With recent commentary from High Court judges past and present, the issue of legal costs in Ireland has arisen once again. Killian Flood writes on the issue of legal costs from a barrister’s perspective.
Two weeks ago, Mr Justice Peter Kelly returned to the judge’s bench in Court 4 to deliver a keynote speech marking the 20th anniversary of the Commercial Court. Over the course of his address to an audience of judges, commercial law luminaries and yours truly, the former president of the High Court spoke about the troubled history of commercial litigation in Ireland and the value of the Commercial Court’s modern procedures in assisting the smooth running of complex trials. Despite his retirement in 2020, there was no doubt that Judge Kelly had retained his famous, formidable intellect.
Notable within his address was a comment on the high cost of commercial litigation. Mr Justice Kelly remarked that it was “disappointing to see so little apparent progress” on the issue of legal costs in civil law cases, despite recommendations made in the Review of the Administration of Civil Justice published in 2020. The review group was chaired by Mr Justice Kelly so, as ever, he spoke from a place of authority.
Coincidentally, the next day the High Court delivered judgment in Connective Energy Holdings Limited v Energia Group ROI Holdings DAC [2024] IEHC 23 which lifted the veil on the cost of litigation in a “straightforward” commercial case.
Based on evidence adduced to the court by specialist legal costs accountants, Mr Justice Twomey determined that the case would cost the defendant €443,000 for the seven-and-a-half-day trial. The defendant, for its part, had argued that the case would take four-and-a-half weeks and would cost €937,000.
Moreover, the defendant claimed that it would incur additional costs for discovery of €570,000 plus VAT. The defendant’s solicitors had quoted this figure on the basis that a minimum of 100,000 documents would be reviewed in the case.
Throughout the judgment, Mr Justice Twomey outlined concerns about the affordability of modern litigation, repeating Mr Justice Kelly’s line that “the only people who can litigate in the High Court are paupers and millionaires”. It was noted that the average wage in Ireland is €48,000 and that the Taoiseach’s salary is €230,000. In quoting these figures, the judge said he was putting lawyers’ fees “into some kind of context”.
Undoubtedly, the legal fees in Connective will be utterly alien to the general public. After all, we’re talking about a defendant being charged possibly €1 million for legal representation. The lawyers are sharing lottery-level earnings for a single Commercial Court trial.
However, we should be slow to feed into the commonly-held view that Irish lawyers overcharge their clients. It is a simplistic and reductive statement that takes no account of the work involved in litigation or the realities of modern legal practice.
In many ways, the legal professions have failed to contextualise legal fees, leaving the judiciary and lobbying groups to set the narrative that legal costs are out of control and a barrier to justice.
So, let’s break the omertà and talk about legal costs from a lawyer’s perspective.
A fair examination
We must begin with the obvious: litigation will always be an expensive business. A party calling upon experienced senior counsel, junior counsel and solicitors to act on their behalf should not expect a cheap service. A fair examination of legal fees must accept that expertise is a highly valuable commodity.
Equally, as I have previously written, the practice of law has become far more complex in recent decades. As such, there has been a trend towards specialisation by all lawyers across the board. Today, almost without exception, commercial cases are taken by commercial law solicitors briefing commercial law barristers. This holds true for every other practice area. Cases requiring specialist legal advice (such as Commercial Court proceedings) will come at a higher price.
The specialisation trend naturally limits the pool of lawyers who are competent to take on particular classes of proceedings. In some practice areas, there are only a few dozen barristers who are briefed in the preponderance of cases.
Scarcity creates value. There are only so many hours that an individual lawyer can dedicate to a particular case and, as such, there is a premium to be paid for that lawyer’s time. We often hear judges state that court time is limited and valuable. The same must be true for the lawyers in those courtrooms.
Additionally, we must not forget that there are many lawyers who act on a “no foal, no fee” basis and, as such, will only be paid if they win the case and get a court order for their costs. In such cases, it is the lawyers who are funding justice and taking a significant personal financial risk, albeit that their client is also at risk of an adverse costs order.
On the other hand, there is merit to the argument that there are lawyers who charge large amounts of money for their services, and it is not always clear how the final figures are calculated. The Connective decision is a case in point. Although the defendant’s lawyers had quoted €570,000 to review discovery, the defendant’s legal costs accountants could not justify this figure and suggested that €150,000 was more appropriate. Such a discrepancy is not a good look for anybody.
One might argue that section 150 of the Legal Services Regulation Act 2015, which requires all lawyers to provide an up-front estimation of their fees to clients, is an antidote to the risk of overcharging. However, generally a client won’t know the going rate for, say, drafting an affidavit or reviewing discovery because they do not have a full appreciation for the level of work that is actually involved. Further, it is often very difficult to accurately estimate legal fees before a case has played out, so an early estimate of fees is not always useful.
It must be acknowledged that there are lawyers who charge more money than others for the same work. Just because a client can pay a higher fee does not necessarily mean that the fee is appropriate or commensurate to the workload. Professional ethics demands that legal fees are reasonable having regard to complexity and time demands.
The philosophical and economic spheres
It is not inconsistent to accept that lawyers provide a highly valuable service while also questioning some of the legal fees that are charged. We are, however, left with questions that skirt both the philosophical and economic spheres: how much is a lawyer really worth? And how much is too much?
These are not easy to answer. If one lawyer takes five hours to research a legal question and provide a detailed letter of advices, while another provides the same advice within five minutes because they are an experienced specialist, have both provided the same level of value to the client? If so, we must accept that one lawyer’s five hours is another lawyer’s five minutes.
How exactly this should be reflected in legal fees is unclear. However, if a lawyer has spent decades learning to do something in five minutes, I feel that they owed for the years rather than the minutes. In litigation, the quality of the work is more important than the hours spent behind a computer screen.
Ultimately, where a lawyer’s worth is derived from variables in as skill, knowledge, and experience, it feels futile to attempt to put any definitive values on legal work. As we so often hear in the courtroom, every case must be determined on its own facts. In the same way, legal fees must be assessed on a lawyer-by-lawyer basis.
In the Kelly Report, a majority of the review group recommended drawing up guidelines for legal fees in civil cases which, although non-binding, would operate to establish the going rates for High Court work and help to reduce legal fees.
Personally, the idea that legal fees should be lowered by guidelines is unpalatable. Other sectors are not similarly regulated and it feels that lawyers are being singled out. There is no similar push to dictate the prices charged by insurance or energy companies. Further, legal costs are already subject to assessment by independent adjudicators which regularly results in reductions in fees.
There is also the distinct possibility that guidelines would eliminate competition amongst lawyers for legal fees. It is not hard to envisage the guideline amounts becoming the industry standards, where every lawyer charges the same minimum fees for cases.
In my view, reductions in legal fees must be led by clients because it is the client who has the ultimate agency in litigation. Too often, clients are presented as price-takers in the legal marketplace, but the reality is that lawyers are dependent upon clients for their practice. A lawyer would much rather be paid a lower fee than lose a brief entirely.
However, a race to the bottom is also not advisable. Litigation is serious and you only get one chance to get things right. Low-paid lawyers will cut corners and make mistakes to the detriment of their client and the legal system as a whole. In truth, the question of legal fees has, and always will be, about balance. Our current equilibrium is for the reader to decide.
This article was originally published in the Irish Legal News, on 1st February 2024.
