merrion street

Introduction

The theme of your Annual Conference – Regulation, Representation and the Future of the Legal Profession – is self-evidently timely. As you know, the Government is undertaking a process of structural reform of legal services and legal costs that has far-reaching implications for these important matters. My contribution today as the Minister responsible for introducing the reforming Legal Services Regulation Bill 2011 will reflect this theme by touching upon the three Rs of Regulation, Representation and Reform. I also look forward to hearing the views, experiences and insights of today’s other speakers about the challenging future faced by the legal professions. And I wish to express my personal appreciation of the very valuable contribution that they are making to this event.

The Bill has its genesis in the Government’s Programme for National Recovery. Under that Programme, the Government undertakes to "establish independent regulation of the legal professions to improve access and competition, make legal costs more transparent and ensure adequate procedures for addressing consumer complaints". The Legal Services Regulation Bill 2011, provides a statutory framework for delivering these commitments. It encompasses both solicitors and barristers – in fact, the latter are for the first time regulated by statute.

The Bill also supports the urgent objectives of structural reform, national competitiveness and economic recovery contained in the EU/IMF/ECB Memorandum of Understanding on Specific Economic Policy Conditionality of November 2010. These build on the relevant recommendations made by the Legal Costs Working Group in 2005 and by the Competition Authority in 2006. Reflecting the gravity of the current economic crisis, there was an EU/IMF deadline - the end of Quarter 3 of 2011 - for the publication of this Bill. We met the deadline despite the obvious challenges this presented. The EU/IMF/ECB Troika, whom I briefed on the Bill, considers the Bill to have met both the spirit and the letter of the Government’s undertakings. The Bill has also been welcomed by a number of prominent legal academic specialists in the area of professional regulation.

Mindful of its 2006 Report on the legal professions, the Competition Authority has welcomed the Bill and its potential benefits for consumers. The Competition Authority has confirmed that its particular proposals do not in any way constrain the specific policy responses that may be taken by the Government. The National Competitiveness Council considers the Bill’s measures to be welcome and overdue. More recently, the Chief Executive of the Injuries Board, Ms. Patricia Byron, has noted that, in the context of the current debate about legal reform, many of the same arguments against reform that we are hearing today had been made by opponents of the introduction of the Injuries Board model in the early 2000s and that these vested interests have since been proven wrong.Succession of Reports

The regulation of a more open legal profession, greater transparency in the charging of legal costs and the removal of restrictive practices in the provision of legal services have been matters of persistent policy concern. There is a plethora of reports relating to proposed change in these areas spanning the last thirty years. Like a number of colleagues here today I have seen these initiatives come and go, one after the other, during my 35 years in legal practice. They have included the reports of the Restrictive Practices Commission (1982); the Fair Trade Commission (1990); the OECD (2001); the Legal Costs Working Group (2005); the Legal Costs Implementation Advisory Group (2006); the Competition Authority (2006); the Law Reform Commission (2010); the National Competitiveness Council (2010) and the Dáil Committee of Public Accounts (2011).

Along the way, there have been a number of welcome responses to matters raised in these reports by way of legislation and the enlightened changes made to professional codes and disciplinary frameworks by the Law Society and by the Bar Council. But, as I see it from both the professional and political perspectives, these have not achieved the desired level of change with due depth or dispatch. As a result we have been somewhat ill prepared sectorally for the onset of the current economic crisis.

We have also been ill prepared for the substantial change being implemented elsewhere, including on our doorstep in England, with regard to the structures through which legal services may be delivered. In the area of international competition for legal services the train has left the station and we are risk of being left at the side of the track. It is better by far to be advancing with the vanguard of progress than to be cut off in the defensive rearguard of an outmoded

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Grasping the Nettle

The failure to grasp the nettle of reform is evidenced by the several false-starts to legal sector reform in the past. The Solicitors (Amendment) Act of 1994 took account of the Fair Trade Commission’s Report of Study into Restrictive Practices in the Legal Profession published in March 1990 by making respective provision for "incorporated practices" and the "sharing of fees" while also opening the way to authorising alternative providers of legal professional education. Back in 1994, when introducing these provisions at Second Stage, the then Minister of State, Willie O’Dea, noted that "the Solicitors’ Acts contain restrictions on the organisation of solicitors practices" and that "multi-disciplinary practices involving solicitors and members of other professions and multi-national practices involving Irish solicitors and lawyers from other jurisdictions" were not permitted under the existing Acts of the time. He stated that "It would not be prudent to statutorily preclude the possibility of future developments in these areas and, accordingly, sections 70 and 71 enable the Incorporated Law Society to bring forward regulations to provide for these new forms of working arrangements". Alas, all of these modernisation measures have lain dormant. Meanwhile in other common law jurisdictions, such as New South Wales in Australia, they are a significant part of the legal landscape.

And it was not just professionals who were reluctant to introduce change – the political system also hesitated to grasp the nettle of reform even when empowered to do so. Under Section 78 of the 1994 Act it had been made possible for the designated Minister to make regulations authorising Credit Unions to provide services in relation to wills and probate but this never happened. Section 46 of the Court and Court Officers Act 1996, which allows the designated Minister to initiate the setting of scales of legal fees in consultation with the professional bodies, was similarly left wither on the vine of legislation. These failed initiatives of the past are all redolent of the reports and recommendations for legal reform which preceded them but have lain unused by mutual neglect for respective intervals of up to 18 years. Our crisis responses in partnership with the EU/IMF/ECB Troika have clearly identified such gaps in our follow-up to structural reform initiatives as something the country can no longer afford to carry. As someone who has been engaged in politics and legal practice over the past four decades of botched legal reform initiatives, I am not prepared to allow the professions veto reforms that are not only in the interest of both solicitors and barristers but which are also essential to protect consumers of legal services and bolster their confidence in the profession.

Existing mechanisms of self- and co-regulation have not sufficiently met the targets of transparency and competitiveness necessary to inspire lasting public confidence and to encourage sectoral growth and competition in a modern, open, recovering economy. It is not surprising, therefore, that many legal practitioners already find themselves pushing out the boat of new practice models and business technologies and stand ready and able to embrace the processes of modernisation and reform. In the face of such past and recent history I cannot accept, therefore, the emotive and misleading contention that the Legal Services Regulation Bill of 2011 is some kind of sudden, opportunistic or otherwise malevolent ambush on the legal sector.Momentum of Change

Taking account of developments and the pressures being experienced by legal practitioners in other open jurisdictions the real danger may prove, in fact, to be that of doing too little too late and leaving Irish law firms languishing at a competitive disadvantage. Several types of new alternative business structure models have been, or continue to be, rolled-out in England and Wales, Scotland, Australia, Germany, Netherlands and parts of Canada. And the momentum of this change is unstoppable. Having initially resisted the tide of alternative business structures in its discussions early in this millennium the American Bar Association reopened its consideration of alternative business structures including multi-disciplinary practices by means of a new issues paper it circulated this time last year. While remaining averse to "passive non-lawyer investment in law firms" the paper represented a shift from the Association’s previous stance against new business models in noting that "the competitive environment in which US firms of all sizes now operate has changed" and that US firms and lawyers are already participating in alternative business structures abroad. We are not, therefore, alone in our change endeavour and in our concerns about what they entail. The reformist route we are taking under the Legal Services Regulation Bill is merely the reciprocation of the different ways similar reform is already taking place in common law jurisdictions around the world.

It was not professional regulation that led to the current global or national banking and economic crises but rather the lack or feebleness of it. More fundamentally, the current economic crisis has been a revelation of how legal practitioners, whether individual or corporate, are no longer beyond the cut and thrust of the business world and are in fact having to interact with it on a daily basis. This entanglement continues to be challenging in terms of maintaining and nurturing a more consumerised clientele while also ensuring the integrity and financial viability of legal practice. Nor are clients governed simply by customer loyalty to one individual who is perceived to be the family’s lawyer nor by loyalty to a single solicitor’s firm anymore – they are happy to shop around or engage several lawyers simultaneously especially where large or multinational business transactions are concerned. Lawyers are no longer condemned to serve with one legal practice for life and have greater mobility in their careers with the option to specialise in particular areas of law that make them highly marketable. Legal business is not confined in its conduct to the confines of the flat world of a mahogany desk festooned with ribboned writs, seals and a lawyerly brass lamp – it is taking place globally in the very round world of cloud computing, e-mail, tele-conferencing and other innovative technologies and applications. The turnaround time for transactions in today’s climate is mind-boggling and no longer lends itself to ponderous or sectorally self-indulgent work practices whether one a lawyer, banker or accountant be.

It is clear in today’s context that this Bill and the change and reform it seeks to accommodate is not an impediment to our economic recovery, to international investment in this State nor to greater national competitiveness as has previously and recklessly been put about – rather it is an essential contribution for their realisation. As I discuss further on, the Bill provides an essential statutory structure to bring the profession into the 21

century whilst guaranteeing its independence and prescribing crucial objectives and principles in section 9(4) and 9(5) which lay the foundation for a move away from sole reliance on complaint based regulation to compliance based regulation. The obligation imposed on the new Legal Services Regulatory Authority by section 9(1) of the Bill to ensure not only the maintenance but also the improvement of standards in the provision of legal services, taken together with other provisions in the same section, is in this context of central importance. The Bill is a vehicle for the reform of what has been recognised as one of the "sheltered" sectors needing radical change under the Government’s Programme for National Recovery. As a specific deliverable of programmatic structural reform under our EU/IMF/ECB undertakings the new Bill will, by its very essence, inspire international investor confidence.Cultural Challenges

I would like at this point to refer briefly to the strong, historic and deeply embedded cultures which permeate both legal professions. While these cultures have their virtues in seeking, to a large extent, to preserve the professional independence and integrity of our work they also carry an amount of dusty baggage. For we are not the only professionals who embrace high standards of professionalism – indeed, like other professions we have to invoke disciplinary procedures when the need arises. The ethical principles and procedures to which we adhere already dovetail to some degree with other professions – for example, we mirror the profession of accountant in relation to the auditing and financial management of our practices upon which the securing of a Practicing Certificate depends. Indeed, in our day to day business we are already happy to rely upon the supporting services of such professionals and their work ethic. Our collective lawyerly culture should not blind us to the opportunities for a coalescence of our interests with those other professions while duly upholding those principles which we hold so dear. From the perspectives of both lawyer and politician I cannot but recall the words of the guru of organisational culture E. H. Schein – "

". Might I also say in this regard, we need to re-examine aspects of our inherited models of professional and legal education and some of the still current rites of passage which remain disquietingly redolent of the ostensibly fictional academy that is Harry Potter’s Hogwarts. The relevant provisions of the new Bill, which are broadly supported, will allow us to look unobtrusively at the current state of legal professional education and to identify appropriate opportunities for modernisation and change.　

Public Confidence, Regulation and RepresentationTimes, the economy, the world and the Government have changed. Consequently, in the new Legal Services Regulation Bill we find a deepening of reform ambitions and structures beyond the model of supervised self-regulation introduced by the previous Government under the Legal Services Ombudsman Act 2009. That model has been made obsolete by this Government’s commitment to more independent regulation of the legal professions bolstered by the relevant EU/IMF/ECB Programme undertakings. The 2009 Act left too much of the duality of regulatory and representational functions to persist in the professional bodies concerned - with all of the working conflicts and tensions inherent in this duality. It also failed to completely bridge the gap of public confidence especially in relation to the objectivity of complaints procedures and the transparency of legal costs notwithstanding the extent to which these perceptions may or may not be justified and the improvements made by the professional bodies in these areas. To my mind, the 2009 Act also perpetuated an unhelpful blurring of the distinction between the regulatory and representational functions of the professional bodies in a way which can be detrimental to the full pursuit of relevant interests when complex issues arise. In putting clearer light of day between the representational and regulatory domains of the Law Society and the Bar Council the new Bill provides a better path to the future for the legal professions that should have positive resonance within the theme of this conference.Modern Balance of Interests

The Bill provides a balance between public and professional interests and strikes that balance in a more contemporary and appropriate manner. These interests are iterated in the statutory objectives of the new Legal Services Regulatory Authority to be found in Part 2, section 9 of the Bill. For the first time in national legislation, these objectives commit to supporting the proper and effective administration of justice, encouraging an independent, strong and effective legal profession and promoting and maintaining adherence to what are described as the professional principles. Those who hastily suggested that the Bill threatened the independence of the legal profession appear to have selectively overlooked the fact that this is the first legislation of which I am aware that gives statutory recognition to the importance of having an independent legal profession. This is the first time the value and importance attached to the legal system in our democracy are fully and properly recognised in a major statute. Similarly, the Bill commits to promoting and protecting the public interest and the interests of consumers in the provision of legal services, while also promoting competition in the provision of these services.Law Society Response

In working towards an appropriate balance of the professional and public interest in the delivery of legal services I was greatly encouraged by the decision taken by the Council of the Law Society of Ireland on the 20

January last, according to which the Society recognises that "it would be in the best interests of the public and the profession" if complaints were no longer to be dealt with by the Society but by the new Legal Services Regulatory Authority to be established under the Bill. I am aware that when it was initially proposed your members had reservations about this change to your existing and recently enhanced complaints frameworks. I commend the Society, having reconsidered its initial stance, for being willing to put aside the complaints procedures it has used and developed over the past 150 years in order that public perceptions of impartiality can be underpinned to the utmost degree. Great maturity has been shown in relation to this particular area of change and by the timely manner in which the Society has formalised its reviewed position on this key issue of public interest. I am also encouraged by the reported statement by a spokesperson that, "The Bar Council has no issue in principle with disciplinary involvement and supervision by an external body, provided that it is truly independent in nature". Let me assure all concerned that in perfecting the Legal Services Regulation Bill for Committee Stage the independence of the disciplinary entities will be assured – I will be returning to this topic.Compensation Fund Inspections

I have also been persuaded by the Law Society’s view that the power to supervise and inspect compliance with the regulations relating to solicitors’ accounts should remain vested in the Law Society. Under the Bill, the society will continue to have ultimate administrative and financial responsibility for the Solicitors’ Compensation Fund. This refinement of the Law Society’s proposed functions with regard to the fund can better incentivise compliance by solicitors in public and professional interests while avoiding the imposition of any burden on public resources. If such work undertaken on behalf of the Law Society were to disclose any misconduct this would be dealt with by the independent disciplinary system prescribed in the Bill or otherwise brought to the new Regulatory Authority’s attention. If at a future stage the Legal Services Regulatory Authority were to recommend a change such as direct access to barristers for contentious business then the issue of inspecting barristers’ accounts would need to be duly considered and addressed.Professional and Regulatory Independence

I would now like to turn to the concerns expressed about the Bill’s potential impact on the independence of the legal professions. A number of these concerns have been directed at the impartiality of the new Legal Services Regulatory Authority and the modalities of its appointment, while others have been critical of the regulatory interface with the Government. It has been contended by some that the Bill could augur an era of improper interference with the independence of the two legal professions. Yet, the objectives of the Legal Services Regulatory Authority are predicated, inter alia, on having "an independent, strong and effective legal profession" and adherence to "the professional principles" contained in section in 9(5) of the Bill by legal practitioners who are required to act with independence and integrity, in the best interests of their clients and maintain proper standards of work. Moreover, they are also required to comply with the duties rightfully owed to the court and, subject to "any profession obligations" as "a legal practitioner, including any obligation as an officer of the court" to keep the affairs of their clients confidential. These are all absolutes under the legislation. There can be no Government interference in that regard.

Pursuant to section 9(4) of the Bill the Legal Services Regulatory Authority to be established will be "independent in the performance of its functions" and have the necessary powers and functions to achieve this. Its independence will be protected under the Bill. This will include new and independent procedures relating to allegations of professional misconduct by either solicitors or barristers. Such complaints will be dealt with under the auspices of the Authority's Complaints Committee and supported, where appropriate, by the work of the new and independent Legal Practitioners' Disciplinary Tribunal. Under the Bill, members of the public will no longer go to the Law Society or to the Bar Council and their respective disciplinary tribunals to deal with complaints, as happens at the moment, but will instead do so through the Legal Services Regulatory Authority.

The modernised legal costs regime being provided under Part 9 of the Bill will augment the disciplinary and complaints structures under the stewardship of the Office of the Legal Costs Adjudicator that will replace that of Taxing-Master and, for the first time in legislation, by stated Legal Costs Principles. The legal costs provisions of the Bill have been broadly welcomed by the Law Society and the Bar Council and by Dáil Deputies during the Second Stage debate of the Bill which concluded on 23^rd February.

All of these entities will be placed beyond Government interference. Clearly, the guiding principles of independence permeate the Bill’s key provisions, particularly those relating to the legal professions and the new regulatory architecture. The inclusion of these independence principles and their related objectives at various points in the Bill would not have made sense if there were a hidden or ulterior motive to usurp or undermine the independence and integrity of the legal professions. Not surprisingly these principles were studiously ignored by early opponents of the Bill or those interests who have chosen to paint themselves simplistically into the corner of self-regulation. Some of those who, in public discourse, portrayed the Government as intent on controlling the legal profession in their anxiety to preserve the existing arrangements of self-regulation, unfortunately confused their perceived self interest with the public interest.

Under this Bill, every lawyer will remain an officer of the court who is free to exercise independent judgment in the performance of his or her professional service, who must obey the rules of our independent courts, and who owes a duty of candour to the court. He or she must assist the court, appropriately, in the fair administration of justice and has rights and responsibilities to the court arising out of his or her relationship to it. One of his or her basic duties as an officer of the court is and will continue to be to make sure that the party that he or she represents receives a fair trial and ever lawyer will continue to be free to provide legal advice and legal services and to represent anyone in court proceedings in the absence of any executive control or pressure. All lawyers will remain completely free to champion fundamental rights under the Constitution and to sue the State before the courts without fear of executive disfavour, disadvantage or disapproval. They will also be free to sue the State in courts outside this jurisdiction such as, for example, the European Court of Human Rights and the European Court of Justice. Any suggestion to the contrary is grossly misleading and nothing other than partisan special pleading or political hyperbole.

Essentially, there is nothing in the Bill which acts as a barrier of any description to a lawyer - be he or she a solicitor or barrister – advising or representing an individual or a group of clients in respect of any matter relating to any legal issue or acting on a pro bono basis. Moreover, the importance of independence is further copper fastened by the criteria, for the first time prescribed in statute, applicable for the future appointment of Senior Counsel, which includes ensuring that a legal practitioner seeking to be so appointed has, in his or her practice, "displayed professional independence" as well as competence, probity, prescribed expertise and other appropriate skills and suitable characteristics.

Clearly, it is not valid in the context of this Bill to create a false impasse between the principles of professional independence and of independent regulation. They are not, of necessity, mutually exclusive. I believe that, taken together, the provisions of the Bill will make the independence of the two legal professions, and the independence of their regulation, both reciprocal and mutually reinforcing.Continued Roles of the Professional Bodies

Nor are the legal professional bodies to be suppressed. The Law Society will continue to represent solicitors and the Bar Council will continue to represent barristers. Also -

· They can set rules, regulations, practice notes and codes of conduct for their members

· They will retain their own committees, working groups and task forces.

· They will retain their representation on other bodies such as court rules committees.

· They will maintain a role in the field of legal vocational education and training.

· The Law Society will retain the Compensation Fund and administer the provision of Professional Indemnity Insurance (PII) for practitioners and the issue of Practice Certificates. A statutory minimum of PII cover will continue to apply.

· Both the Law Society and the Bar Council will nominate members to the Legal Services Regulatory Authority, the Authority’s Complaints Committee and the Legal Practitioners Disciplinary Tribunal.Progressing the Bill

I have never seen a Bill of this magnitude published by a Government and introduced to the Dáil that did not require some fine-tuning and amendment. That is part of the democratic process encompassed in the Bill’s Second, Committee and Final Stages. Under this organic process I intend to bring forward timely and appropriate amendments at Committee Stage to address a number of issues. I am more than happy to consider further constructive amendments within the Government’s stated policy objectives to which I have referred in my opening remarks. I am grateful to the Law Society for its continued, constructive engagement and inputs in relation to the Bill and, in that spirit, I am happy to share some of my thinking on how it may now progress.

This brings us neatly to the question of the Bill’s generic provisions, based on standard legislative precedent, for a range of ministerial consents. In December I indicated that I would be removing the need for ministerial approval for any Codes of Practice which the Legal Services Regulatory Authority proposes to apply to the legal profession. I am also actively considering other instances in the Bill where similar amendments might arise and where, having reflected on the contents of the Bill, I see no benefit or public interest in certain actions of the Regulatory Authority requiring ministerial consent.

Similarly, I am considering possible amendments in the context of creating an appropriately independent procedure for the appointment of lay members of the Legal Services Regulatory Authority. There are various models of reference by which this might be achieved. One of these is the possibility of advertising through the Public Appointments Service for expressions of interest and another, with which I would have a personal affinity, relates to the option of drawing from a pool of nominating bodies. The Law Society and Bar Council are, of course, already named nominating bodies for the appointment of solicitors and barristers to the new Authority. I also intend to bring forward an amendment at Committee Stage in respect of section 8 of the Bill in order to make provision to stagger the appointment of members of the Authority. This would be similar to the provision contained in section 10(7) of the Property Services Regulation Act 2011. Such a measure would ensure continuity in the expertise and effectiveness of the Authority, while safeguarding against the unilateral removal or roll-over of its entire membership in one sweep.

I am revisiting the complaints processes, as outlined in Part 5 of the Bill, with a view to providing greater clarity in respect of the independent appointment of members to the Complaints Committee and the Legal Practitioners’ Disciplinary Tribunal, as well as the manner in which complaints will be dealt with by the Authority, the Complaints Committee and the Disciplinary Tribunal. I see merit in having a greater role for the Authority in settling complaints, as far as possible, by agreement between the parties or by mediation, particularly when the complaints do not relate to very serious matters but are clearly of concern to the complainant. In New South Wales there is a clear distinction made between what are regarded as consumer complaints and allegations of misconduct and I believe the approach of the New South Wales Legal Service Commissioner of interest in this context. It is important that this facility be available before the more formal processes of the Complaints Committee and the Disciplinary Tribunal would come into play.

Serious consideration is being given to the issue of Limited Liability Practices, an option which I know to be of interest to the Law Society. I will examine this in all its aspects including in relation to ensuring adherence to the professional principles and considering the current Professional Indemnity Insurance regime, levels of personal liability exposure and the possible implications of any changes for solicitors’ indemnity cover generally and for its cost. There is, of course, already some provision in law for limiting liability by agreement with a client and the Bill replicates the current provisions in section 44.

Many aspects of the Regulatory Authority and its governance are thus being considered in perfecting the Bill. While they have, as I said, been subjected to standard legislative provisions in preparing the Bill, I am satisfied that they can be enhanced in order to allay any fears or perceptions regarding the possible imposition of any undue political, administrative, financial or other dependencies on the new Regulatory Authority.Independence of Regulatory Authority and Staff

The independence of the new Regulatory Authority and of its attendant complaints and Disciplinary Tribunal procedures is fundamental to their success and to the avoidance of any perception that complaints about lawyers are being dealt with by lawyers themselves or their representative bodies. Under the Legal Services Regulation Bill 2011, therefore, the complaints systems currently operated by the legal professional bodies are to be replaced by new procedures the independence of which will have to be reflected in the relevant recruitment and appointment processes.

Staff appointments to the new Authority and its complaints or disciplinary components would be better made by the Authority itself under a public competition carried out, for example, by an entity such as the Public Appointments Service. It would not be appropriate in meeting the desired standards of independence and impartiality for its staff to be appointed directly or indirectly by one of the professional bodies or by a Government Minister under the traditional civil service model. We have to meet the requirements of the public interest and achieve public confidence in the independence of the new Regulatory Authority and its disciplinary framework. Consequently, I do not want to create any unrealistic expectations around these issues. While I acknowledge that the transition to a new and independent complaints architecture under the Bill will have an undesirable impact for some staff of the Law Society currently involved in that area it will be open to such staff - who would obviously possess the relevant skills and experience - to offer to apply for positions advertised by the new and independent Legal Services Regulatory Authority. Regulation Models and Costs

A number of speculative assessments have been put forward on the potential costs of the new Legal Services Regulatory regime and their possible passing-on as an additional cost to consumers of legal services. Much of this argument has been fallacious in that it has cited exorbitant and unrealistically high levels of average salaries for a statutory supervisory body and based itself on models of sufficient expansiveness to support the case of those opposed to the reforms enshrined in the Bill. Opposers of the Bill have also very selectively ignored the reality that both legal professions already pay substantial fees in support of duplicative frameworks encompassing disciplinary committees and their attendant adjudication, appeal and tribunal structures. As you are all aware, these substantive costs are already being levied on practitioners with the attendant impact on consumers of legal services.

Under the Bill the new Legal Services Regulatory Authority will be made responsible for a number of supervisory and disciplinary structures, in the case of barristers for the first time under legislation. The relevant regulatory costs should logically transfer from any existing structures in these areas to the new regulatory architecture. This should be proportionate to the functions and levels of work activity involved. The Bill seeks to provide a formula that will reflect the respective levels of work that arise under the new regulatory regime from the two legal professions and to share the cost burden of that work fairly and proportionately between them. The new Regulatory Authority will be a lean organisation adequate for the tasks with which it is entrusted. As part of the Regulatory Impact Analysis that will be made available in advance of Committee Stage of the Bill I will be providing an overview of structures and costs for the new regulatory architecture and I am confident that this will not reflect the outlandish scale and cost of the supersized alternatives that some have mischievously cited. Moreover, the emphasis in the Bill on compliance based regulation taken together with the compliance based requirements for risk management now imposed for practice insurance should ultimately reduce the cost incurred by consumer complaints and allegations of misconduct. If the Authority properly having full bedded down fulfils its functions there should, after an initial period, be a year on year reduction in such complaints. In this regard, we can replicate the experience of New South Wales.

The reason I would be confident about this matter is that this Government formed a legal reform policy from the perspective of our jurisdiction and what would be the best fit for it legislatively at this time and into the future. The proposed mimicking of the supervisory models of other common law jurisdictions has not really been conducive to realistic debate on the Legal Services Regulation Bill. It has ignored the stark a-symmetries at play between the legal sectors involved and the fundamental constitutional guarantees and safeguards upon which we can rely. It is not without reason that David Clementi made it clear that his findings were not intended to be a model for other jurisdictions. Nor would we have the desire or financial capacity to establish a Legal Services Board costing 5 million pounds sterling per year and a Solicitors’ Regulation Authority with an annual budget of 22 million pounds sterling. But that approach is the one taken by the authorities in England and Wales to meet their particular regulatory needs in a sector with a multiplicity of historically established niche actors. We have no need to use a model based on multiple regulatory bodies for each branch of the legal profession including legal executives, notaries, conveyances, legal costs accountants and conveyancers - to name but a few. Between them England and Wales have a total of 157,000 solicitors to supervise along with 15,000 barristers and 9,000 legal executives, again to name but a few. We have a combined total of over just over 10,400 solicitors and barristers.

But there are elements of the successful new regime the authorities in England and Wales have developed that we may wish to consider and emulate. They have been able to roll-out a succession of models of alternative business structures beginning in 2009, including Legal Disciplinary Practices and Conveyancer-Led Practices now culminating in the introduction of Multi-Disciplinary Practices. In the process they have developed a system of "Outcome Focussed Regulation" with supporting resources for practitioners and have encountered a surprising level of interest among small and family-run firms in the new alternative business structures. At the same time, most of the controversy and teething problems arising from the introduction of the new legal structures have now abated.Modernisation and New Business Models

The settling-in of the new regime in England and Wales provides something of an antidote to the scaremongering about the threats of a proliferation of alternative or multi-disciplinary legal practices which has taken place in our jurisdiction. As I have already outlined, we are not alone in facing these areas of reform - such practices are now being established in other jurisdictions where a great deal of work has been done on how one deals with the regulatory ethical issues concerned. No one in the legal profession should be threatened by the possibility of barrister partnerships, barrister-solicitor partnerships or multidisciplinary practices. As many are well aware, in the legal profession there are what I would describe as virtual partnerships between some members of the Bar and solicitors with whom they have a natural working affinity and match of required expertise. Similarly, solicitors can choose to regularly interact with a very small number of members of the Bar. Other practitioners are operating cyber networks that can match the expertise of individual practitioners to the stated needs of clients making contact on-line.

The new Bill includes several measures aimed at opening up the provision of legal services in a way that takes account of the emergent legal business models. It provides a framework for key structural reforms building upon a series of public consultations. These will be used, on the basis of the consultative process, to address key issues such as -

§ partnerships between barristers; barristers and solicitors; lawyers and non-lawyers (also known as multi-disciplinary practices)

§ direct access to barristers on contentious business

§ the possible unification of the two legal professions

§ the education and training of legal practitioners

The Bill also contains other modernisation provisions which provide new opportunities for legal practitioners as follows:-

o it will be possible to establish multi-disciplinary practices.

o solicitors and barristers will be allowed to act jointly as advocates in court and other proceedings.

o for the first time express provision is made for solicitors to be appointed Senior Counsel.

o The Law Society and the Bar Council will, as I have pointed out, be more the representative organisations of the professions and will have less constraints on that area of their activity arising from their regulatory inputs.

o clients will be able to nominate who should lead their case where members of both legal professions are involved and cannot agree.

o procedures will be put in place to ease switching between the two legal professions of barrister and solicitor.

o legal practitioners working for private or State entities will be allowed to act as advocates in court proceedings for their employers.

o the new Legal Services Regulatory Authority may make regulations in relation to the advertising of legal services.

o practising barristers who share premises and costs as a group are to be allowed to advertise themselves as such.

o solicitors will be able to employ barristers in their practice if they wish to do so.

o a whistleblowers provision will protect employees who report professional misconduct.

A number of benefits accruing to legal practitioners under the proposed alternative business and multi-disciplinary models have been identified. These would include –

o Increased clientele generated by linking-up with the client base of other professional service providers.

o Greater access to investment, liquidity and debt equity in support of practice viability and business expansion - nationally or internationally.

o Better spread of financial risk which will lower the rate of return on investment and encourage it while achieving economies of cost at the same time.

o Increased operational flexibility and service options that are more attractive to consumers by creating working synergies with non-legal providers in areas such as insurance, real estate, accounting, finance.

o Greater discretion in the hiring and retention of high-quality legal and non-legal staff with incentivised remuneration.

o More choice and opportunity for new or as yet untapped legal professionals who are in the labour market but inhibited or restricted in opportunity by existing structures.The New South Wales Experience

I have recently returned from Australia where, in addition to performing official St. Patrick’s Day duties, I have had a meeting with the Legal Services Commissioner of the State of New South Wales, Mr. Steve Mark. The State of New South Wales has led the way on legal sector reform since the early nineties. I also took the opportunity to visit a large multi-disciplinary practice in Sydney which had been made possible by that State’s Legal Profession Act of 2004 and meet the solicitor managing partner of a medium sized multi-disciplinary practice. Efforts are also underway to bring all States in Australia under one overarching piece of legislation to regulate the legal sector on a national basis in the future. The Commissioner had a number of positive observations to make on the roll-out of alternative and multi-disciplinary practices.

Initial fears that large accountancy or corporate service firms would dominate and take-over the legal profession have not been realised. Concerns that the ethics of legal practitioners would be diluted or displaced by multi-disciplinary practices have not come to pass – rather, the opposite has been the case. This has been facilitated by the New South Wales Office of the Legal Services Commissioner in the words of Steve Mark "entrenching and promoting ethical behaviour and encouraging the profession to remain a true profession as well as operate like a business". Ten objectives of sound legal practise were identified and prescribed for compliance. I have circulated with my script an article by Steve Mark addressing some of the Australian reforms which include these. The result has been the application of robust legal ethics to new practice structures. My overall impression has been that the new legal business models can be introduced prudently and effectively and that we are in the happy position to learn from the roll-out of the various models in other jurisdictions and to avoid the difficulties they have encountered while drawing, where appropriate to our policy objectives, from the solutions to those difficulties that are on offer. I was also reassured by the lean and highly cost-effective regulatory structures New South Wales has in place and by the obvious cost-savings that can be made by taking a risk-based approach to statutory supervision and in its daily application to practitioners so that the risks of regulatory failure are mitigated from both sides of the new regime. I am delighted to see that there was a risk-management module in the Skillnet Business Symposium which you held here yesterday and to see some aficionados of risk management in attendance today.

So, let us not succumb to "future ghosts" but shape the reality of our future. I have just seen that future in the State of New South Wales, Australia, which has been to the forefront internationally in rolling-out new legal service models and reforms since 1994. Yes, that’s 1994, the year in which we facilitated similar reform under the Solicitors (Amendment) Act. Unlike us, New South Wales followed through. Neither their world nor the legal professions have collapsed, there was no unseemly stampede to new business structures and the traditional practice models remain. No lawyers were pilloried or oppressed and their legal practitioners continue fearlessly to enjoy the professional independence that is their due.

Similarly, under our Legal Services Regulation Bill, while providing for new business structures to deliver legal services, members of both professions will continue to be entitled to deliver legal services under the current structures of solicitors’ practices and through the Bar Library. The alternative business and multi-disciplinary models are discretionary and not imposed while providing flexibility and opportunity for the competitive provision and consumption of legal services into the future. Such change is not something that can be rolled out instantly. The Government recognises that prudential safeguards will need to be put in place for professionals and consumers. Under section 75 of the Bill the Authority will carry out a public consultation and evaluation process and then report to the Minister on the manner in which these models for delivery of legal services should be formed and operated. I wish to emphasise that it is only when this process has been completed that the relevant provisions by way of regulation or codes of practice or otherwise can be framed.A Balanced and Progressive Bill

It is, I think, fair to say that in developing the Bill to date substantial, positive progress has been made towards achieving the desired balance between the independence of the legal professions and the Government’s stated policy objective of independent regulation. The relevant professional standards and objectives are specified and upheld in statute for the very first time under this Bill. The standard ministerial consents and appointment procedures that apply to statutory bodies generally and were availed of in the initial drafting of the Bill are being enhanced to uphold the relevant principles of independence to the utmost degree. As I have outlined in some detail, I am actively considering amendments that will place the new regulatory and disciplinary architecture for the legal professions beyond any undue interference by Minister or Government. This effectively lays to rest those concerns about impinging on the independence of the legal professions that have been voiced, sometimes irrationally, in relation to the Bill and its motivation.

As we approach Committee Stage we have reached a point where the Bill provides for an independent Legal Services Regulatory Authority, an independent complaints framework and an independent Legal Practitioners’ Disciplinary Tribunal. These are being buttressed by the functions and powers of a modernised Office of the Legal Costs Adjudicator, with the support of transparent Legal Costs Principles and procedures. The provisions of the Bill relating to legal costs, complaints and legal education already have broadly declared support at both the professional and political levels. Moreover, the Bill ends restrictive anti competitive legal practises by providing for solicitors and barristers acting as joint advocates in court proceedings and enabling the appointment of solicitors to the position of Senior Counsel. The Bill is, therefore, already opening up the path of the legal services sector to the future and its new business technologies in a way that will benefit the legal professions as much as it will enhance the position of their clients.

I wish acknowledge and thank those bodies including the Law Society, the Bar Council, Kings Inns, Dublin Solicitors’ Bar Association, other associations and bodies and also individuals who furnished very detailed submissions to my Department with regard to possible amendments, changes and developments of the Bill to fine-tune its provisions. I will build on these submissions to ensure that when we establish the Legal Services Regulatory Authority, it will be competent and able to fulfil its duties, undertake its work and meet the onerous obligations imposed on it under the terms of the legislation with an appropriate balance of the relevant professional and independence principles.

Both of our legal professions have been to the forefront of the public life of this State both professionally and politically and have sustained it and nurtured it to recovery through the troubles and vagaries of our past. I have every confidence that we can continue to make such a positive contribution to our nation’s recovery from the current crisis which we face, including within the realms of reform of our own professional domain. While it is understandable that those involved in the provision of legal services will continue to be concerned about their professional standing under the new Legal Services Regulation Bill, I would, in light of the many considerations I have put forward, encourage practitioners of both legal professions to embrace the Bill, support its development and thereby open the way to modernisation and reform. It represents a watershed opportunity to modernise legal services at the professional, business and transactional levels and allows us to be duly adaptable as a profession in response to the pressing challenges we face at this unique time.