Data shows costs of litigation falling, Government duties make up a third of legal costs.
A major new report on options to control legal costs commissioned by The Bar of Ireland and The Law Society of Ireland has recommended a system of Non-binding Guidelines for legal practitioners as opposed to a Table of Maximum Costs model as the best means of ensuring fair and equal access to justice.
The independent report, undertaken by EY, has been submitted to Indecon who was appointed by the Department of Justice to conduct an economic evaluation of options to control litigation costs. The EY Report has also been shared with the Department of Justice.
A 2020 Report of the Review Group on the Administration of Civil Justice (known as the Kelly Report), made a recommendation, supported by a majority of its Working Group, that Non-binding Guidelines should be introduced as a mechanism to control legal costs on the basis of flexibility and fairness. Both the Law Society of Ireland and The Bar of Ireland support that majority recommendation, however the minority view was also published and it would appear that it has since delayed progress on the matter.
The EY Report – based on an international benchmarking exercise, a review of past reports on legal costs and analysis of 256 litigation cases from 2011 to 2019 – addresses concerns regarding the misrepresentation of legal costs in Ireland in recent years, particularly in respect of certain interests overstating of levels of legal costs in Ireland. The assertion that Ireland is a high legal costs jurisdiction is not strongly supported by evidence, which shows that there has been a decrease in legal fees over the period 2011 – 2019.
Maura McNally S.C., Chair of the Bar of Ireland said:
“This EY report is an exhaustive analysis of two options under the Kelly Report. It finds that Non-binding Guidelines pragmatically recognises that each litigation case is different, and so offer flexibility and fairness, as well as speed. A rigid ‘one size fits all’ approach places justice further away from ordinary citizens, and favours those with economic power. Guidelines can bend and flex according to needs of the injured parties and complexity of cases.
The key issue for citizens – and it is within the Government’s gift – is resourcing of the justice system – judicial resources, case management, support staff – these are important determinants of ultimate costs borne by litigants.
“Furthermore it sets out conclusively that the narrative regarding legal costs to date has been based on incomplete data. The Irish case-data analysed shows that legal fees paid to Counsel, and to solicitors has in fact decreased by between 13% and 23% in recent years. While a third of legal costs charged to clients is in fact Government levies and duties.”
When comparing Ireland to EU partners, it appears that other member states offer consumers lower exposure to costs, however their judicial investment is significantly higher. Ireland’s per capita spend on justice is €59.50.
The report confirms that “if Ireland were to have a similar justice system to the Dutch, it would require an additional investment of €61 per inhabitant, or €305 million on an annual basis.”
Based on the analysis of the performance of judicial systems, the EY Report notes that if the Department of Justice wishes to implement new measures to reduce litigation costs, this will require greater expenditure on the justice system to support any such measures. While many other EU countries appear to offer consumers lower exposure to legal costs, the analysis of EU member States shows that in the sample of other jurisdictions presented, a greater number of judges and non-judge court staff are required to manage the passage of litigation, paid for through general taxation. There is a wide range of reforms required so that timely and efficient access to justice is accessible to all those that need it. Increased efficiency, and in turn a reduction in costs could be achieved by the appointment of additional judges, reforms to the discovery process, the increased use of electronic filing and service procedures, improvements to the process for listing cases, and enhanced case management tools across all courts.
The EY Report recommends that Non-binding Guidelines would not require the establishment of an oversight body, and that the Legal Cost Adjudicators Office could manage the determination and implementation of the guidelines.
Michelle Ní Longáin, President of the Law Society of Ireland said:
“Our intention in commissioning this report, was to obtain conclusive and independent analysis that could assist the discussion on the future direction of legal costs for public benefit. The data shows that awards, legal costs and length of trial, are all reducing in the current regime for legal costs.
“The work of the Legal Cost Adjudicators Office, the Kelly Report recommendations in respect of practice and procedure, as well as recent Judicial Guidelines, all point to the continuing reform of the costs regime.
“Of particular interest is the case study contained in the EY Report about the use of scale fees at District Court level, last set in 2014. This case study outlines that the impact of set costs penalise parties, and where matters are complex or novel, may in fact make legal representation uneconomical, expanding the unmet legal need. Instead, it is our strong view that all users of the courts would be better served by increased investment in judicial resources to facilitate the efficient administration of justice in the public interest.”
The Bar of Ireland and the Law Society made a submission to Indecon in February 2022, available here, and today’s EY Report supplements that earlier submission.
Key Findings from the “Analysis of the impact of proposal to reduce legal costs in Ireland”:
- Non-binding Guidelines found to be more favourable on the grounds of
- Fair & Equal Access to Justice
- Allows for the length and complexity of a case
- Positively impacts quality of service provision
- Complements the current adjudication process
- Requires minimal legislative intervention
- Takes into account general economic conditions
- Professional legal fees declined by 25.6% between the data sets relating to 2011-2013 and 2014-2016. The EY Report indicates that this was the ‘lag effect’ of 2007/2008 economic crisis, and that legal fees do respond to economic conditions.
- Senior & Junior Counsel fees declined by 23% between 2011 -2019 in respect of both PI and Medical Negligence fields.
- PI and Medical Negligence awards decreased by 12% between the data set timelines. This is contrary to the popular perception that awards have increased significantly.
- Of the other jurisdictions assessed (England & Wales, Scotland, New York, Australia, New Zealand, Germany & Netherlands), all but Germany apply a type of non-binding guideline such as recommended by the majority of the Kelly Review Group. However the EY Report found, that in some instances in Germany court fees (Government duties) may actually be higher than lawyer’s fees.