Recent statements from those at the centre of the legal system have highlighted the lack of transparency in legal costs, writes Carol Coulter, Legal Affairs Correspondent.
The issuing of a "wasted costs order" by the Master of the High Court yesterday will send a few ripples around the Four Courts.
Edmund Honohan described it as a wake-up call for solicitors, as he ruled that two days' hearing of an application before him was unnecessary and a waste of time, and ordered the solicitor to reimburse his client for the costs.
In a 24-page written ruling, he went into some detail on the lack of control on costs charged to clients by solicitors, and warned that the spiralling cost of litigation was driving the Oireachtas to legislate for alternative forms of dispute resolution.
Meanwhile, one taxing master, Charles Moran, has drawn attention to the fact 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 over-charging.
The taxing masters are officers of the High Court who adjudicate on costs when they are disputed between the parties, or between a solicitor and his client.
Mr Moran also said that costs were frequently more related to the monetary value of a case than to the actual work involved, which should be the basis for calculating costs. He argued that the courts, when making orders for costs, should take into account unnecessary motions and time wasted by groundless claims, and rule that such costs should not be granted to the winning party. He also said that solicitors should keep a client informed at all times when incurring certain expenditure.
In a paper at a legal conference last November, Mr Moran proposed that a position of "cost judge" be created. Such a judge would hear appeals against the ruling of a taxing master, and could affirm, dismiss or substitute his own figures for any disputed item in a bill of costs. The judge should have power to impose fines or other sanctions on an offending party.
The Minister for Justice received and accepted a report on legal costs last month. This report, from a working group chaired by former secretary of the Department of Enterprise and Employment Paul Haran, recommended that legal fees should be charged for specific tasks done and hours worked, rather than global instruction and brief fees.
It also recommended the abolition of the functions of the taxing masters, and the establishment of a new body to regulate legal costs. However, Mr Moran and Mr Honohan have highlighted weaknesses in the existing system that, they say, could be addressed both by legislation and by the courts themselves.
Urging the courts to use "wasted costs orders" against lawyers who bring unnecessary motions, or lengthen the proceedings unnecessarily, Mr Honohan listed a number of examples that might incur such orders. These included amending court documents; 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.
"Does the client know or have any means of knowing whether these costs could or should have been avoided?" he asked.
Referring to the taxation of costs system, he pointed out that two different sets of costs were involved: the sum payable to the winner by the loser in a case ("party and party" costs) and any additional outlay by the solicitor not covered by these costs, or reduced by the taxing master. These are known as "solicitor and client" costs, and are payable by the client to his own solicitor.
Mr Honohan said the Rules of Court made it very difficult for the client to challenge a solicitor's bill for these extra costs, as the rules state that all costs incurred "with the express or implied approval of the client" are presumed to have been reasonably incurred.
"This is an almost insurmountable hurdle for a client questioning value for money," he said. The taxing masters can therefore do very little for a dissatisfied client, Mr Honohan said.
In his paper Mr Moran said that appropriate limitations should be placed on orders for costs by the courts, before they come to the taxing masters, who have no power to change the orders. This could arise, for example, where a plaintiff caused unnecessary evidence to be presented in court, thus prolonging a hearing.
He said the taxing masters could not rewrite orders for costs once they had received them from the court, they could only determine the amount, based on submissions from legal costs accountants. "All too often," he said, "little or no attempt is made to have obvious limitations or restrictions placed on the order."
He was also critical of the failure of solicitors to negotiate fees with counsel or expert witnesses before or after the hearing. "It appears to me that in some cases over-reliance is placed on the amount of the award or the monetary value of a case when it comes to marking fees, rather than on the overall nature and extent of the work undertaken and performed, which is the correct and fundamental basis for assessing costs," he said.