Report finds non-binding guidelines are preferred way of controlling legal costs

A report commissioned by the professional bodies representing barristers and solicitors has recommended legal costs should be controlled by a system of non-binding guidelines rather than a table of maximum costs.

The report, by independent consultants EY, said that findings in various reports over 20 years that Ireland is a high legal costs jurisdiction compared to others are “not strongly supported by the evidence”, for reasons including the adequacy of data on which those reports were based.

The 63-page report concluded non-binding guidelines are “more favourable” as a system of legal costs control compared to a table of maximum costs.

While finding a table of maximum costs would provide transparency, clarity and predictability, and promote greater efficiency, the report preferred non-binding guidelines for reasons including they would provide fair and equal access to justice, allowed for the length and complexity of cases, require minimal legislative intervention and take into account general economic conditions.

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It also recommended the legal costs adjudication regime as administered by the Legal Services Regulatory Authority since 2019 should be allowed more time “to bed in”.

Total professional legal fees fell by 10 per cent between 2011-2013 and 2017-2019, contradicting the “general narrative” that litigation costs in Ireland have been rising generally, it said. Almost one third of lawyers’ bills of costs is returned as State revenue, either through court duty or VAT on professional fees, it added.

Based on a sample of 184 cases, it said that, between 2011-2019, awards in personal injury and medical negligence cases fell by 12 per cent, the number of trial days fell by almost one third, and barristers fees in such cases fell by 23 per cent.

This is “contrary to the popular perception that awards have increased significantly”, The Bar of Ireland (TBOI) and the Law Society of Ireland (LSI) said in a joint statement on Friday announcing details of the EY report.

The report was commissioned by both bodies after the Minister for Justice, Helen McEntee, asked consultants Indecon to carry out an economic evaluation of the costs findings of the 2020 report of the Review Group on the Administration of Civil Justice, chaired by Mr Justice Peter Kelly.

The review group split on the issue of legal costs, with a majority favouring non-binding guidelines and the minority, including Mr Justice Kelly, recommending a table of maximum costs.

The Minister has said she will implement the bulk of the review group’s recommendations but has deferred a final decision on the legal costs issue pending consideration of Indecon’s findings. The EY report, published on Friday, has been forwarded to Indecon and the Department of Justice.

Both legal professional bodies support the review group’s majority recommendation on costs and say that publication of the minority view appeared to have “delayed progress” on the costs matter.

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

Of the other jurisdictions assessed (England & Wales, Scotland, New York, Australia, New Zealand, Germany and the Netherlands), all but Germany apply a type of non-binding guidelines on costs.

Maura McNally, chair of TBOI, said: “A rigid ‘one size fits all’ approach places justice further away from ordinary citizens, and favours those with economic power. Guidelines can bend and flex according to needs of the injured parties and complexity of cases.”

The “key issue” for citizens, which is “within the Government’s gift”, is resourcing of the justice system, she said. When comparing Ireland to EU partners, it appears other member states offer consumers lower exposure to costs but their judicial investment is “significantly higher”.

Increased efficiency, and in turn a reduction in costs, could be achieved by appointing more judges, reforms to the discovery process, increased use of electronic filing and service procedures, improvements to the case listing process and enhanced case management, she outlined

Michelle Ní Longáin, LSI President, said a case study in the EY Report about the use of scale fees at District Court level, last set in 2014, showed the impact of set costs penalise parties, and where matters are complex or novel, “may in fact make legal representation uneconomical, expanding the unmet legal need”.

“Instead, it is our strong view that all users of the courts would be better served by increased investment in judicial resources to facilitate the efficient administration of justice in the public interest.”