While Portugal and Iceland garner headlines for their international financial woes, Ireland is getting on with implementing the terms of last November’s EU IMF Programme of Financial Support for Ireland. For readers of this blog, one very important element of that programme requires the removal of restrictions to competition in sheltered sectors, such as the legal and medical professions. In particular, the Programme recommends the implementation of the 2005 Report (pdf) of the Legal Costs Working Group and of the Competition Authority’s 2006 Reports on regulated professions, including their Report on the Legal Professions. Unsurprisingly, the Bar Council professed itself unhappy with the IMF proposals; but, in my view, the implementation of these recommendations can change the Irish legal system for the better.

In January of this year, the Public Accounts Committee published their Third Interim Report on the Procurement of Legal Services by Public Bodies (pdf). Starting from the premise that public bodies procure huge amounts of legal services every year, the Report concluded that the ability to get value for money is restricted by the practices of the legal profession. Indeed, the Committee was very concerned that the two Reports mentioned above had not been implemented:

The Committee notes the restrictive practices that are keeping legal fees artificially high. As public bodies are the largest procurer of legal services, it behoves the State to bring in reforms that will eliminate restrictive practices and bring in more competition in this market. The Competition Authority has provided a blueprint which will facilitate change and it is the Committee’s view that this should now be implemented. [p38]

In this respect, it recommended:

1. Competitive tendering should be made mandatory for the procurement of solicitors’ and barristers’ services by the State, so that a greater number of legal service providers have the opportunity to compete for work. This will lead to better service and better value for money for all State and public bodies. …

3. The taxation of costs system should be overhauled or replaced so that legal professionals and consumers of legal services have available to them clear guidance on current market rates for such services. …

6. Restrictive customs and practices in the two legal professions which lead to higher legal fees should be challenged and removed and should not tolerated any longer by the State. [p40]

It now looks as if all of these recommendations are about to be implemented. Writing in the Irish Times last Friday, Barry O’Halloran and Deaglán de Breádún report that the government intends to introduce new measures to shake up the legal and medical professions within three months:

Under the terms of the €67.5 billion EU-IMF bailout deal, the State is committed to boosting competition in sheltered sectors such as the legal profession, medicine and pharmacies by banning various restrictive practices. … The measures will include establishing an independent regulator for the legal profession and implementing recommendations made by the previous government’s legal costs working group and the Competition Authority.

From the point of view of legal education, the most important recommendation is the introduction of a Legal Services Commission, to act as an independent regulator for the legal professions, to set standards for the training of solicitors and barristers, and to approve and licence institutions that wish to provide such training. The EU IMF Programme requires that this should be completed by the end of the third quarter of this year. We may not meet that timetable, but I’m delighted that things are moving, and I look forward to the Government’s recommendations.

In yesterday’s Sunday Business Post, I argued that the IMF deal can change the Irish legal system for the better, reflecting arguments I have already made here and here.

IMF deal can change the Irish legal system for the better

The IMF deal has provoked a great deal of discussion, from its impact on our political and economic sovereignty, through the details of tax increases, state spending cuts and the implementation timetable, to the question of whether it needs to be ratified by Dáil resolution or even referendum. But there is a lot more to it than that.

IMF packages typically require structural reform to open the labour market and encourage competition in goods and services. The memorandum of understanding between the IMF and our government is no different. It requires the government to introduce legislation to remove restrictions on trade and competition in professions such as law, medicine and pharmacy. …

The IMF memorandum made it clear that all of the necessary legislation must be enacted by the end of the third quarter of 2011. This is probably not an impossible target, as these recommendations were not new in 2005 and 2006: many of them had been made in a report in 1990. Moreover, many other jurisdictions have already been down the same road. .. There are, therefore, many precedents to aid the Department of Justice in drafting the necessary legislation. It is unfortunate that successive governments have not implemented these reports.

Read the full piece here. Picking up on this, Rossa McMahon has rather dryly observed that the Government could help bring down legal costs overnight, but won’t. He concluded that if the IMF reforms “are implemented in the relatively short timeframe of the programme, they would represent something of a Big Bang for the professions”.

Following on from my post on the impact of the IMF bailout on Irish legal education, I see from today’s Irish Times that the Bar Council (logo left) is not happy with some of the proposals, in particular those directed to the establishment of an independent statutory Legal Services Commission:

Parts of legal sector reform ‘not in public interest’

CAROL COULTER, Legal Affairs Editor

THE BAR Council has criticised proposals concerning the legal professions in the Government’s four-year plan and in the EU-International Monetary Fund (IMF) programme of financial support. … Responding to queries from The Irish Times, the Bar Council said it welcomed aspects of the plan and the programme:

However, there are other aspects which have come as some surprise to the Bar Council, and which cause it concern, not because of any sectional or selfish interest but because they do not appear to be in the public interest.

… Bar Council chairman Paul O’Higgins SC said the Council had not been made aware of any detailed proposal to give effect to the establishment of an agency described as an “independent regulator” and it awaited details:

The Bar Council notes that the position of legal services ombudsman has recently been advertised in the national press. It is not clear how that position will interact with what may be a further State agency, namely, the ‘independent regulator’. …

Well, they would say that, wouldn’t they? The article finished with a quote from me:

the single most effective reform of the legal system would be the establishment of an independent regulator and the introduction of genuinely competitive tendering.

I don’t agree with the Bar Council’s point about there being a potential conflict between the Legal Services Commission and the Legal Services Ombudsman. The role of that office (which I welcomed when the current legislation was initially published) is to oversee the handling by the Law Society and Bar Council of complaints by clients of solicitors and barristers. The Ombudsman is independent in the performance of the functions of the office. There is no reason why this function could not simply be folded into the more general Legal Services Commission. For example, the Ombudsman could be a member of the Commission, and the Ombudsman’s office could be a division within the broader functions of the Commission. Moreover, there is no reason why the Ombudsman should not be given greater powers in respect of disciplinary matters relating to both branches of the profession: in particular, that office could be the first port of call for parties seeking to complain about a solicitor or barrister, and not simply be an appeal body from an internal complaints system.

Other divisions within the Legal Services Commission can take up the other functions recommended by the Legal Costs Working Group in 2005 and the Competition Authority in 2006. One of these concerns extending the provision of professional legal education beyond the monopolies currently enjoyed by the Law Society in training solicitors and the King’s Inns in training barristers. Most other common law countries have gone this route. In my view, it is long past time for Ireland to do the same. My only regret is that is has taken the IMF to make us do it!

I never thought I’d see the day when I’d put both the International Monetary Fund (IMF) and Irish legal education together in the title of a blogpost. But there it is, above. And this is because the summary of the the Joint EU-IMF Programme for Ireland on the Department of the Taoiseach website suggests that there will be consequences for legal education:

Competition

Removal of restrictions to competition in sheltered sectors including:

Legal profession:

- establish an independent regulator;

- implement the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations. …

The enhancement of competition and the reduction of regulation in sheltered sectors is a standard IMF prescription, so this recommendation comes as little surprise. As for its details, the Legal Costs Working Group was established in 2004 and asked to look at the way in which legal costs are determined and assessed, and it reported in 2005 (pdf). In December 2006, as part of a series of reports on regulated professions, the Competition Authority published a Report on the Legal Professions which determined that the legal profession was in need of substantial reform. Read the rest of this entry »

The Office of the Legal Services Ombudsman for England and Wales and the Office of the Scottish Legal Services Ombudsman were established in 1990. There are plans afoot for their reform (Scotland | England & Wales) but the basic principle of independent oversight of disciplinary matters for the legal professions will not only remain intact but be enhanced. Now, it seems that Irish law is soon to adopt this principle too. Carol Coulter has an interesting article about recent developments in this regrad in today’s Irish Times (sub req’d); some extracts:

Ombudsman will oversee complaints against lawyers

A Legal Services Ombudsman who will be appointed by the Government for up to six years will have oversight of the disciplining of solicitors and barristers, and of their recruitment and training. The ombudsman will be appointed under the Legal Services Ombudsman Bill, expected to be published next week.

The Bill was originally part of the Civil Law (Miscellaneous Provisions) Bill 2006 [2006 press release], but was taken out of this Bill for further development in the wake of controversy concerning solicitors Michael Lynn and Thomas Byrne. Under it, members of the public will be able to appeal to the ombudsman if they are dissatisfied with the outcome of complaints to the disciplinary bodies of the Law Society or Bar Council.

The Legal Services Ombudsman (LSO) will be a ministerial appointment of a person with “appropriate experience, qualifications, training or expertise”. The nature of such experience or qualifications is not specified in the Bill. However, members of the Oireachtas, European Parliament, local authorities, Law Society or Bar Council, or solicitors or barristers, will not be eligible for appointment. …

This is an entirely welcome development. Read the rest of this entry »