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Recent Developments on Legal Costs

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By Sarah McAuley


Published 20 April 2023


Costs associated with litigation have been the subject of much debate. Former Chief Justice Mr Frank Clarke has stated previously that “many types of litigation are moving beyond the resources of all but a few".

Attempts have been made to confront this issue over the years, perhaps most notably in recent years with the introduction of the new system of costs adjudication under the Legal Services Regulation Act 2015. Additionally, a report was commissioned into the civil justice system by the Minister for Justice with Mr Justice Peter Kelly appointed as Chairperson. This group published its report in October 2020. One of the specific terms of reference provided was to examine ways in which the cost of litigation could be reduced. According to Mr Justice Peter Kelly, Ireland is a “high cost jurisdiction in which to conduct litigation” . This report also found that Ireland ranked “among the highest-cost jurisdictions internationally for civil litigation.

The review group were unable to reach consensus on how best to tackle this issue. It did however put forward two options aimed at reducing costs. The minority preferred the introduction of a mandatory scale of costs to achieve some uniformity and a reduction in overall expense. The majority however felt that the new costs adjudication system introduced in the LSRA 2015, was relatively new and should be given time to assess its effectiveness. In addition, the majority cautioned that maximum scale fees may constitute an infringement of EU competition law. The majority favoured the introduction of non- binding guidelines for costs to improve the “certainty and transparency” of the costs process. It was felt that this option would be more straightforward to implement and would not require legislative input.

Following the publication of this report, the Law Society of Ireland and the Bar of Ireland jointly commissioned a report into legal costs, conducted by EY. This report analysed costs associated with litigation cases from 2011-2019. This found that “the assertion that Ireland is a high-legal-costs jurisdiction is not strongly supported by evidence”.

The EY report found that trends showed that there had been a decrease in value of legal fees over this period.

The results of the EY report may come as a surprise to practitioners, considering the pervasive view that costs associated with litigation remain high. In practice, colleagues may likely have noted a marked inflation of bills of costs being received. By reference to the Office of the Legal Costs Adjudicators Annual Report from 2021 , the average amount claimed on adjudication generally has decreased slightly from 2020 to 2021 but when one examines this figure closely, certain matters have seen a rise in the costs being claimed by practitioners. For example, the total amount claimed in cases involving road traffic accidents increased from €12,970,373 in respect of 171 cases in 2020 to €17,518,910 in respect of 174 cases for 2021. Clearly, there is a marked increase in the level of costs being submitted in certain areas, at odds with the general trends in litigation costs noted by the EY report.

The Law Society of Ireland and the Bar of Ireland both advised that economic investment is required to achieve costs reform. Appointment of more judges, reforming the discovery process and increased use of electronic systems were some of the ways it was suggested that this could be achieved.

A recent Irish Times article notes that the Government had commissioned economic research into this issue following the Kelly report. There is some way to go before definitive Government intervention in this matter and no doubt practitioners will keep a close eye as matters progress.