Monday 5 December 2016

EU to scrutinise reforms of 'crushing' legal bills

Published 16/04/2016 | 02:30

Photo: Andrew Parsons/PA Wire
Photo: Andrew Parsons/PA Wire

EU chiefs are now monitoring efforts to reform legal services in Ireland amid continuing concern over high fees.

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The disclosure comes after a European Commission report expressed scepticism that reforms aimed at increasing competition in the sector would be successful.

High legal costs have come to the fore in recent weeks, with the National Competitiveness Council linking the issue to soaring insurance premiums.

Mr Justice Max Barrett also raised the issue in a judgment published this week, saying a systemic solution was needed to the "crushing cost of High Court litigation".

In a statement, a spokesman for the Commission said it was carrying out a process of continual assessment on the impact of regulation in member states under a professional qualifications directive.

The spokesman said it did not aim at regulating or deregulating professions, but would recommend modernisation and support reforms "especially in priority areas, such as the legal profession".

The comments came after a Commission country report for Ireland, published in February, said the planned Legal Services Regulatory Authority should "contribute to reducing high legal services costs".

However, the report contained an air of scepticism as to whether this would actually happen, saying: "The proof of the pudding will be in the eating."

In it, the Commission said it was "too early to be fully confident that the new framework will be effective". The report said much would depend on the proposed new body's ability "to assert its independence" and "to defend society at large against vested interests".

The authority was promised by the last Government following significant pressure from the Troika over the cost of legal proceedings and the need to improve efficiency in the legal sector.

However, although legislation underpinning it was passed last December, the authority is still not in place and no chief executive has been recruited or board appointed.

The country report noted that high legal costs were hurting competitiveness, saying the issue was "a major concern" for companies, "including for those considering whether to start operations in Ireland".

It said the proposed new regulator opened the door to increased competition and would allow for oversight by an external body.

But it also found the process of reform of the legal profession in Ireland had been very slow and "its ambition has been tamed". The document noted there had been significant concessions to the Law Society and Bar Council before the bill allowing for the setting up of the authority was passed.

"An unusually high number of amendments were introduced late in the legislative process, touching upon major issues such as complaints, limited liability partnerships, membership of the Law Library, indemnity insurance, and financial and accounting oversight of solicitors," it said.

"Some of the concessions made to the legal professions have significantly reduced the initial ambition of the reform.

"This will affect the prospects of allowing the entry of innovative players and enhancing competition, including as a result of more stringent insurance requirements and a ban on corporate bodies taking part in possible multidisciplinary practices."

Earlier this week the Irish Independent revealed details of a memo for the Government prepared by the National Competitiveness Council on rising insurance costs, which noted prices for legal services had "proved extremely sticky" during the recession, failing to fall to the degree that might have been expected.

The Law Society has disputed the claims, saying gross incomes for self-employed solicitors fell 43pc between 2007 and 2012. It has also denied legal fees are driving up insurance costs.

Irish Independent

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