Thursday 29 September 2016

Lawyers fees rose by 5pc last year - despite clamour to rein in costs

Legal professionals put on the poor mouth, but CSO figures show they hiked up fees last year, writes Maeve Sheehan

Published 01/05/2016 | 02:30

COSTLY: Ireland’s high legal fees have come under fire from government ministers, State agencies, businesses and insurers. Stock Image
COSTLY: Ireland’s high legal fees have come under fire from government ministers, State agencies, businesses and insurers. Stock Image

Lawyers hiked up their prices last year at a time when the government was pushing through legislation originally intended to address high legal costs.

  • Go To

The cost of legal services rose by just over 5pc in a six-month period, according to figures compiled by the Central Statistics Office (CSO).

The increase came as the government was being heavily lobbied by the professional bodies for solicitors and barristers to water down legislation it promised would help reduce fees.

It also suggests the Troika's demands that Irish legal fees be brought "into the 21st century" may have fallen on deaf legal ears, while the rest of society was forced to endure its harsh austerity measures.

The legal services fees index put together by the CSO based on data from a small number of firms monitors the percentage by which prices rise or fall every three months.

The index shows that after a long period of largely static prices since 2010, prices for legal services rose by 1.3pc in the second quarter of 2015 and rose again by 4.1pc in the third quarter, and remained at that level until the end of year.

Whether the legal fees continued on their upward trajectory for the first three months of this year remains to seen in the 2016 figures.

But it was the first significant shift in legal prices recorded by the CSO since 2010.

Up to last year, movement in legal prices was marginal with the biggest increase recorded as 2.2pc in 2014, while the biggest decrease in prices was 1.2pc in 2013.

Of course, the latest price hike could be just a blip - as the Law Society suggested last week.

The CSO's data is based on a small sample of legal prices submitted by up to 20 firms with at least 10 employees on a quarterly basis. The prices include hourly rates for partners and for less senior solicitors, along with fees for conveyancing, litigation and other services.

The Law Society has been at odds with the CSO over its legal prices statistics and disputes the reliability of figures, which it says the CSO itself describes as "experimental" and needing "to be treated with caution".

However, if the rise in legal prices reflected in the CSO's figures is not "a blip", they confirm the European Commission's worst fears; that officialdom's appetite to reform the legal profession has been "tamed".

Since they were first scrutinised by the Troika, Ireland's legal costs have rung bells all the way to Europe.

In 2011, Istvan Szekely, the head of the so-called Troika overseeing the bailout programme, said the legal profession and its costs needed to be brought "into the 21st century".

Two years later, the Troika was still unhappy, noting in a draft report that other sectors had experienced "considerable cost adjustments" but legal services remained expensive.

The upshot of the Troika's dim view of Ireland's high legal costs was the Legal Services Regulatory Bill, pushed through by Alan Shatter when he was Minister for Justice in 2011, then watered down and diluted - thanks to a four-year legal lobbying offensive - into its eventual incarnation last December.

The legislation originally proposed a "one-stop shop" for barristers and lawyers to set up businesses with other professions - a measure intended to drive competition, lower fees and lower barriers to entry. But these and other measures didn't make it to the final draft. The Bar Council found aspects of the legislation "unconstitutional". The Attorney General's desire to move disciplinary responsibility for solicitors from the Law Society to the new independent legal regulator function was also thwarted. The Law Society retains financial and accounting oversight of solicitors.

In a country report on Ireland published earlier this year, the European Commission's analysts were sceptical about this supposedly reforming legislation, because of the concessions to the legal profession. "The proof of the pudding will be in the eating," it said. Much would depend on the new regulatory authority's ability to "assert its independence" and to "defend society at large from vested interests".

Critics of Ireland's high legal costs include the profession's biggest customers. They include government ministers, numerous State agencies, small businesses, High Court judges and insurers.

Michael Noonan, the Minister for Finance, said legal costs were driving up insurance premiums.

The Medical Protection Society, which indemnifies doctors, has blamed legal fees for driving up health costs for patients and insurance for doctors.

The Health Service Executive's head of legal services, Eunice O'Raw, herself a barrister, wrote a memo in 2012 saying that legal costs had been "inexplicably high".

"On occasion, brief fees demanded were of the order of €60,000 or €80,000. Such brief fees for single cases equate with the annual salaries of crown prosecution counsels in England and Wales."

The maxim goes that the customer is always right. According to the Law Society, the claims about high legal fees are simply wrong. Most firms are non-commercial small practices led by solicitors who saw their incomes drop by 43pc during the bust.

"Legal fees have been significantly impacted by the recession and have fallen substantially in recent years in response to intense competition within the profession and downward pressure from clients," the Law Society said in a statement to the Sunday Independent.

"Because it would infringe competition law, the Law Society does not provide a scale of estimated solicitors' fees." Charges are subject to the "normal market forces of supply and demand".

To finally debunk myths, we asked the Law Society if it would consider conducting its own detailed analysis of legal fees to settle the argument. The Law Society does not get involved in pricing - it leaves that to the free market. Perhaps it's a project for the new Legal Services Regulatory Authority, whenever the powers that be get around to setting it up.

Sunday Independent

Read More

Promoted articles

Editor's Choice

Also in Irish News