If lawyers dismiss the Competition Authority report, they will be guilty of professional myopia, argues Pat McCloughan, who says that reform will be good for competition and the consumer.
The Competition Authority's final report into the legal professions published yesterday comes in the midst of increasing emphasis on competition policy as a driver of Ireland's overall economic competitiveness.
The obstacles to effective competition in legal services were documented in the 2003 report prepared for the authority by Indecon consultants, for whom I work.
Earlier this year, the National Competitiveness Council identified tackling internationally high fees in legal services as an essential condition to improving sustainable economic growth in Ireland.
The authority's final report has been the result of much research and extensive consultation and provides a wide-ranging set of recommendations that have been carefully developed to address the areas in most need of competitive stimulus in each of the solicitor and barrister professions.
The need to ensure adequate consumer protection and high standards in legal services, while at the same time making the professions more competitive, can be achieved under the authority's recommendations, which now deserve urgent attention by the Government and the relevant professional bodies.
Consumers of legal services are not the only party to gain if the recommendations are acted upon. The report represents a unique and positive opportunity for both solicitors and barristers, and their respective representative bodies, to develop a profession that will be competitive, productive and consumer-oriented. To dismiss the report out of hand would be myopic of either profession.
The legal profession might do well to look at the experience of the retail banking sector in Ireland. This time two years ago, the authority unveiled a wide-ranging set of reforms which the retail banks took on board in a constructive way, in partnership with the authority and the Financial Regulator.
Today, it is difficult to find an area of retail banking in Ireland that is not subject to strong competitive pressures.
What prompted the authority's study of the legal professions in 2001 was their self-regulating nature and the perception that there were numerous rules and practices hindering the development of effective competition in legal services, which otherwise would benefit consumers through lower prices, greater choice and improved quality of service.
Examples of the numerous restrictive practices include the Law Society's monopoly of the professional education of solicitors, the King's Inns' monopoly of the professional education of barristers, solicitors' monopoly in conveyancing services, the highly restrictive advertising rules placed on barristers and the restrictions placed on each profession regarding organisational form.
(For example, solicitors are prevented from entering into partnership with other professionals, which otherwise could benefit consumers through, for example, the provision of legal and accounting services under the one firm.)
Overall, the authority, which is headed by a lawyer, has concluded that regulation of the legal profession needs to be more consumer-oriented. Personal consumers in particular (ie those that deal with lawyers on an infrequent basis) need to be empowered with more information so that they can be more confident when dealing with lawyers and make informed decisions.
If implemented, the authority's recommendations could have profound consequences for the provision of legal services in Ireland, in a positive way that could lead Ireland in becoming an international centre of excellence in legal services - a truly unique opportunity that would tie in public policy aims of making Ireland a world-class, competitive economy.
The vision implied by the authority's recommendations includes:
An overarching regulatory body, the proposed Legal Services Commission, giving appropriate voice and representation to consumer issues;
the creation of a new, paralegal profession in the form of licensed conveyancers, which would help to realise price competition in what is the most frequent type of legal service purchased by consumers in Ireland;
open access for consumers to advocates in the higher courts (which would include solicitor-advocates as well as barristers);
professional education of solicitors and barristers outside Dublin, which would help reduce the cost of becoming a lawyer (as well as increasing the numbers entering the profession, this initiative would also represent a new opportunity for higher education institutions, including the institutes of technology), and
new business models for legal practices, including limited liability as well as partnerships and sole proprietorships.
Easing the restrictions on organisational form would permit greater levels of capital to be invested in legal practices and permit legal services to be delivered in novel ways, including in association with related services.
A parallel might be drawn here with the integrated medical centres emerging in Ireland, where medical practitioners work alongside other healthcare professionals.
The experience in other countries, where the legal professions have been deregulated, suggests that implementing a range of reforms simultaneously will work best for competition and the consumer rather than implementing initiatives in a piecemeal fashion.
Only the weak fear competition.
Dr Pat McCloughanspecialises in competition and regulation at Indecon International Economic Consultants. He was on the team that advised the Competition Authority in preparing the original report on the legal professions, published by the authority in 2003