High-legal-costs view ‘not backed by evidence’

A report on options to control legal costs has recommended a system of non-binding guidelines for legal practitioners, as opposed to a model based on a table of maximum costs, as the best way of ensuring fair and equal access to justice.

The independent report, commissioned by the Bar of Ireland and the Law Society of Ireland, was carried out by EY.

“The assertion Ireland is a high-legal-costs jurisdiction is not strongly supported by evidence,” the analysis says.

It has been submitted to consulting group Indecon, which was appointed by the Department of Justice to conduct an economic evaluation of the options to control litigation costs. The report has also been shared with the Department of Justice.

‘Flexibility and fairness’

The 2020 report of the Review of the Administration of Civil Justice, headed by former High Court President Peter Kelly, backed the introduction of non-binding guidelines, on the basis of flexibility and fairness, as a way to control legal costs.

Both the Law Society of Ireland and the Bar of Ireland support that recommendation, which was backed by a majority of the 2020 review’s working group. A minority view, however, was also published, and both organisations say that this has since delayed progress on the issue.

The EY report was based on an international benchmarking exercise, a review of past reports on legal costs, and analysis of 256 litigation cases from 2011 to 2019.

The two representative organisations say that it addresses concerns about “the misrepresentation of legal costs in Ireland in recent years, particularly in respect of certain interests overstating levels of legal costs in Ireland”.

Decrease in fees

They say that 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 eight-year period analysed.

The report gives a number of reasons for favouring the introduction of non-binding guidelines:

• Fair and equal access to justice,
• Would allow for the length and complexity of a case,
• Positive impact on the quality of service provision,
• Complements the current adjudication process,
• Requires minimal legislative intervention,
• Takes general economic conditions into account.

It finds that professional legal fees declined by 25.6% between the data sets relating to 2011-2013 and 2014-2016. The report indicates that this was the lag effect of 2007/2008 economic crisis, and that legal fees respond to economic conditions.

The report says that senior and junior-counsel fees both declined by 23% between 2011 and 2019, in respect of personal-injury (PI) and medical-negligence cases.

It also finds that PI and medical-negligence awards fell by 12% between the data set timelines – contrary, the two bodies say, to the popular perception that awards have increased significantly.

Other jurisdictions

The EY analysis argues 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.

The EY report looks at seven other jurisdictions: England & Wales, Scotland, New York, Australia, New Zealand, Germany, and Netherlands.

It finds that all but Germany apply types of non-binding guidelines. In some instances in Germany, court fees may be higher than lawyers’ fees.

‘Continuing reform’

Michelle Ní Longáin (President of the Law Society of Ireland, pictured) said that the two representative bodies commissioned the report to obtain “conclusive and independent analysis” that could assist the discussion on the future direction of legal costs.

“The data shows that awards, legal costs and length of trial are all reducing in the current regime for legal costs,” she stated.

“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,” the president added.

Maura McNally SC (Chair of the Bar of Ireland) described the report as “an exhaustive analysis” of the two options under the Kelly Report.

“It finds that non-binding guidelines pragmatically recognise that each litigation case is different, and so offer flexibility and fairness, as well as speed,” she said, adding that a “rigid, ‘one-size-fits-all’ approach” put justice further away from ordinary citizens, and favoured those with economic power.

Call for more investment

Both bodies warn that measures to reduce legal costs would require increased investment in the justice system.

“It appears that other member states offer consumers lower exposure to costs, however their judicial investment is significantly higher,” they say.

“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,” the EY report states.

The representative bodies argue that increased efficiency, and 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.