ANALYSIS:Reform of legal costs has been under consideration for almost a decade, writes CAROL COULTER
THE TÁNAISTE told the Dáil this week that a Legal Costs Bill is being prepared by the Department of Justice. When it comes, it will be based on the work of two groups, the Legal Costs Working Group and the Legal Costs Implementation Advisory Group, which were set up by former minister for justice Michael McDowell.
The issue of legal costs has been a vexed one for years, with critical reports from the OECD in 2001 and the Competition Authority in 2005.
In 2006 McDowell set up a working group chaired by Paul Haran, former secretary of the Department of Enterprise and Employment.
This recommended that legal fees should be charged for specific tasks done and hours worked, rather than global instruction and brief fees.
He then set up an implementation advisory group, chaired by businessman Dermond Miller, to make concrete proposals based on the Haran report, and these proposals will form the basis for the legislation currently being prepared.
He also said that he favoured the abolition of the taxation of costs system. However, four years later the Taxing Masters are still very much in place.
The advisory group recommended that a legal costs regulatory body be established, consisting of three part-time commissioners and appropriate staff.
This body should draw up appropriate guidelines governing the items of legal costs recoverable on a party-and-party (where the losing side pays) basis, it said.
It echoed the views of the Haran group in recommending that the practice of solicitors and barristers charging global fees such as brief fees and instruction fees be abolished and replaced by fees and charges set out on an hourly or daily rate.
They should be obliged to use time-recording to support these charges, and set out what their hourly or daily rate is.
It said in all civil litigation solicitors should issue a client engagement letter, along the lines of the existing Section 68 letter, but with greater detail. This should be obligatory.
At the moment, while the Solicitors (Amendment) Act 1994 obliges a solicitor to do so, it has been found that a failure to issue a Section 68 letter cannot be a basis for refusing to pay the fee charged. Both solicitors and barristers should then enter a legal costs agreement with the client.
A legal costs assessment office should be established to take over the functions of the existing taxation of costs system. It should be independent of the legal costs regulatory body, the group said.
It also recommended that rules of court should require the courts to exercise greater discrimination when awarding liability for costs between parties.
A spokeswoman for the Department of Justice was unable to say when legislation based on these proposals might be published.
The legal costs system has also been criticised from within the legal system, with Taxing Master Charles Moran and the Master of the High Court Edmund Honohan expressing their own reservations from time to time about the way costs are charged.
Among the issues Honohan has raised were the additional costs caused by extending missed deadlines; responding to an opponent’s application to strike out proceedings when this was justified by the solicitor’s own conduct; and the costs incurred by the formal denial of a fact that is not seriously in dispute.
Moran has drawn attention to the fact that, once a costs order is made by the court, the Taxing Master cannot vary it, he can only determine the amount, based on submissions from legal costs accountants.
He has also commented that the taxing masters do not have any statutory power to report solicitors, counsel or expert witnesses to their respective associations or governing bodies for overcharging,and that costs were often more related to the monetary value of the case than the work actually done.