The Law Society of Ireland has defended the right of solicitors to keep any free shares or financial windfalls due on client accounts from the planned flotation of the First National Building Society.
The director-general of the Law Society, Mr Ken Murphy, said yesterday that it would be both "impossible" and "not practical" for solicitors to redistribute any financial windfall to clients whose accounts are held in trust for them by solicitors. "There is no obligation on solicitors to do this", he said.
More than 2,000 solicitors will be entitled to free shares or a once-off financial payment - where their client accounts meet the qualifying criteria - if the First National flotation goes ahead this autumn. In many cases, the beneficiaries of these accounts are minors or people with mental or physical disabilities, but the solicitor is deemed to be the legal owner of the account.
Mr Murphy suggested that where a client had specifically directed their solicitor to open an account on their behalf at First National the client might have a "strong case" to claim the shares. "But where the decision to place the accounts with First National is the solicitor's, I'm not sure that there is any onus on the solicitor to distribute the shares", he told The Irish Times.
Mr Murphy said that solicitors would tend to hold a number of client accounts, in some cases containing funds for up to 100 people. Regardless of the number of accounts held with the society, the solicitor will automatically receive a single allocation of free shares or a cash payment.
It is estimated that each free share allocation will be worth about £1,170 initially.
In general, solicitors set up client accounts with a financial institution where they are acting as an executor of a will, where they are appointed as a trustee over certain funds, or where they are holding funds on behalf of a client.
First National is not legally obliged to recognise these clients as beneficiaries. Under Irish building society legislation, the society must issue shares to the person whose name appears first on a qualifying account for two years before the flotation date.