Dáil and its legal reform bill still pro-lawyer

VILLAGEAugust/September 

HE circumstances of the demise of

former Minister for Justice, Alan

Shatter, diverted attention from the

risk of the thwarting of his reforms of the

legal profession. Infamously many minis-

ters, and their – often informal - advisers,

are lawyers. Indicative of the problem is that

at the last reading of the proposed reform

bill, it was clear that both Fianna Fáil and

Sinn Féin, the principal opposition contrib-

utors on the bill, had nothing to contribute

beyond what they had been fed by the repre-

sentative bodies of the legal profession, the

Law Society and Bar Council.

The only person who seemed concerned by

this was, ironically, the ex-Minister himself,

a high-ﬂying solicitor. Under successor min-

ister, Frances Fitzgerald, the substance of his

proposals remain intact. So far.

To the detriment of all but the most pam-

pered senior lawyers, they do not go far

enough any way.

When the bar is accused of privilege and

anticompetitive practices, the defence is

often proﬀered that the fact that so many

barristers are struggling and even leaving

the profession proves lack of privilege and

anticompetitive practices. This defence

is incorrect. On the contrary, in a profes-

sion, the relative suﬀering of the incoming

juniors is indicative of anti-competitive prac-

tices, not of their absence: both the general

public and those less established in a profes-

sion pay for the profession’s obstruction of

competition.

Ireland shares with the UK the distinc-

tion of maintaining the highest legal costs

in Europe, and a similar system of practices,

including separate functions for barrister

and solicitor, the real pressure to hire three

lawyers in the higher courts, the much-ques-

tioned institution of Senior Counsel, and a

system of legal-cost adjudication (formerly

called ‘taxation’) in which the question of

whether a lawyer has overcharged you is

decided in a process which seems designed

to punish you severely for challenging the

lawyer’s bill.

Obstacles to barrister

right of establishment and

to price competition

Two key obstacles to barrister competition

are restrictions on advertising, particularly

of fees, and prohibition of direct access to

barristers by clients (approach must be done

through a solicitor).

These obstacles have a powerful twofold

economic eﬀect in favour of established bar-

risters: ﬁrst, they obstruct new entrants

from establishing themselves, getting

NEWS LAW REFORM

Bill fails to tackle advertising, ‘taxation’, ‘three-lawyer’

practice, direct access to barristers and Ministerial

veto. By David Reynolds

Dáil and its legal reform

bill still pro-lawyer

August/September VILLAGE

market share and competing with the

incumbents; second, they inhibit what econ-

omists call price competition: the system

inhibits the client’s ‘shopping around’ for

the best-value barrister for their needs, and

haggling for fees, and thus bringing normal

market forces to bear for lower fees.

These two obstacles are of

the Bar Council’s own making

and it vehemently resists their

repeal, desite the issuance of an

infringement ‘formal notice’ by

the EU Commission in November

.

Theoretically the solicitor can

do this ‘shopping around’ for the

client. But there are three major

problems with this. Firstly, the

solicitor is not necessarily going

to take this ‘shopping’ seriously

enough as her own money is not

on the line. Secondly, as this

shopping takes the solicitor’s time, the

solicitor can bill for it; if she does not, she

is not incentivised to work thoroughly on it.

Thirdly, there can be a fee-splitting practice

where solicitor and barrister, while having

actually billed the client distinctly, aggre-

gate their actual received fees and split

them. Fee-splitting is a form of kickback

to the solicitor on the barrister’s fees, and

actually puts price competition in reverse by

perversely incentivising the solicitor to use

a more expensive barrister. The barrister’s

code of practice is totally silent on any such

kickbacks; it does not prohibit them or even

require that the client be notiﬁed of them,

indeed it does not mention them at all.

Investigation by the Irish

Competition Authority

The Irish Competition Authority inves-

tigated the Irish legal profession and in a

ﬁnal report published in , concluded

that the legal profession was “in need of

serious reform”, and “permeated with

unnecessary and disproportionate restric-

tions on competition”. It set a target date of

 for the implementation of its many

recommendations. As of , the most

important recommendations have not been

implemented.

Troika pressure and glacial

government response

The Irish government was under pressure

from the Troika to reform the legal system

and to do something about excessive legal

fees. The ﬁrst draft of the Legal Services Bill

was published in , already three years

after the Competition Authority’s target

date for implemented reforms. Since then,

the draft bill has sat on the shelf for a fur-

ther three years. In November , the

European Commission initiated an infringe-

ment procedure against Ireland (reference

NIF /) for continuing to allow the

Bar Council to maintain the restrictions it

has on advertising.

The ﬁrst draft of the bill had

many problematic provisions,

some of which have removed

or improved in the new draft of

the bill.

Key obstacles to barrister

competition not removed

The draft seems to be pretend-

ing that it is implementing

direct access to barristers,

with a heading ‘code not to pre-

vent direct access to barrister’.

When you look closely, it is only

implementing direct access in

‘non-contentious’ cases, that is, about %

of barristers’ work.

The bill does not mandate eﬀective free-

dom of advertising for barristers at all.

Flagrantly unjust legal cost

adjudication regime

The current draft of the Bill codiﬁes and

slightly modiﬁes an existing th-century

practice of ﬁnancially ﬂogging those who

challenge lawyer’s bills: if you challenge

your own lawyer’s bill and she is found to

have overcharged by anything less than

%, you have to pay an % ‘stamp duty’

on that bill and, additionally, the costs of

the hearing.

An even worse current practice is left

unmentioned and unchanged by the Bill: you

have to pay the stamp duty of %, regard-

less of whether or how much you have been

overcharged, when you challenge the bill of

a lawyer who is not your own (which hap-

pens only when you have to pay the costs

of the other side). This system is in ﬂagrant

violation of natural justice, equality before

the law, and arguably the constitution.

In Ireland, unlike for example in Germany,

there is no cap on costs in such a case, and

exposure of €,-€, might be

expected. Legal costs inhibit the correction

of many injustices, including those related

to high legal costs!

The Minister for Justice exacerbated the

injustice in , by raising this particular

stamp duty from % to %.

Inconsistency with open justice,

and obstruction of research

The Bill mandates that legal-cost determina-

tions are to be ‘published’ by archiving them

locally in each county registrar’s oﬃce. This

obscure arrangement powerfully inhibits

legal-costs research and therefore public

awareness of legal costs.

Transparency demands that they be pub-

lished and searchable on the central court

website. This would also be cheaper.

Also, the recently-introduced practice of

allowing journalists into family-law cases

needs to be extended to legal costs adjudi-

cations relating to family-law cases.

Ministerial veto without

political accountability

In a welcome move, the Bill establishes the

Legal Service Regulatory Authority (LSRA),

an authority which will regulate barristers

and solicitors.

But all of the reform proposals of the LSRA

– as is currently the case for the proposals of

the Superior Courts Rules Committee - are to

be subject to veto by the Minister for Justice.

To facilitate accountability and inhibit

interminable ministerial foot-dragging,

the minister should have a limited period

to exercise such veto giving reasons, as is

the case for Minister for Enterprise with the

Competition Authority.

Outlook

While the legals-cost regime beneﬁts a

small number of elite lawyers, it is a disas-

ter for society as a whole and has profoundly

backﬁred on lawyers as well. The public has

long responded to the huge fees in Ireland

by eschewing legal serv-

ices and depriving lawyers

of work; the civil litigation

rate of Ireland and the UK is

a fraction of what is typical

for developed, democratic

countries. Further, insti-

tutions such as the PRTB,

which are largely bandages

on the problem of excessive

legal fees, and are doing what

courts should be doing, now

permanently deprive law-

yers of work.

The cost to society is not

just in direct costs for those

whose lives are ruined by

legal bills, and in hidden and

distributed expenses such

as higher insurance premi-

ums but in the indirect cost

of unjust, antisocial and anti-competitive

practices that go unlitigated.

Real reform should bring legal fees down.

It should also in the long run bring the rate

of litigation up, and improve the state of

public justice. •

Both Fianna Fáil

and Sinn Féin

had nothing

to contribute

beyond what

they had been

fed by the Law

Society and Bar

Council

“

The draft seems

to be pretending

that it is

implementing

direct access to

barristers

“