WHEN A High Court judge criticises certain professionals for “feasting on the carcasses” of insolvent and distressed companies, the scavenger metaphor evokes the image of the jackal. Mr Justice Brian McGovern used this colourful imagery to express his unease about the sizeable fees that accountants and lawyers can – in the midst of an economic downturn – command for managing the financial affairs of failed, or failing, companies. Some professionals, he said, enjoy the good pickings from troubled sectors of the economy while others, who work equally hard, take pay cuts.
This disparity he found troublesome. Mr Justice McGovern made his remarks after he had, reluctantly, approved payment of €647,832 to an accountant for five months of work as special manager at Newbridge Credit Union. Last January the Central Bank made the appointment, and agreed an hourly rate of pay (€423); which the Minister for Finance then regarded as “excessive”, and which the High Court reduced a month later.
The issue raised by the judge’s comments – the large fees paid to professionals, whether by the State or the private sector – deserves wider public debate. The High Court recently agreed to a request by the former Anglo Irish Bank – now the Irish Bank Resolution Corporation – to vary an order freezing the accounts of family members of bankrupt businessman Seán Quinn. The order was sought to allow payment of €430,000 for the family’s legal fees for a three-month period for a range of services. Once again a payment sanctioned by the State – that may well become a liability borne by the taxpayer – can be seen as generous.
The State’s efforts to control professional costs have long proved inadequate. The bill for the Moriarty tribunal now stands at €41 million, four-fifths of which are payments to its own legal team, where three members have between them earned €25 million for their work over 14 years. But as yet there is no overall estimate of the likely final bill – including third party costs – which some consider could reach €120 million. In 2004, a government proposal to pay senior counsel working in tribunals the equivalent of a High Court judge’s salary was never implemented.
The National Competitiveness Council in its 2012 report found legal costs were 12 per cent higher than in 2006, despite the deep economic recession. Unsurprisingly, Irish legal costs are now among the highest in the developed world, a World Bank survey suggests. The Government’s decision to establish a State legal costs unit is welcome, if long overdue. It is also a requirement of the EU-IMF bailout agreement. The Legal Services Regulation Bill, which provides for reform of the legal profession, is making slow progress through the Oireachtas, while meeting some resistance outside. But as many of the Bill’s provisions reflect commitments agreed under the bailout programme, its parliamentary passage seems assured. The EU and IMF deserve some acknowledgment for accelerating necessary and long overdue change that successive governments should have delivered much sooner.