[a] Regulation of solicitors
in Northern Ireland is a statutory
and delegated function conferred on LSNI (principally) by the Solicitors'
(NI) Order 1976, as amended by the Solicitors' (NI) (Amendment) Order
1979;
[b] By virtue of this primary
legislation, and secondary regulations made thereunder, LSNI through
its governing Council is responsible for regulating professional standards,
the propriety of solicitor's professional conduct in general and the
handling of client's funds in particular, professional indemnity insurance
and client compensation requirements, as well as the handling of complaints
about solicitors made by their clients;
[c] The regulatory, disciplinary
and compliance context within which LSNI operates is not self-determined.
The main principles and parameters are in fact laid down by Parliament,
and further reinforces that in Northern Ireland the public interest
has informed and continues to be reflected in the governing primary
legislation.
[d] In the exercise of its
functions LSNI is subject in various ways to the oversight and supervision
of the Lord Chief Justice of Northern Ireland. For example, the LCJ
acts in an appellate capacity for certain purposes, in the admission
of solicitors to practice, and generally his concurrence is required
before any Regulations approved by the Council can be implemented. This
structure of accountability reflects the position of solicitors as officers
of the court and members of an independent profession within the justice
system;
[e] Apart from the supervisory
jurisdiction of the Lord Chief Justice, LSNI is subject to a number
of other "checks and balances". As a matter of policy and
statute, provision is made for independent lay members to participate
in the consideration of clients' complaints. In the more serious cases
of professional misconduct, including breaches of the regulatory requirements
prescribed by LSNI, and of inadequate professional services to clients,
LSNI itself does not adjudicate but refers the matter to the Solicitors
Disciplinary Tribunal. This body again established by statute, is independent
of LSNI. It is comprised from a panel of senior solicitors and lay persons
appointed by the Lord Chief Justice. Where the question of referral
on to the Tribunal arises out of a client complaint, both the individual
client and the independent Lay Observer have a free-standing right to
complain direct to the Tribunal;
[f] As an additional client
protection measure, all solicitors in private practice are required
to maintain Professional Indemnity Insurance at a level and to a specification
prescribed by LSNI. This cover is a pre-condition to the ability to
practice. As in Scotland (but not in England and Wales) LSNI has operated
successfully for many years a mutual form of Professional Indemnity
Insurance (through a corporate Master Policy) which provides a guarantee
of recovery to clients where loss has been suffered through the actions
of solicitors. This reflects positively the willingness of the profession
in Northern Ireland to assume a collegiate approach to, and responsibility
for, client protection;
[g] On the same principle,
LSNI maintains by statutory authority a Compensation Fund. This Fund
is uncapped, is maintained entirely by contributions from practising
solicitors, and again is a prerequisite to the right to practice. The
Fund provides an additional guarantee to clients of recovery of losses
incurred as a result of a solicitor's default [for example, because
of insolvency] or otherwise than in circumstances covered by the Professional
Indemnity Insurance arrangements.
[h] In part because of the
collegiate burden borne by the profession LSNI (again, as we understand
it, in common with the Law Society of Scotland and as against the position
in England and Wales) has always attached a high priority to pro-active
monitoring of solicitors' practices. Thus, for example, solicitors'
accounts are actively monitored by professional staff employed by LSNI
on a regular and precautionary basis, as well as in response to specific
concerns identified by LSNI in respect of particular practices. That
is, action by LSNI is not dependent exclusively on a system of self-certified
or audited accounts, but by detailed bookkeeping inspections and rigorous
enforcement of the relevant regulations;
[i] In respect of complaints-handling
the performance of LSNI is subject to review and comment by the independent
Lay Observer (very broadly similar to the Legal Services Ombudsmen).
Apart from the casework function of reviewing the handling of particular
cases by LSNI, the Lay Observer makes recommendations periodically for
improvement to procedures and other matters. In terms of the effectiveness
of the current regulation model, a series of Lay Observers have commended
consistently the efficiency with which complaints are handled by LSNI,
and the degree of respect and seriousness with which the regulatory
functions exercised by LSNI are taken by the profession. This is in
marked distinction to experience in England and Wales.
[j] In the context of the
public interest as it pertains in this jurisdiction it is worthwhile
to note the following excerpt from the most recent report of the Lay
Observer. After commending the competency of the LSNI operation which
"compares most favourably with the other parts of the UK",
he continues:
"Factors which contribute
to this position I believe include the comparatively small membership
of the Law Society, the largely cohesive concerns of that membership,
the size of legal operations, the comparative closeness (e.g. geography,
size of firms) to the elected officials and the highly professional
standards shown by the vast majority of solicitors. These factors
(et alia) should be given due cognisance when new and appropriate
self-regulation frameworks are being considered thus avoiding unnecessarily
imported solutions which may search for non-existent problems".
[k] More generally, in both
the framing of regulations within its delegated authority and the discharge
of all these regulatory functions, the overriding principle applied
by LSNI is to regulate in the public interest. LSNI regulation carries
with it a formidable and extensive range of client protections and practice
requirements for which solicitors have taken corporate as well as individual
responsibility, despite the fact that solicitors compete in an increasingly
demanding professional environment;
[l] Without prejudice to
these important protective mechanisms, and within the context of the
effective enforcement of rigorous regulatory and ethical standards,
LSNI seeks to promote positively both best commercial practice and management
standards.
APPENDIX 2
STATEMENT OF CORE VALUES
Every citizen has fundamental
rights. The legal profession protects those rights. The independence
of the legal profession and of the judiciary guarantees the rule of
law which underpins those rights. If there were no rule of law there
could be no justice, democracy or freedom. The core values of the profession
are independence, confidentiality and the avoidance of conflicts of
interest. These safeguard the fundamental rights of every citizen.
APPENDIX 3
What price the Core Values?
Over recent months we have
followed with interest the debate on the future regulation of legal
services provision by solicitors in England and Wales, the main focus
of which has been the prospect of such services being provided to third
parties on a commercial basis by supermarkets and others. We have done
so with increasing concern and astonishment because what seems to be
up for sale is the independence of the solicitors' profession - together
with the fundamental rights of every citizen which this independence
protects.
What is at stake are the
core values which define the identity of lawyers in independent practice
(i.e., guaranteed independence, avoidance of conflicts of interest,
and client confidentiality). Failure to understand and protect these
values will result in irreversible damage to the interests of individual
consumers of solicitors' services and the public interest.
We take as given that this
debate should not be feared. It will always be incumbent on the profession
to make sure that its regulatory systems and content are fit for purpose
and adapted to take account of changing social and economic conditions.
Where any practice or regulation, properly understood, is restrictive
of competition and not otherwise justified we would not seek to defend
it. But the core values are not negotiable. We need to assert this without
equivocation no matter how inconvenient or out of line with policies
of the moment or commercial expediency.
We are concerned first about the Lord Nelson touch being applied to
recent developments, particularly the European Court of Justice decision
(NOVA). This dealt directly with the interface between competition and
the core values. It cannot be dismissed as dealing only with different
circumstances peculiar to the Netherlands, or exclusively with competition
issues, or with the particular structure of a multi-disciplinary partnership
between lawyers and accountants. The Court validated an absolute regulatory
prohibition on any form of mixed control partnership, which was implemented
by the Dutch Bar in substitution for a more limited prohibition precisely
because the absolute ban was considered to be the minimum necessary
to protect the core values. This was accepted as such and as reasonable
by the Court. The true implications of the NOVA decision therefore are
that the Court regarded issues of structure and control as of critical
importance; recognised that effective regulation was necessary to guarantee
and protect consumer interests by securing the core values, and confirmed
scepticism as to the efficacy of cosmetic arrangements such as Chinese
Walls.
The case could not be more
on point. It is of special significance because the ultimate judicial
authority on EC competition law and principles (on which principles
UK competition law is based) has made clear that the core values of
the legal profession must not and should not be sacrificed to the god
of competition.
Everything about our understanding
of the real world tells us that unbridled commercialism will not work
in the public interest, and that there has never been a greater need
than now for genuine and guaranteed independence of solicitors services.
No solicitor can serve two masters, and he who pays the piper will ultimately
call the tune. It is naïve and against all the evidence to think
that the core values can be preserved effectively without regulating
and controlling the structure within which the services are delivered.
This point is captured in
the current American Bar Association resolution, which states;
"The sharing of legal fees with non-lawyers and the ownership and
control of the practice of law by non-lawyers are inconsistent with
the core values of the legal profession."
The media coverage appears
to have been dominated by briefings from the proponents of the proposals
with no serious attention being given to the core values and the real
world implications of the planned de-regulation. Every impression is
given of unquestioning acceptance of the premise that the present evolved
regulatory framework is an elaborate conspiracy by lawyers against an
unsuspecting public. That premise is wholly wrong. The tools of regulation
of the legal profession have been based on the public interest, designed
to preserve the core values effectively, and forged on the anvil of
experience. That is why they deal both with the regulation of individual
practitioners and the context in which they practice. The lack of recognition
of this creates a self-fulfilling caricature of the solicitors' profession
as reactionary, protectionist and out of date.
We understand that the debate
will now go forward. This article is offered as a contribution from
a different and perhaps detached perspective which we hope will help
to ensure that all relevant arguments are addressed and debated openly
and in a more balanced way. It is understood that the de-regulation
proposals as initially proposed will proceed only if some way can be
found of ensuring that third party clients of an employed solicitor
can be guaranteed the same effective levels of protection as under the
present regulatory structure. For the reasons we have set out most lawyers
might well feel that this will prove to be an impossible task
For all lawyers there is
a common position which should unite us: the core values are not for
sale. These permanent values are more important than commercial expediency.
All that we know as lawyers tells us that these values will always be
subject to attack, will always need to be defended and should not be
compromised.
V.Alan Hewitt, President, Law Society of Northern Ireland,
Elma Lynch, President, Law Society of Ireland,
David Preston, President, Law Society of Scotland
November 2002
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