Reform of the legal profession is a challenge for more than the Competition Authority, writes John Fingleton
In its report on competition in legal services published yesterday, the Competition Authority finds that competition in the legal profession is unjustifiably restricted by legislation, regulation, and conventions that have built up over decades, if not centuries. Access to legal education is determined by monopoly establishments controlled by lawyers. The ability of business and individual consumers to make informed choices is limited. The ability of lawyers to organise their practices so as to deliver services to their customers more efficiently is restricted.
Full and open competition in legal services will require the removal or modification of all disproportionate restrictions on competition. But that will not be enough to prevent new and innovative anti-competitive restrictions from re-emerging. A particular feature of the Irish system of legal regulation is that it relies heavily on self-regulation by lawyers themselves. This involves a serious conflict of interest.
Each of the regulatory bodies is controlled by lawyers. Two of them, the Law Society and the Bar Council, also represent their members' interests. External oversight of self-regulation, where it exists, is below best-practice levels.
For that reason, the authority's most important and most radical proposal is the revamping of the regulatory structure of the profession, with the creation of a Legal Services Commission, an independent body composed primarily of non-lawyers. This commission would regulate both branches of the profession, either alone or as a supervisory body of existing or new regulatory bodies. If the supervisory option is adopted, then the regulatory bodies would not be able to represent the interests of lawyers.
The establishment of a Legal Services Commission would bring the regulation of the legal profession into line with other professions in Ireland, such as doctors and dentists, and with other sectors of the economy, such as financial services. Similar measures are already under consideration in the UK, and have existed for some time in a number of states in Australia. This proposal would create greater public confidence in the legal profession.
The authority has made over 40 other proposals to address such restrictions as the monopolies in legal education held by King's Inns and the Law Society, restrictions on advertising (especially barristers' advertising), the restriction on barristers dealing directly with members of the public and restrictions on the sort of business structures barristers and solicitors are allowed to form. The authority is also recommending greater transparency in the way fees are charged and in the way the title of senior counsel is awarded.
Many of these proposals, if implemented, will mean considerable changes in the way in which the Bar especially is organised. What none of them will do, however, is abolish the concept of an independent referral Bar. Such a Bar has existed here for centuries, as it does in the UK.
While we propose the lifting of restrictions on the ways in which barristers can organise themselves and while we also propose allowing direct access to barristers' services, it is important to note that all we are proposing is freedom of choice. Nothing in our report obliges barristers to form partnerships, just as nothing forces them to provide services directly to clients. We simply say that they should not be prohibited from doing these things.
In carrying out this study, the authority's function was to analyse the market and to make proposals for change. It has now done so. The next stage is implementation, and here the burden passes to others. It passes first of all to lawyers themselves, both barristers and solicitors. This is their opportunity to engage in voluntary reform.
Self-reform by the Law Society, the Bar Council and King's Inns offers the most effective and speedy way to deliver the full benefits of competition. A clear statement by the Government that it is committed to bring forward legislation to ensure full and open competition in legal services would further encourage the process of voluntary self-reform.
Apart from the profession itself, and the Government, action is also required by others before the benefits of the lifting of restrictions can be fully enjoyed. For example, one of the principal restrictions identified in the report is the monopoly held by King's Inns and the Law Society in the provision of barristers' and solicitors' education.
The authority recommends that this monopoly be removed and the way opened for other education providers to offer training courses for barristers and solicitors. The regulatory bodies and the legislature can remove the monopoly and establish criteria for the offering of new courses. But that is as far as they can go. Potential providers who have told the authority that they want to establish courses for barristers and solicitors would then be free to do so.
It is important then that people do not view our proposals as ends in themselves. Removal of restrictions allows competition to operate, but it doesn't guarantee competition. Responsibility now moves from the authority to the various bodies whose function it will be to implement the different proposals - the Government, the Law Society, the Bar Council and King's Inns - and moves on from them to potential entrants into the market who can provide new services, and also to members of the profession itself, who will hopefully take responsibility for exercising the new freedom that removal of the restrictions would give them. This is the real challenge for the future.
Dr John Fingleton is chair of the Competition Authority
Full text of Competition Authority report is available at ireland.com