The Law Society is to issue guidelines to solicitors on the forthcoming First National Building Society flotation, recommending that where possible free shares issued on client accounts should be given to beneficiaries.
The society's director-general, Mr Ken Murphy, said yesterday the society has decided to issue this advice to members next week having previously stated that it would be "impossible" and "not practical" for solicitors to redistribute their windfall.
The society will now be recommending that where it is possible to identify individuals who have held funds with First National for the qualifying two-year period, any free shares issued to solicitors should be given to the client.
Mr Murphy said that where a number of individuals are the beneficiaries of a client account, the proceeds of the windfall should be distributed to clients on a pro-rata basis.
"Where this is not possible, as in cases where perhaps hundreds of clients have had their funds mixed together in various amounts and over various time periods, there's nothing that can be done" Mr Murphy told The Irish Times.
Solicitors are not obliged by law to distribute these gains to their clients, where clients' funds are held in accounts in the solicitor's name. The solicitor is deemed to be the legal owner of that account and as such is the sole beneficiary of any proceeds of the flotation and has the right to vote on the conversion. It is estimated that each free share allocation will be worth about £1,170. The shares will be issued in September if the flotation is approved by the society's members at its annual general meeting next Monday.
In a statement, First National Building Society said its conversion statement indicates that trustees may have to give "careful consideration to any potential conflict of interest between their right to vote and/or receive free shares and the rights of the beneficiaries under trust". Reacting to the society's initial defence of the right of solicitors to keep any free shares or financial payments arising out of the flotation, the chairman of the Council for the Status of People with Disabilities, Mr Frank Mulcahy, said he was "outraged".
Mr Mulcahy said a number of disabled people, who were already among the most marginalised in society, had money invested for them by solicitors. "Solicitors charge them an administration fee per annum. Why should they take something which morally, if not legally, is their client's? Surely it would not be beyond the bounds of possibility to calculate what they were due? If they can administer funds, why can they not share out funds?"
Mr James MacGuill, a member of the council of the Law Society, said he could not envisage a situation where it would be impossible for solicitors to allocate the proceeds of the flotation to beneficiaries.
"While it may in some cases be a difficult calculation to make, the accounts are very sophisticated, and the compliance requirements from solicitors are very high. At the moment we have to account to clients for any interest over £50. Quite a bit of the work would be done already."