Business Choice

Saturday 22 October 2016

Charlie Weston: Sky-high legal costs must be tackled once and for all

Sky-high legal costs are one of the main reasons we pay through the nose for goods and services - they must be tackled once and for all

Published 19/05/2016 | 02:30

The €60,000 paid out by a ‘generous’ judge to a person who slips in a supermarket has a direct bearing on the costs of running the shop
The €60,000 paid out by a ‘generous’ judge to a person who slips in a supermarket has a direct bearing on the costs of running the shop

HAVE you ever wondered why we pay so much for goods and services in this country compared with our European Union neighbours?

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Prices here are 22pc above the European average. This makes this country the joint-third most expensive place to live in the EU, according to the Central Statistics Office.

We pay more for most activities and goods, be it swimming lessons, driving a car, or paying for our groceries.

And one of the key reasons for inflated price levels is our litigious nature and sky-high legal costs.

Leave aside the legal cost to taxpayers of cases funded by the State, the €60,000 paid out by a "generous" judge to a person who slips in a supermarket has a direct bearing on the costs of running the shop.

Legal costs and the high cost of claims have a knock-on effect on the price of insurance. This is turn is passed on to the consumer in the form of higher end-user prices for all sorts of goods and services.

Wigs and gowns cost money and it is ordinary, honest mugs, who would never dream of taking a personal injuries claim, never mind an exaggerated or fraudulent one, that end up paying for them.

Despite the witterings of the lawyers' lobby group, the Law Society, the plain facts are that the number of claims faced by insurers are rising, the cost of these claims are increasing and the frequency of these claims is also on the up.

That is the view of the Central Bank after it examined the issue. The National Competitiveness Council found that the cost of legal services failed to fall during the recession, and has since risen.

This means lawyers were sheltered during the economic storm.

The Law Society says that there is a lack of data around the value of individual awards settled by insurance companies outside of the courts.

This is a smokescreen. As the old Chinese proverb goes, must one count the rain drops to tell it is raining? Claims costs and claims frequency are rising, plain and simple.

During the bailout era, the cost of hiring lawyers and reform of the legal profession was a constant bugbear of the European Commission.

In reviews of the bailout, a familiar item on the list of policy proposals would be "the opening up of competition in sheltered sectors like legal services".

What a waste of time that proved to be. Nothing sums up the power and privilege of the legal profession quite like the revelation that amendments to legislation to reform the profession were sent to the barrister representative body, the Bar Council, before they were seen by Cabinet members in the last Government.

That is shocking and disgraceful, and shows the anti-consumer bias at play when it comes to the regulation of lawyers.

And judges in this country are nothing if not generous when it comes to personal injuries awards. In fact, it might be more accurate to say some of them are quite gullible.

As far as judges are concerned, personal responsibility has little or no place in Irish society. How else can you explain some of the frankly whacky awards dished out in court every day?

Enter a premises that is shut off, with prominent warning signs, and hurt yourself. No problem, you stand a good chance of an award in court.

Remember that legal costs, which include solicitor and barrister fees, add an additional 60pc to the cost of settling the average award.

But it is mere propaganda, according to the lawyers, to suggest that the high, and rising level of awards, and their increased frequency, is in any way the responsibility of solicitors, barristers and judges.

They like to blame insurers for claims costs.

Insurers have been heavily criticised by this journalist in this publication numerous times - for blowing up their own industry, and creating a pricing problem and now seeking a back-door bailout from insurance customers.

But the failings of insurers do not absolve the legal profession and judges from acting responsibly and in line with the common good.

Personal injury awards are too high, too frequent and too many dodgy ones get through. Lawyers and judges bear some responsibility for that.

Irish Independent

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