12 September 2011 | By Joanne Harris
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With wide-ranging legal reforms on the table, the Irish profession is set for a shake-up, says Joanne Harris
It is now seven years since Sir David Clementi published his review of the regulatory framework for legal services in England and Wales, the forerunner of the Legal Services Act which is due to come into force in October this year.
Now Ireland is gearing up to follow suit, with proposals for a Legal Services Bill that could see the country’s legal profession embrace concepts such as LLPs, alternative business structures and splitting regulation from representation.
In June a study of the state of the profession, including recommendations, was published by Anne Neary Consultants. The Blueprint Report followed recommendations made by the International Monetary Fund (IMF) linked to the bailout of Ireland’s financial sector.
The memorandum drawn up between the IMF, the EU and the Irish government stated that Ireland had to make legislative changes in “sheltered sectors”. For the legal world that meant “establishing an independent regulator for the profession and implementing the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations to reduce legal costs”.
The Competition Authority report referred to was produced as long ago as December 2006. Its recommendations included the establishment of an independent legal services commission, separating the regulatory and representative functions of the Law Society and Bar Council, implementing measures designed to reduce costs and permitting direct access to the bar.
The IMF stipulation seems to have accelerated the process of implementing the changes proposed by the Competition Authority, and a bill is expected to be published soon.
The Legal Services Bill 2011, in respect of which substantial work has been undertaken, is currently being developed and finalised in consultation with the Office of the Attorney General,” comments a spokesperson for the Ministry of Justice. “It is a specific national commitment under the EU/IMF structural reform programme aimed at modernising the provision of legal services, reducing legal costs and supporting national competitiveness and economic recovery. It will be published by the end of September.”
Ireland’s minister of justice Alan Shatter, himself a qualified lawyer, has spoken publicly about his aim of pulling the profession into the 21st century.
“I thought that was a good comment because the legal profession is changing radically, from being professional gentlemen to providing commoditised legal services in many areas,” says Anne Neary, who co-authored The Blueprint Report with her colleague Frances O’Toole.
Neary believes that following the lead of legal reforms in the UK would benefit the profession, including the addition of structures that would permit firms to limit the liability of individual lawyers.
Such structures, including LLPs or limited liability companies, would allow firms to expand more rapidly and in a more corporate fashion, according to Neary.
“[Firms] feel that the single biggest issue they would like to see changed is to allow them to deliver services as corporate entities and take that route, rather than unlimited liability partnerships,” she adds.
Of course, switching to such a structure would force the traditionally reticent Irish firms to be more open about matters such as financial information.
Mason Hayes & Curran is currently the only large Irish firm that reveals its turnover. Managing partner Emer Gilvarry says this is because the firm believes such transparency “is the way of the future”.
Gilvarry adds that clients seem to welcome the publication of figures, although she admits the steady growth of the firm in recent years has helped too.
“It’s important for clients at this time to know that they’re aligned to a successful business,” she says.
Gilvarry also welcomes the proposals to split regulatory and representative functions at the Law Society.
“There’s always a confused message - not from the Law Society but about the Law Society - as to whether it’s a representative body or a regulatory body,” she adds. ”Having a clear line would allow any confusion about the society’s role to abate in the public’s mind.”
Mid-tier firms also support the proposal to split regulation from representation.
However, there are concerns that too much regulation will impose a cost burden on firms they can ill-afford, especially with rising insurance premiums still a concern.
The more regulation there is, and the heavier that regulation is, will inevitably be reflected in prices, according to Eugene F Collins managing partner Sean Twomey.
Until the publication of the Legal Services Bill the precise nature of the reforms in store for the Irish profession are uncertain. However, it seems clear that something will happen, and in years to come the Irish legal market will function quite differently from the way it does at present.