Legal Costs

Dáil Éireann Debate, Tuesday - 25 October 2011

Tuesday, 25 October 2011

Questions (7, 8, 9, 10)

Bernard J. Durkan

Question:

44 Deputy Bernard J. Durkan asked the Minister for Justice and Equality the extent to which it is envisaged that various levels of legal fees identified by the public as being excessive are likely to be reduced in the context of current or proposed legislation; if any evaluation has been done to identify those aspects of legal charges deemed to be most costly; if studies have been done to compare the various costs of legal services with those in adjoining jurisdictions; the extent of the calculation that has been done as to the likely benefit accruing to the Exchequer arising from a reduction in the legal costs of the various tribunals; and if he will make a statement on the matter. [31223/11]

Clare Daly

Question:

66 Deputy Clare Daly asked the Minister for Justice and Equality his plans to deal with excessive legal fees being charged, particularly in relation to family law cases which are covered by the in camera rule. [30797/11]

Catherine Murphy

Question:

72 Deputy Catherine Murphy asked the Minister for Justice and Equality his views that for the purposes of transparency and competition that the in camera rule for family law cases should be relaxed in respect of the fees charged; if he is considering introducing a requirement to keep time records in order to assist the Taxing Master to adjudicate on the fairness of fees charged; if he intends to make other such proposals to ensure that those family law cases that end up in courts are handled in a cost-effective manner; and if he will make a statement on the matter. [31260/11]

Catherine Murphy

Question:

78 Deputy Catherine Murphy asked the Minister for Justice and Equality if sufficient information is available to introduce penalties for legal professionals who are repeatedly the subject of overcharging following complaints to the Taxing Master; if so, the measures he intends to introduce and the timeframe for same; and if he will make a statement on the matter. [31259/11]

Oral answers (15 contributions)

Deputy Alan Shatter

I propose to take Questions Nos. 44, 66, 72 and 78 together.

In the Programme for National Recovery 2011-16, the Government made a commitment to "establish independent regulation of the legal professions to improve access and competition, make legal costs more transparent and ensure adequate procedures for addressing consumer complaints". The Legal Services Regulation Bill 2011, published on 12 October, provides the statutory framework for meeting all of these commitments. By the same token, the Bill supports the urgent objectives of structural reform, national competitiveness and economic recovery contained in the EU-IMF-ECB memorandum of understanding, while taking account of the recommendations for reform made by the legal costs working group and by the Competition Authority. I had the opportunity to brief the EU-IMF-ECB Troika on the provisions of the new Bill on Monday, 17 October. The troika considered the Bill to have met both the spirit and the letter of the Government's relevant undertakings.

The Bill provides three levers of sustainable reform. There will be a new and independent legal services regulatory authority with responsibility for oversight of both solicitors and barristers, an office of the legal costs adjudicator to assume the role of the existing Office of the Taxing Master, which is being conferred with enhanced transparency in its functions. The legal costs regime will be brought into the open with better public awareness and entitlement to legal costs information. There will be an independent complaints mechanism within the new regulatory authority to deal with complaints about professional misconduct and this will be supported by a new independent legal professions disciplinary tribunal. These three levers of change are mutually reinforcing in terms of oversight, standard-setting, enforcement and redress. For example, as well as providing a modernised framework for the adjudication of disputed legal costs, the Bill makes the issue of an excessive bill of costs one of those matters which may be considered as misconduct when a complaint is made to the new regulatory authority.

Part 9 of the Bill sets out, for the first time in statute, a set of legal costs principles that are to guide the assessment of legal costs, the key principle being that of reasonable costs for appropriate work done. Lawyers will be required to notify clients in a more detailed and intelligible way about legal costs. Key changes include the fact that both solicitors and barristers will now have to provide proper costs information. A client has to be issued with a notice of costs as soon as he or she has given instruction to a lawyer and the notice must also specify a cooling-off period allowing the client to consider whether or not to continue with the case.

The process of notification of costs to clients is ongoing and responsive to any developments in the conduct of a case and is not just an initial, once-off exercise. When legal work is completed a detailed bill of costs has to be issued, which also explains that the options of negotiation, mediation or adjudication are available to resolve any disputed aspects of the bill. Contravention of the notification requirements is misconduct and may be taken into account to disallow costs in a costs adjudication.

Arbitrary costs practices, such as imposing the two thirds of senior counsel rule in charging for the services of a junior counsel, are abolished. Recruitment to the role of legal costs adjudicator, previously confined to solicitors of ten years standing only, is now extended to people with a wider skill-set, that is, to similarly qualified barristers and legal-costs accountants. The office of the legal costs adjudicator — currently the Office of the Taxing Master — will be made subject to the governance and accountability practices, such as annual reporting, applied to public bodies generally. The office will be able to issue legal costs guidelines and will, for the first time, maintain a register of decisions on adjudications. This will publicise both the reasoning and outcomes of legal costs adjudications.

It will be possible to publish decisions made by the office of the legal costs adjudicator in regard to family law cases. Provision is made in section 82, subsections (3) and (4), to publish such a decision and the reasoning for it. Only certain information will be withheld, for example, the name of the party to a decision, the name of a child where one is involved and such other information as is protected by rule of law, including, for instance, the in camera rule. This means that the basis of cost adjudication decisions arising from family law cases will become transparent in a way that has not been possible up to now, while the in camera rule and other relevant privacy provisions continue to be observed. A case progression initiative has been operating in recent years in the Circuit Court for family proceedings and such case management has been mandatory for family law cases since October 2008. Under this system cases are listed before a county registrar for a hearing to determine whether they are ready to proceed. I participated in the launch of the Dolphin House initiative last May involving the Courts Service, the Legal Aid Board and the family mediation service of the Family Support Agency. This initiative encourages parties into an alternative mediation process with a special focus on cases involving the welfare of children.

The principles relating to legal costs, which are contained in Schedule 1 to the Legal Services Regulation Bill, include "the time and labour that the legal practitioner has reasonably expended on the matter" concerned. The legal costs adjudicator is obliged, under subsection 95(5) of the Bill, to ascertain reasonably the time taken to carry out the work concerned as part of his or her determination of the appropriateness of work done and the reasonableness of its cost. While solicitors and barristers alike will have to inform clients of any time-based rates that may apply to their work, they will also have to satisfy the other principles relating to legal costs that have been set out. This is considered the best way to achieve a balance between time and the other factors that relate to legal costs, for example, the complexity, urgency and priority of a case. The intention is to avoid creating a situation where over-emphasis of time as the determinant of legal costs could incentivise inefficiency in the handling of cases or be unfairly exploited as a "plodder's charter".

Additional information not given on the floor of the House

The interests of client consumers and legal practitioners will be balanced under this Bill better than ever before, to the mutual benefit of both. Under the provisions of the Bill everyone will be clearer about what should be happening when legal services are being sought or provided, how much these services will cost and where they can go to for independent adjudication if they have a complaint or wish to settle a dispute about legal costs. These measures, combined with the proposed new business structures for legal practitioners set out in the Bill, will provide a basis for enhanced competition and efficiencies in the legal sector and will lead to a reduction in legal costs. The Bill represents a package of reforms that will be of long-term benefit to the legal professions, consumers and the national economy.

Deputy Dara Calleary

I welcome much of what is proposed in the Bill. Shedding light on the issue of legal costs is a particularly welcome amendment, although whether they will be reduced is another argument. I do not want to anticipate the Second Stage debate, but will the Minister indicate when it is intended to bring it forward?

Deputy Alan Shatter

I am conscious that this is a detailed and complex Bill. As such, I wish to afford time to Members opposite and to those affected by the Bill, including consumers of legal services and the legal professions, to consider its provisions. It is anticipated that Second Stage will not be taken until after the second week in November, at the earliest, to afford an opportunity for the fullest possible consideration to be given to the Bill before proceeding to detailed debate on it in this House.

Deputy Jonathan O’Brien

We were under the impression that this legislation would run to some 300 pages. While the Bill we have been presented with is comprehensive, it comprises just over 100 pages. I am not complaining about this——

Deputy Alan Shatter

The Bill was 300 pages in typed print, but when it was printed by Cahill Printers it turned out at approximately 100 pages.

Deputy Jonathan O’Brien

Will the Minister confirm that nothing was removed from the Bill at the last minute which he wished to include?

Deputy Alan Shatter

Yes. I will be pleased to show the Deputy my very thick folder of typed content. To be specific, there were originally 298 pages of content in typeface, but the printing process reduced that substantially.

Deputy Bernard J. Durkan

I thank the Minister for his comprehensive reply. Will he indicate whether an assessment has been done of the extent to which legal fees are likely to be reduced arising from this legislation? I have raised this question many times in the past. It concerns the extent to which legal fees are likely to be reduced arising from the proposed legislation, particularly in respect of the costs of tribunals and the level of legal fees identified by the troika as being a serious impediment to competition. The Minister might indicate in quantifiable times the extent to which the benefit will accrue to the taxpayer arising from that as opposed to a rejigging of the structures which might mean we will end up in the same position we were in when we started.

Deputy Alan Shatter

A broad range of issues must be addressed to bring about a reduction in legal fees. Legal fees will be reduced as a consequence of this Bill, first, because of the new transparency that will apply to the charging of legal fees; second, the adjudicative process will cease to be a mystery both to some members of the legal profession as well as to the entire general public by the publication of decisions which should provide for a greater uniformity in the charging of legal fees; and, third, as a consequence of the new structures that will be available that will reduce costs. For example, under the provisions of the Bill it will be possible to directly consult a barrister to obtain advice without having to first consult with solicitors. The Bill envisages the provision of legal advice through alternative structures as well as the current form of solicitors practice and barrister practice being able to continue out of the Bar Library with barristers operating as sole contractors. Those alternative structures will create the possibility for barrister partnerships, multi-disciplinary firms and the possibility of solicitors and barristers jointly representing clients as advocates in court proceedings.

All of those measures will contribute to cost reduction but the Legal Services Bill is not a magic bullet in affecting cost reduction because a broad range of other things must be done, some of which we are engaged in dealing with. First, we must try to ensure that people use alternative dispute resolution methods as opposed to litigation when disputes arise and I am happy to tell the House that a mediation and conciliation Bill which I hope to bring before the House is at a reasonably advanced stage of preparation. Second, there is a need to provide for greater efficiencies within the court services to ensure our courts operate in a manner which does not unnecessarily give rise to legal costs.

In the context of tribunals, the Deputy is right in saying that tribunals have proved particularly costly. I do not believe there is a way of guaranteeing to the House that if a tribunal in the future is investigating the issue the substantial costs will not be incurred. That is the reason we need new accountability mechanisms and why there is a referendum taking place to facilitate committees of this House investigating matters of substantial public importance and holding hearings with a view to ensuring not only that this House does its duty, but issues that need to be inquired into can be inquired into without the enormous costs that have been incurred in the past through the use of the mechanism of tribunals.

Deputy Catherine Murphy

I have not mastered the art of bilocation yet. I was in a committee meeting and missed much of the response the Minister gave. There are a number of components to my questions, the first of which is the requirement to keep records. It is very difficult for the Taxing Master to adjudicate on something if there is no requirement to keep records. I do not know if the Minister indicated in his reply that he intends to make changes but I presume it is open to him to make those type of provisions by way of an amendment to a piece of legislation.

The second component concerns people who are persistently complained to and found to have been offenders in regard to the Taxing Master. Most of those would concern family law cases. The lack of that information does not act as a warning to people when they take on someone to prosecute a case. Those are the areas on which I would like to hear the Minister's response.

Deputy Alan Shatter

The Deputy may have missed hearing me say that an important element of the new reform is that the legal costs adjudication office will have to maintain a record of decisions delivered by it and that they will be published. In the context of the way the legislation is drafted, I hope there will be a facility, for example, for those decisions to be on a website.

In the context of the family law area, while the anonymity of estranged spouses in a family dispute, for example, or the names of their children will be preserved because of the in camera rule, if there is a dispute over legal costs in a family law matter it will be adjudicated upon and the outcome of the adjudication can be published while preserving the privacy of the individuals concerned. The lawyers will not have anonymity in the context of publication. The anonymity applies to the parties, that is, the husband, the wife or the cohabitees in a family dispute or, if it involved an adoption issue, the adopters and perhaps the biological parent but the anonymity will not apply to the law firm under the provisions of the Bill. The fact that these decisions will be published, whether we are dealing with family litigation, civil litigation or any other litigation, will also act as a spotlight on costs that are charged.

As I mentioned in my initial response, where a complaint of excessive charging is adjudicated upon it is an issue that can fall within the context of misconduct as it arises under the Bill, which may result in that matter being dealt with from a disciplinary perspective. There is a range of what I would describe as connected reforms which should not only shed a spotlight in this area but disincentivise persons who overcharge. In fairness to members of the legal profession, not every allegation of overcharging against members of the legal profession is true. Some are true but some are not.

Deputy Bernard J. Durkan

To what extent have comparisons in respect of legal fees been made between this jurisdiction and adjoining jurisdictions, for instance, Northern Ireland, the United Kingdom and France, having particular regard to the recognition by the troika of various aspects of our financial services and various structures, legal and otherwise, as being a deterrent in terms of competition and costs? If he has not done so already would it be possible for the Minster to produce a graph illustrating the comparisons between the fees for similar activities here and in the other jurisdictions?

Deputy Alan Shatter

I do not have a graph I can produce for the Deputy but I refer him to the initial report and the final report of the Competition Authority published towards the end of 2006 which regarded a range of difficulties within the legal professions as restrictive practices which unduly added to the legal costs for the consumers of the legal profession. I see the legislation to be published as being of substantial benefit to consumers in particular and I hope that when members of the legal profession, both solicitors and barristers, have had an opportunity to reflect on the detailed contents of the Bill they will see it is also modernising the structures through which legal services can be provided, bringing the legal professions out of the 19th into the 21st century and, in sweeping the cobwebs out of the legal corridors, is giving an opportunity to those who wish to be competitive and provide legal services to consumers to do so through new structures which will be to the benefit of both the legal profession and consumers and which I believe will reduce costs because of increased competitiveness.

The view of the troika is that, on average, legal costs in this jurisdiction are something in excess of 20% of what they would be in our neighbouring jurisdiction in England. I am not sure how they have calculated that sum because often it is difficult to do the comparisons.

The issue of legal costs is not simply about what lawyers charge. A range of reforms are necessary to incentivise people to use mediation instead of litigation in resolving disputes and to incentivise lawyers to encourage clients to resolve disputes by agreement where mediation is not necessary. There are substantial reforms needed within our court structures, which ensure that those who have to litigate areas of difficulty in their lives know lawyers are kept waiting around courts from one day to the next with court hearings lasting an hour or a couple of hours while other matters intervene. Court cases end up costing clients of the legal profession for three or four days in court when, if the courts were better organised, the matter might have been dealt with within a single day.

These are specific issues and I have urged the Courts Service to address them in the interests of consumers and also in the interest of the State, in the context of the substantial legal costs the State must meet in dealing with litigation taken against the State.

Deputy Dara Calleary

Has the Minister a figure in mind for what people can expect legal costs to be reduced by over, for example, a two year period as a result of full implementation of the Legal Services Bill and addressing the other issues?

Deputy Alan Shatter

I cannot give the Deputy an answer to that. Every legal issue is different and every type of legal work that must be undertaken, be it by solicitors or solicitors and barristers and, hopefully also in the future, by barristers alone, can vary. It can depend on not only the issue that must be addressed but also the personality of the client with whom the lawyer is dealing. The Deputy knows that well enough. One cannot prescribe a specific fee that is payable in a range of litigation areas; in other areas it is a great deal simpler. In the making of what I describe as simple wills or the conveyance of a property there are set fees that can be readily identifiable and that people should know they will incur in advance of legal work being undertaken.