Clarity urged on new legal costs laws

The master of the High Court has said proposed new laws for assessing reasonable legal costs may not allow the economic crisis to be considered as a relevant factor and could result in a more complex and expensive system for assessing costs.

While the High Court Taxing Master fixes costs according to a “reasonableness” test, this is “a very inexact” measure and the existing legal framework does not allow him to take economic conditions into account despite the president of the High Court having indicated that the financial crisis should be a factor, Master Edmund Honohan also said.

This was not a matter for the Taxing Master’s discretion and the law “must be clarified”, he said. “An issue for legislators is whether the new Legal Services Regulation Bill proposes any, or any adequate, change in this regard.”

The key “competitive marketplace” factor which should ground all other factors to be considered in assessing costs was also missing from the long list of 13 factors set out in the new Bill, he added.

More costly

The new Legal Services Adjudicator “quango” could result in a more complex and costly system than the existing one for several reasons, including scope for full appeals against the adjudicator’s decisions, he said.

Mr Honohan, who deals with pre-trial and other issues in litigation, said costs to be paid by losing parties should, “in a perfect world”, be no more or less than the marketplace price for the services provided.

Fees to be paid by clients to their solicitors were “another matter altogether” and “have little marketplace reality” with the service provider nominating the price which “may be closer to a cartel price” than a competitive marketplace one. The Bill appeared to make no distinction between party and party costs and solicitor/client costs, he said.

That was a matter obviously for legislators but, while the new “fair and reasonable” test proposed in the Bill for assessing costs might be expected to produce different results, it remained unclear whether that would allow some “luxuries” previously disallowed by taxing masters or if it would reduce solicitors’ broad entitlements in the taxation of solicitor and client bills.