Andy: In Which the Legal Profession Stomps on the Little People

John Deasy TD estimates that the Mahon, Moriarty and beef tribunals cost about €250 million in total and that their major impact was to make “the Dublin legal profession a lot richer”.

That profession’s determination to get richer still has been much in evidence of late.

Specifically, the government has just unveiled new legislation on the regulation of legal services. Some advances have been made, but in at least two important respects, the lawyers have won the right to keep on regulating themselves in a manner contrary to the public interest.

Firstly, the original draft legislation envisaged barristers being able to join up with solicitors in new, more flexible (and hopefully cheaper) multi-disciplinary practices, but, under the new legislation, the Bar Council can refuse membership in the Law Library to any barrister doing this.

Former Justice Minister Alan Shatter says this means proposals for barristers partnering with solicitors are now “effectively off the table”.

Secondly, the Law Society retains the right to regulate the financial affairs of solicitors, including overseeing how solicitors deal with clients’ funds.

The Competition and Consumer Protection Commission dolefully concludes that “the views of the Law Society and the Bar Council have been privileged over those of the consumers of legal services”.

According to Arthur Beesley of the Irish Times, “the sense remains in Coalition circles – and within the legal community – that the established bodies have seen off what they see as the most damaging [to them] elements of the plan”, following a successful lobbying offensive that probably “went all the way to the top”. Both Fine Gael and Labour have prominent members who are lawyers.

Colm Keena, also of the Irish Times, has launched a curious defence of the new legislation, saying that one would expect the legal profession to be formidable advocates of their case and that we should be worried if they were not. This rather overlooks the fact that a case that is contrary to the public interest remains contrary to the public interest regardless of how well it is argued.

Keena also quotes (and does not challenge) Ken Murphy, director general of the Law Society, to the effect that the recession has already exerted downward pressure on legal fees. In reality, a 2013 study by the European Commission found that the cost of legal services in Ireland was 12.1 percent above their 2006 level.

And while law firms claim they are facing greater competition, a recent study found that profits over the last year had risen in two-thirds of the 105 firms surveyed.

Bodies such as the Medical Protection Society (which provides indemnity cover for Irish doctors) claim that Irish legal fees are the highest in the Western world. They point to the fact that a senior barrister will typically charge a fee of €30,000 for a short trial in Ireland, which is double what a Queen’s Counsel would usually cost in England.

They also make the point that Irish barristers will sometimes insist that junior counsel receive an additional 50 percent of the fee paid to senior counsel, regardless of whether the junior counsel actually does any work.

The World Bank’s latest Doing Business report showed that legal costs for enforcing contracts constitute, on average, 27 percent of the value of the claim in Ireland, compared to 14 percent in Germany, 16 percent in Finland, and 18 percent in Austria and Belgium.

It is figures such as these that prompted the “troika” (the European Commission, the European Central Bank and the International Monetary Fund) to call for the reduction of Irish legal costs as part of the 2010 “bail-out” programme.

And while the government has been ready and willing to slash costs in other areas, including substantially cutting public-sector pay, the legal profession has largely managed to fight off the pressure for reform.

There are concerns other than just costs about how sectors of the Irish legal profession operate.

For example, Dublin solicitors Arthur Cox acted for both Siteserv and businessman Denis O’Brien during takeover negotiations that later saw the now-O’Brien-owned company receive a substantial and controversial write-down of debt – amounting to €110 million – from the state-owned Irish Bank Resolution Corporation (the former Anglo Irish Bank).

While Arthur Cox denies any wrongdoing, the appearance of a conflict of interest in a matter of such huge public importance might have been expected to trouble the sector’s regulators.

Taoiseach Enda Kenny said in 2011 that he wanted Ireland to be “the best small country in the world in which to do business”. But the reality is that “competitiveness” is for little people. When it comes to the golden circle of privileged insiders – including the elite of the legal profession – cost control goes out the window, and transparency and proper regulation go with it.