THE PROPOSED regulatory authority for the legal profession will cost between €5.3 million and €8.6 million more than running the existing regulatory regime, leading to increased costs to consumers, according to an economic assessment commission by the Bar Council.
It pointed out that no regulatory impact assessment had been published prior to the publication of the Legal Services Regulation Bill, and it argued that proper oversight of the existing model of self-regulation was a better and cheaper alternative.
The study was carried out by Comecon-Competition Economics for the Bar Council, and it examined the proposed legal services regulatory authority, the tasks set out for it under the new Bill, the alternative proposals made by the Competition Authority in its 2006 report and the existing regulation regime.
Minister for Justice Alan Shatter said the Government will be publishing its regulatory impact assessment of the Bill in advance of the Bill’s forthcoming Committee Stage. He said he was “extremely disappointed at the Bar Council’s continued, misguided and misleading campaign against legal sector reform and, in essence, against any form of independent regulation of its own members.”
Regulation of the legal professions is carried out by the Law Society for solicitors and the Bar Council for barristers. In 2011 this cost the Law Society €11.6 million, including running the Solicitors Compensation Fund, and the Bar Council’s regime cost €130,000. Very few complaints are made against barristers, who do not handle clients’ money.
According to the report, the Bill was now in its second stage in the Dáil and still no impact assessment had been published, despite it being stated Government policy that an assessment should precede policy initiatives. This raised the possibility that such an assessment, when it was published, would be an ex-post justification rather than an objective analysis, it said.
Self-regulation reduces the cost of regulation because it reduces the cost to the regulator of acquiring information, it said. While self-regulation can be abused, such abuses can be prevented by proper oversight, as was proposed by the Competition Authority, the authors said.
Neither the Competition Authority nor the Minister had put forward a case to show why changing the regulatory structure would lower prices, they said, arguing that it was likely to increase them, and the increased costs would bear particularly heavily on barristers.
The report assesses the costs of the proposed new regime on the basis it would take on 47 of the Law Society’s existing 59 regulatory staff, and take on another three to deal with the regulation of the Bar. The Bill proposes a number of additional tasks for the new authority, and this, along with the need for administrative and support staff, would bring the number of staff to about 80 full-time staff.
The report compared the payroll costs of various regulatory bodies, including the Commission for Aviation Regulation, the Medical Council, the Commission for Energy Regulation (CER) and ComReg, and set out two costs scenarios: one based on CER average salaries of €74,452 and the other on ComReg average salaries of €94,706. It calculated there would be a 50/50 split between payroll and non-payroll costs.
Based on these comparisons, the report estimated that the cost of running the new authority would be between €17 and €20 million, compared with €11.7 million at the moment. As the Bar would have to bear more than 10 per cent of this under the Bill, this would increase the cost to each barrister by between 14 and 18 times.