The implementation of the Haran report on legal costs will involve a major culture change for the legal professions, writes Carol Coulter, Legal Affairs Correspondent.
The report into legal costs, by a group led by former secretary general of the Department of Enterprise and Employment, Paul Haran, provides a fascinating insight into the way in which legal costs are charged, and the lack of control over these costs by users of legal services.
One reason for this lack of control, according to the report, is the fact that in Ireland the party that wins a case has its legal costs paid by the losing party. This gives rise to the "no foal, no fee" practice, where lawyers take on cases on the basis that they will not charge if they lose.
It also means, however, that the defendant must have the resources to pay both sets of costs where the plaintiff wins. Typically, the defendant in such cases has been an insurance company or the State. The defendant usually does not control the way in which the case is conducted, or the length of time it takes.
The report does not recommend any change in the "costs follow the result" principle, as it considers it central to the principle that a person should be able to vindicate their rights, and the authors also recognise it means that many have access to justice who otherwise would not.
However, it concludes that greater transparency and predictability is necessary in legal costs, and so recommends a number of measures. The central one is the setting up of a new legal costs regulatory body, which would formulate guidelines for pricing legal services. Higher amounts would have to be justified to a legal costs assessment office.
This proposal involves the abolition of the office of Taxing Master of the High Court. There are two Taxing Masters at the moment, and they decide on High Court costs where they are disputed by the parties.
In examining the existing system of legal costs, the Haran group commissioned independent research from economist Vincent Hogan of UCD. This concentrated on personal injury cases in the High Court and four of the Circuit Courts.
One of Mr Hogan's main conclusions was that a major determinant of costs in personal injury litigation was not the complexity of the case, or the amount of work done, but the size of the award.
The research also showed that solicitors' fees have risen at twice the rate of other workers' incomes between 1984 and 2003, with barristers' incomes rising at 50 per more than those of other workers. There were also wide variations in the fees charged among individual lawyers, with some barristers earning almost twice what others earned for the same work.
Where costs were appealed to a Taxing Master, they were reduced by, on average, 20 per cent.
Nonetheless, according to Mr Haran's report, the Taxing Master has failed to make any inroads into certain entrenched practices. These include the routine where a junior counsel is normally paid two-thirds of what a senior counsel is paid, irrespective of the work he or she puts in, so his or her earnings depend on those of the senior counsel.
They also include the inflation of a solicitor's "instruction fee" to compensate for the fact that other elements in the bill of costs are regulated, and the amounts provided for these have not been updated. The instruction fee is not itemised, and, according to the report, allows for "crosssubsidisation". The production of itemised bills by solicitors and barristers, the provision of a detailed estimate to clients in advance, and giving the client the option of halting proceedings at various stages are among the report's recommendations.
The authors also stress the importance of changes in the courts themselves, to reduce delays and ensure that any lawyers contributing to delays are penalised. The jurisdictions of the different courts, which are set at a relatively low monetary level at the moment, should be gradually increased, and both the jurisdiction and range of cases to the Small Claims Court increased.
In family law, where the costs are borne by the individual litigants, there should be full disclosure of all financial information at a very early stage in the process. The report also stresses the importance of keeping cases out of court where possible through the increased use of mediation and case management.