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Sunday 18 February 2018

Caveat emptor: The soaring cost of legal services

Irish legal costs are now so high that some types of litigation are simply beyond the reach of the average person. In the first part of a ­week-long ­investigation, our legal affairs editor asks what can be done to make legal ­services affordable to all

Lawyers are notoriously defensive about the fees they charge. Stock image
Lawyers are notoriously defensive about the fees they charge. Stock image
Shane Phelan

Shane Phelan

The prospect of having to pay astronomical legal fees has long been an obstacle for regular people seeking justice in Ireland's superior courts.

Win, and the other side usually has to pay your lawyers' fees. Lose, and you might have to sell your home or worse.

It was refreshing then to hear the new Chief Justice, Frank Clarke, tackle the issue in his first major speech since assuming office.

"It has increasingly become the case that many types of litigation are moving beyond the resources of all but a few," he told a gathering to mark the start of the new legal year, which began this month.

Lawyers are notoriously defensive about the fees they charge, as is the judiciary about its pay.

So, Mr Justice Clarke's comments were a rare acknowledgement that in our system of justice, the dice appear to be loaded in favour of the wealthy.

A general lack of information about civil legal fees has inhibited debate on the issue.

The legal industry in Ireland is big business, generating €2.3bn annually in revenue and supporting 18,000 jobs, but information on private fees is closely guarded.

During the financial crisis, a series of cuts were made to legal fees. These largely related to work in the criminal courts and civil work involving State bodies. In contrast, fees charges by lawyers for private work in the civil courts have been on the rise and have largely escaped scrutiny as they are more difficult to quantify.

Minimal disclosure

While public bodies have to disclose what they pay lawyers, private entities and individuals do not. Law firms and barristers are under no obligation to publicly reveal their earnings and there is little in the way of voluntary disclosure.

It is no wonder then that analysts at The Lawyer, a UK-based specialist legal publication, describe Ireland as the "least transparent jurisdiction in Europe" from a data collection perspective.

While it is encouraging the Chief Justice put the high cost of accessing justice front and centre, actual solutions may not be so easy to find.

The fledgling Legal Services Regulatory Authority (LSRA) is expected to bring forward measures to increase competition and drive down costs but it is still only in the process of being set up.

One solution advocated by many lawyers is to provide significantly more taxpayer funding to the Legal Aid Board. The board administers a civil legal aid scheme under which, in theory, people of limited means can get support from the State to vindicate their rights in court. In reality, this system is straining under the weight of demand, with long waiting times for consultations.

Many who could reasonably be classed as poor do not meet the qualifying criteria and those that do still have to make a contribution towards their legal costs. These rules gave rise to a shocking situation recently where a domestic abuse victim whose husband threatened to kill her had to represent herself in a family law case because she could not afford the necessary €130 contribution.

The slow pace of reform

However, despite considerable lobbying on issue, the Government has shown little appetite to significantly increase civil legal aid funding.

The judiciary, for its part, is focussed on reviewing procedures, many of which are seen as outdated.

Lawyers aren't the only ones being paid when someone goes to court and parties involved in cases had to spend €44m last year in fees just to lodge civil documents, fees the Courts Service can ill-afford to do without. But if there are to be changes, they won't happen any time soon as a review of the area, being led by High Court President Peter Kelly, is set to take three years.

It is also doubtful whether it will have any impact on fees charged by lawyers.

During the bail-out years, the Troika repeatedly criticised the high cost of legal services in Ireland.

In response, barristers in the criminal courts had their fees slashed, and bodies like the State Claims Agency sought better value for money by inviting tenders for legal services.

However, Ireland remains an expensive place to litigate and the price of legal services is going up rather than down, according to the National Competitiveness Council (NCC). Its 2017 Cost of Doing Business report found legal service prices were 8.3pc higher in the third quarter of 2016 compared to the same quarter in 2012.

Both the Law Society and the Bar of Ireland, which respectively represent and regulate solicitors and barristers, place a health warning on the NCC figures, due to the small sample size used to calculate them. However, the World Bank is also of the view that Ireland is a costly place to litigate, finding it to be the sixth most expensive place in the OECD to enforce a contract.

Law Society director general Ken Murphy said the body was pressing for the revision of court rules to minimise the burden on businesses and individuals. He said increased spending on infrastructure, such as online services, was also needed to speed up the administration of justice.

Bar of Ireland chief executive Ciara Murphy said the ability of courts to cope with caseloads was closely related to the number of judges available. A 2014 study found Ireland had the lowest number of judges in Europe per head of population.

But what about the legal fees charged by practitioners themselves?

A question of fees

A senior barrister prosecuting or defending a murder case is paid a "brief fee" of €7,127. This is a fee covering preparation of a case and the first day of a trial.

For every subsequent day the barrister is paid a "refresher fee" of €1,562. Solicitors receive the same brief fee and a refresher fee of €750 per day. Murder trial brief fees for junior barristers are €4,752.

Lower rates apply in the Circuit Court, but they are still generous. Senior counsel get a brief fee of €1,716 and refresher fees of €858 per day. The brief fee for junior counsel and solicitors is €1,144 and refresher fees are €572 and €418-per day respectively.

Ciara Murphy described the fees on offer as "moderate and well below those paid in other areas", saying they were now similar to levels paid in 2002, while the work involved is now much more complex and demanding.

While the rates paid by the State have been slashed in recent years, an analysis by Review of fees paid by 220 public bodies last year shows many practitioners still do very well. For example, one barrister, Emily Egan SC, earned over €1m working for State bodies last year. Most of her income came from the State Claims Agency. Four criminal barristers earned over €500,000 from prosecution and defence work. Anecdotally, the figures paid for criminal work pale in comparison with those earned by leading practitioners in the civil courts, where fees being charged are said to have increased significantly in recent years.

According to one barrister frequently engaged in litigation in the High Court, leading practitioners now charge a multiple of what they did a decade ago. A brief fee would have been up to €5,000 in 2006, but a senior counsel can now command up to €20,000 for this, while a junior counsel can charge between half and two-thirds of the senior's fee.

A refresher fee, which would have been up to €1,000 for a senior counsel a decade ago, could now be up to €5,000.

The rates are even higher in the Commercial Court. "In big money cases, a senior counsel could charge a brief fee of €45,000 and a junior up to two-thirds of that," the barrister said.

The Medical Protection Society (MPS), which provides indemnity cover for most Irish hospital consultants, told Review it had encountered cases where barristers' brief fees in Ireland were twice those in the UK.

It cited one short trial where a brief fee of €30,000 was charged, double the amount a queen's counsel would seek in England.

The MPS also said it had been involved in cases where the award made was dwarfed by the legal fees charged.

"For example, in a recent case relating to a misdiagnosis of malignant sarcoma where damages settled at €100,000, legal costs of €268,885 were sought," said MPS director of claims policy Emma Hallinan. "In another case relating to a delayed diagnosis of osteoarthritis where damages settled at €17,500, legal costs of €46,159 were sought. This is simply not right."

Data obtained by Review show that where disagreements on High Court costs occur, the quasi-judicial body which decides on such disputes regularly cuts bills. The Office of the Taxing Master has deducted 39.5pc of the value of bills it has adjudicated on since 2012.

Lack of transparency

However, the way in which it has operated has only added to the lack of transparency around costs in the courts system.

Although its hearings are open to anyone to attend, cases are rarely covered by the media and only a handful of determinations are published annually.

It also does not have a public register of determinations, creating a significant information deficit.

This will change when the office is to be replaced early next year under changes being introduced by the LSRA.

A new Office of Legal Costs Adjudicators will publish all of its decisions, and it is hoped this greater level of transparency will place downward pressure on legal costs.

It is just one measure, however, and much more needs to be done if we are to have a justice system open to all.

@shanephelanindo

Indo Review

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