Giles Kennedy qualified as a solicitor in 1978 and went into private practice in Eccles Street, Dublin in 1981.

In April 1993, the compensation fund committee of the Law Society decided to investigate the professional practice of a number of solicitors (including Kennedy) in relation to the accounts regulations.

Solicitors have to maintain separate client accounts into which clients' funds must be paid, and must record such payments in proper books of accounts.

To continue practising, every solicitor must provide an annual certificate signed by an accountant to say that the books comply with the regulations.

A solicitor does not have to disclose a client's entire file to the accountant -- only correspondence covering payments and receipts.

In May 1993, PJ Connolly, registrar of the Law Society, assigned chartered accountant Ashling Foley to investigate Kennedy's practice.

Kennedy challenged Foley's investigation of client files at every stage on the advice of his barristers. Eventually, the Society brought High Court proceedings against him in July 1993, and the court ordered the solicitor to produce certain confidential documents.

A "gagging order" prevented Kennedy informing anyone about the Law Society action.

Kennedy counterclaimed for damages of more than £250,000 (€317,500) on the grounds that the investigation had "exceeded its lawful remit".

In December 1993, Kennedy notified his insurers -- the Solicitors' Mutual Defence Fund -- that he was seeking an indemnity against damages and costs arising from the Law Society claim.

He said that if any clients sued his firm because the Law Society had inspected their files, he would seek a full indemnity from the Society.

In November 1994, SMDF chairman Maurice Curran wrote to Kennedy saying that he was not entitled to seek indemnity "in relation solely to an administrative dispute between your firm and the Law Society." Kennedy disputed this.

Curran also insisted that Kennedy had not notified the SMDF about the claim in time. Kennedy pointed out that he had drafted and posted the claim to the SMDF himself 11 months earlier but, in any case, the SMDF was on notice of the claim because the Fund and the Law Society had common directors. When the SMDF still refused to provide cover, he sued them.

In March 1995, it was agreed that letters would be written to Kennedy's clients by Coopers & Lybrand, not by the Law Society.

In April 1996, Kennedy asked the High Court to quash Foley's appointment and to overrule a decision of the Law Society to seek a High Court disciplinary inquiry into his professional conduct based on her report.

The two sets of proceedings were heard together in October 1999 by Mr Justice Nicky Kearns, who found against Kennedy.

Last April, the Supreme Court reversed the High Court ruling. Mr Justice Frank Murphy said an auditor was "a watchdog and not a bloodhound".

The Supreme Court also said the solicitors' accounts regulations did not authorise the Law Society to investigate possible fraudulent claims.

"As an investigating accountant is not empowered by the regulations to investigate fraudulent claims processed by a solicitor, he or she may not be appointed for that purpose. In the present case it would seem that Ms Foley was appointed . . . on the basis of an ulterior motive," said Murphy.

Last July, Miss Justice Mella Carroll delivered her judgment in Kennedy's High Court action against the SMDF. She said that the Law Society action against the solicitor was covered by the SMDF policy and Kennedy had given the Fund "timely notice" of this claim. She adjourned the issue of damages and costs.

In the Supreme Court last December, Mr Justice Nial Fennelly said the Law Society had concealed from Kennedy its concerns about bogus claims, "going to the lengths of deceit for that purpose".

The judge said Foley's denial of a hidden agenda was "plainly untrue", adding: "It is regrettable, not to use any stronger expression, that Mr Kennedy did not receive a frank and truthful answer to his enquiries."

The Supreme Court ruled that the Law Society's appointment of an investigating accountant was invalid and the Society could not make use of Foley's report. The matter was remitted to the High Court to assess damages.