THE Law Society, the ruling body for solicitors, will retain the right to regulate solicitors' accounts and investigate possible frauds and dishonesty.
The society's regulatory arm has come under fire in the wake of the jailing of former solicitor Thomas Byrne, but it has persuaded Justice Minister Alan Shatter to allow it to continue regulating key aspects of the solicitors' profession.
Under the Legal Services Regulation Bill, solicitors and barristers were to be stripped of their right to self-regulate.
But the society, which has paid out more than €21m to clients of dishonest solicitors since the onset of the recession, has secured a major concession ahead of reform of the legal sector, a move that could save 60 jobs in its regulatory division.
Complaints about solicitors and barristers will be handled by a new Legal Services Regulatory Authority (LRSA), but Mr Shatter has decided to leave the financial investigation of solicitors' practices to the society.
Mr Shatter, who will publish final amendments to the bill before Christmas, would not comment on the U-turn last night. But the policy review is based on a fear that taxpayers could be left with responsibility, or potential future liability, for breach of financial regulations by practising solicitors.
Last night, John P Shaw, the president of the Law Society, warned that its €17m compensation fund would come under pressure if more cases like Thomas Byrne emerged.
But he insisted that the society was best placed to regulate solicitors because practitioners paid for the fund.
"The fund is well funded for any potential impact in the next year or the next two years," said Mr Shaw. "But if there is another Thomas Byrne and another Thomas Byrne after that, we would have to go back to the profession to raise further funds."
Thomas Byrne has begun a 12-year jail term after he was convicted of a €52m fraud. The Dublin-born ex-lawyer was investigated by the Law Society at the height of his fraudulent borrowing spree and stole from longstanding clients and friends after the society discovered a €1.7m deficit in his client accounts in 2005.
The society has defended its handling of the Byrne case. "At no time prior to October 18, 2007, was there any evidence available to the Law Society disclosing dishonesty, let alone criminal acts, on the part of Byrne," said Ken Murphy, director general of the society.
"Up until then, the most that could be proved was that he was very poor at keeping his books of account and had a very poor record of compliance with regulations."
In its submission to the Government, the society said that the compensation fund had ensured that all clients of solicitors had recourse to compensation where loss arose as a result of the dishonesty of a solicitor, regardless of the size, location or nature of the solicitor's practice.
The society has insisted that 152 of the 163 claims in relation to Byrne were paid in full and says all valid claims were paid.