in addressing “excessive legal costs.” Noting that the HSE was the State’s largest purchaser of legal services, the memo stressed the importance of the “competitive dynamic” in the legislation. The HSE spent €40.6 million on legal services in 2010.

The O’Raw memo said HSE costs had been “inexplicably high”. “On occasion, brief fees demanded were of the order of €60,000 or €80,000. Such brief fees for single cases equate with the annual salaries of crown prosecution counsel in England and Wales.”

Costs

There was more. FOI records show that Paul Appleby, then director of corporate enforcement, wrote in February 2012 to Minister for Jobs Richard Bruton to say the Bill should go further in relation to costs.

“We have doubts that the Bill in its present form will deliver fundamental change in the manner in which legal costs are determined,” Mr Appleby said.

“In particular, we have little confidence in the ability of the Bill as currently drafted to control, and where necessary, reduce the very high level of legal costs of the State, the business community and to citizens generally.”

The committee stage Dáil debate opened in March 2012, but it did not resume until July 2013. Two further meetings followed in January and February of 2014 before the committee stage debate reached its conclusion. Despite long public delays, action continued behind the scenes. At a meeting with the department on June 13th, 2013, the Bar Council again raised concern about multidisciplinary practices. The aim was to create a “one-stop shop” in which lawyers worked with other professionals, but the council was opposed. It was “ unhappy” that the decision was made “without the benefit of detailed research on whether it would work in Ireland and whether it would negatively affect access to justice”, said the department’s note.

“The Bar Council wishes to receive the proposed committee stage amendments well in advance, but were told they would only receive them as soon as possible.”

This issue festered, prompting a Cabinet row between Labour and Fine Gael ministers before Christmas 2013. Provisional settlement was reached in January 2014 with a deal to conduct a formal review before the “one-stop shop” was introduced. That was not the end of the matter, however.

Mr Shatter resigned in May 2014 amid a storm of controversy over Garda affairs, leading to Ms Fitzgerald’s appointment. Relations between Mr Shatter and the Bar Council had been very sour, but the atmosphere is widely held to have improved after Ms Fitzgerald’s arrival. Yet tension persisted. Multidisciplinary practices remained a dispute, as shown in another “private and confidential” letter on July 2nd, 2014, to the department from Jerry Carroll of the Bar Council. At issue were contentious Government amendments to the Bill, which had been prepared by the department.

Amendments

Like draft legislation in general, amendments are usually signed off by Cabinet before external release by the relevant Minister. In this case, however, the amendments went to the Bar Council before going to Government.

“We appreciate the fact that we received a draft of the amendments before they went to Cabinet,” wrote Mr Carroll. “Controversial” amendments, as he described them, included provisions in relation to multidisciplinary practices (MDPs).

“There is an issue of principle and there are issues of detail. The Cabinet should not be asked to decide and approve on the detail of these provisions without the principle being addressed as part of the consultation,” the letter said.

“MDPs etc are an ethical minefield. It is very troubling that these amendments are to be dealt with at this stage.”

It was December 2014 before Ms Fitzgerald published that particular round of amendments, which provided for the delayed introduction of MDPs subject to research, consultation and a ministerial decision. Provision was also made then for a new form of legal partnerships between barristers or between barristers and solicitors. However, the Bar Council ultimately retained the right to exclude such partnerships from the Law Library.

At this point it was anticipated that the new regime would come into force in the first half of 2015. But it was not to be. Although the final batch of amendments did not appear until November 18th, 2015, the FOI files indicate that key questions in relation to the Law Society were in the balance until the very end. Department officials had met the Law Society on October 9th.

The department’s note of the meeting said the society “has been informed” that a limited liability option for solicitors’ firms and partnerships had received Government approval “but the draft heads aren’t ready for sharing with them yet”.

This legal status curtails the exposure of such practices to business losses, although they will face tougher regulatory oversight.

Yet that was not the end of the affair. Mr Shatter had reached a “deal” in early 2012 with the Law Society in which it would retain financial and accounting oversight of selectors and responsibility for its €80 million compensation fund. The quid pro quo was the society itself would be overseen by the new regulator, the Legal Services Regulatory Authority.

Still, the October note said the Attorney General’s office was “pushing the department back towards a transfer of disciplinary powers from the Law Society to the authority in all matters”. The note said the society was “unhappy with this prospect,” adding that the matter would have to be discussed in detail with Ken Murphy, director general. “[Law Society] wants (and says it needs) to retain all investigative, protective and disciplinary powers.”

In the final scheme, the society retained its oversight functions. Pre-approval of the new regulator will not be required for it to take any enforcement actions against any solicitors for financial misconduct.

Years had passed. After an effective lobbying offensive by two of the most powerful professional bodies in the State, the final package was rather different to the original.

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