Proposed Legal Costs Bill following Taxing Masters 82% reduction

mectavba

The Tanaiste said yesterday in the Dail that following the Taxing Masters ruling on fees that were "grossly excessive" a Legal Costs Bill could be expected by the end of the year.
What are the proposed changes?
Will they try to implement the Harran report?

Bosco boy

It's about time that excessive fees are tackled, it's a rip off of tax payers money that could be spent where it's really needed. Bring it on!!

johnnyskeleton

Bosco boy wrote: »

It's about time that excessive fees are tackled, it's a rip off of tax payers money that could be spent where it's really needed. Bring it on!!

The eternal question though is how you measure fees. There cannot be a set guideline because that would be uncompetitive, but the absence of guidelines allows arbitrary fees to be charged (and arguably shows how competition law can actually make markets less competitive).

Fees in the Circuit and District Court are fairly standard for different types of work. Occasionally an exceptional point will arise or a case will take longer or a client will wish to pay more to attract better lawyers or increased preparation work. But even then the fees will bear some relationship to the fees charged in a standard case (e.g. twice as much work, twice the fee).

In the High Court and Supreme Court this is not the case because there are some very technical and specialised areas and there are a lot less of what could be called standard cases (outside simple PI / contract debt cases).

So how do you deal with fees or "excessive fees"? Supposing a solicitor does work on a no foal no fee case and is successful and gets an order of costs against their opponent. If that solicitor only wishes to charge a fair amount for the work done, what should they do? There is no agreement as to the fees with the client, as the client was never likely to pay. So the fees are purely a matter between the solicitor and the losing party.

On the one hand, they can calculate it on the basis of an hourly rate but what if that hourly rate turns out at more or less than what is usually paid in such cases? Further, many Irish solicitors don't keep track of the hours that they spend working on a case. Furthermore, if it is calculated on an hourly rate, that encourages inefficiency.

So the situation we have at the moment is that we have a taxation process which compares the fees payable to similar cases. However, the fees paid in other cases is not widely available. On one hand there is no incentive not to charge the maximum fees that are payable in such cases, on the other if a solicitor charges less than the average they could be reduced even further on taxation on the basis that it suggests the work done was less than a standard case (the taxing masters will not increase a bill of costs).

Also, how do the taxing masters assess the complexity of a case? They did not hear the case in court and in any event what goes before the court is but the tip of the iceberg. How do they account, for example, for cases such as the above which involve an element of a high profile challenge to a politically sensitive issue? The costs of bringing such cases does not fit easily into a system of hourly rates.

I'd like to see what other ways of measurement of fees could be used, but each has its own strengths and weaknesses. The main weaknesses of the current system is that a solicitor could incur substantial costs in having a matter taxed when if more information was publically available as to standard fees, the parties could agree figures more easily with each other. The exceptional case would still have to go to taxation, but at least there would be some baseline to measure it against.

Bosco boy

The dogs on the street know we have and are being ripped off for years, tribunals are a licence to print money, people are fed up of it. It's about time the taxing master did their job

Our man in Havana

Can the decision of the taxing master be appealed?

Tom Young

Yep. I suggest it won't be though.

johnnyskeleton

Bosco boy wrote: »

The dogs on the street know we have and are being ripped off for years, tribunals are a licence to print money, people are fed up of it. It's about time the taxing master did their job

Tribunal fees are set by the government and have nothing to do with the taxing master. Try again.

But I wasn't just being rhetorical, I really would like to know what alternative ways there are to deal with legal fees, other than a general need to cut them down. It does not present any easy answers to my mind

nuac

I don't think hourly rates are the answer. It encourages inefficiency. A lawyer experienced in a particular type of work can prepare a case quicker and more efficiently than a lawyer who has to burn midnight oil to achieve the same level of preparation.

That also applies to the backroom staff in a solicitors' office - there is a great deal of work involved in organising the paper work involved = discovery, SI 398 requirements, briefs etc. Experienced staff can get that work out quicker than those who have no such experience.

Suggest time spent should be just one of the factors considered.

McCrack

This particular situation was novel in many respects and was not run of the mill. In general terms insurance companies in house or the panel of solicitors they outsource their defence to are pretty expert in calculating and negotiating with Plaintiff solicitor's Bill of Costs. Defendant solicitors know what a fair fee and what will tax at a certain amount and apply it. Legal cost accountants are the same if not better.

This particular case serves no good purpose other than reinforce the generalisation amoungst the public that lawyers are creaming it. I do support the decision though as it will focus the professions mind however.

johnnyskeleton

McCrack wrote: »

This particular situation was novel in many respects and was not run of the mill. In general terms insurance companies in house or the panel of solicitors they outsource their defence to are pretty expert in calculating and negotiating with Plaintiff solicitor's Bill of Costs. Defendant solicitors know what a fair fee and what will tax at a certain amount and apply it. Legal cost accountants are the same if not better.

This particular case serves no good purpose other than reinforce the generalisation amoungst the public that lawyers are creaming it. I do support the decision though as it will focus the professions mind however.

Although to be fair, even the amounts that the case ultimately taxed at were fairly meaty.

johnnyskeleton

nuac wrote: »

I don't think hourly rates are the answer. It encourages inefficiency. A lawyer experienced in a particular type of work can prepare a case quicker and more efficiently than a lawyer who has to burn midnight oil to achieve the same level of preparation.

That also applies to the backroom staff in a solicitors' office - there is a great deal of work involved in organising the paper work involved = discovery, SI 398 requirements, briefs etc. Experienced staff can get that work out quicker than those who have no such experience.

Suggest time spent should be just one of the factors considered.

Hourly rates have a number of issues:
1) are less arbitrary and more transparent than a global fee;
2) can lead to inefficiencies;
3) can be more cost effective in less contentious issues;
4) make no sense in the district and circuit courts where even at a professional fee of €50 for barristers and €100 for solicitors the simplest district court matter would take over a grand and the simplest circuit court over €10,000. I would say that Family law would have ungodly fees, but to be fair they have had ungodly fees for the last few years anyway;
5) the idea that a less complex case pays less per hour doesn't really make sense;
6) few solicitors keep track of the hours (virtually impossible in small litigation practices);
7) hours can be manipulated (e.g. 2 min phonecall counted as 15 mins of work done);
8) work can be misallocated (partners who do photocopying because of urgency will bill at full partner rate);
9) a solicitor who knows the answer straight off will earn less, as you say, than someone who doesn't and who might be wrong;
10) how do you apportion the hours if there are three cases in on any given day
11) can encourage clients to settle
12) lack the certainty that some clients require (e.g. you ask a mechanic if he will do a job for 2k and he says yes or no, why can't it be the same for the legal profession?)

I don't necessarily think by hours is a good idea either (although it might be a good idea to include under instruction fees an estimate of the time spent on the case) but the problem is that costs in no foal no fee cases are fairly arbitrary. I suppose to a certain extent they compensate for cases which are not successful (whether this is a good thing or a bad thing is also open to debate).

I think that without there being any particular set fee, there should maybe be standard fees. Even if no case is ever standard, it gives a good baseline to measure it.

So, in the O'Brien case, if a standard JR instruction fee in the High Court is 30k, the O'Brien case as taxed is approximately 3x more complicated, time consuming and difficult than the standard JR. Certainly this would make what was originally charged in the region of 30x more complicated than a standard case, which puts it in perspective.

Maybe rather than going to the taxing master (who, since he hasn't heard the case, is maybe not in the best position to judge the complexity) the parties could go back to the judge and argue for a certain uplift on the standard fees or, if it is a standard or easy case, opt to just accept the standard fee. This would also cut out the middle men in the costs accountants firms, who charge pretty big fees themselves, and the risk and delay involved in going to taxation.

It would also mean that pratitioners would have a good idea of what reasonable fees are rather than having to guestimate it.

I'd like to hear people's views on this as I don't think the current system of taxation benefits anyone really - neither the clients nor the lawyers get a particularly good deal out of it.

Strongbow10

what does this mean for the legal costs industry?

I believe there is whole area dedicated to legal costs, legal cost accountants etc....

johnnyskeleton

Strongbow10 wrote: »

what does this mean for the legal costs industry?

I believe there is whole area dedicated to legal costs, legal cost accountants etc....

Yes there is. Legal costs accountants usually get a percentage of the costs.

It doesn't really affect them, unless the system is changed to cut them out of the equation by having set fees. Which of course can't happen because of competition law. Which of course means that we continue with an inefficient uncompetitive system for costs.

Which makes you think why bother with competition law in the first place?

Another way it might affect legal costs accountants is if it leads to more cases going to taxation which means more work which means happy days.

Strongbow10

but surely a new legal costs bill will do exactly that, regulate legal costs and put a uniform system in place??

therefore making this legal costs industry extinct

johnnyskeleton

Strongbow10 wrote: »

but surely a new legal costs bill will do exactly that, regulate legal costs and put a uniform system in place??

therefore making this legal costs industry extinct

EU law prohibits price fixing by government or trade organisations, so a uniform system cannot be put in place as it would be anti-competitive, strange as that may sound.

I guess it shows how one size fits all competition law doesn't always work.

Bosco boy

Something needs to be done, there is competition in many sectors so why not legal fees, why should they have an open cheque book, what about hospital consultants fees is that price fixing? I can't see why one profession in this country can be above regulation. A fair days wage for a fair days work so to speak!

johnnyskeleton

Bosco boy wrote: »

Something needs to be done,

I accept that something should be done because the current system servers nobody - not clients, not the state but also not the lawyers themselves, who have to wait a long time to be paid because of the uncertainty.

I'd like to hear people's suggestions, so maybe have a think about it and come back to me with some ideas of how to go about it, or maybe have a look at the issues that i've pointed out and see is there anything you might suggest pleae.

Bosco boy wrote: »

there is competition in many sectors so why not legal fees, why should they have an open cheque book,

The problem is not where people pay their own lawyers - there people can either pay the agreed price or go to another firm and ask them to lower their price (same as any other profession). Examples of this include conveyancing, probate and road traffic offences.

The problem highlighted by this case is that where costs are recovered from the other side there is often no prearranged fees for the case (the client often having no money and going on the basis of no foal no fee) and equally after the case has ended the unsuccessful defendant can do nothing but send the matter to taxation if they feel the fees are too high.

I'm stumped if I can see how a different system could work in reality, but maybe we should look at it in small steps.

Bosco boy wrote: »

what about hospital consultants fees is that price fixing? I can't see why one profession in this country can be above regulation. A fair days wage for a fair days work so to speak!

With consultants the issue is that they are employed and paid by the state. For party-party legal fees the lawyers are not employed by the state, but the state has to pick up the bill. Imagine someone crashes into your car and you go to a mechanic to get it fixed. You can negotiate with the mechanic but they are the ones who foot the bill.

Plus also, how do you define a fair days wage when such a thing is fairly arbitrary.

Finally, the big irony is that the problems are caused by the very measures designed to create more competition.

mectavba

Something may need to be done, however, the hourly rate idea is a non runner in my opinion. Why should a solicitor who takes longer running a case get rewarded for one who can bring the same case home in a shorter time?

Perhaps there should be a rule that penalises solicitors who claim too much. In solicitor and client bills if more than one sixth comes off a bill the solicitor has to pay the Stamp duty on the Taxation. A similar rule could or should be applied to Party and Party bills.

Also, there should be some sort of Tender process introduced, where the paying party could make a lodgement of what they believe is a fair fee for the solicitor and it would then be up to the solicitor to decide whether to take this offer or try beat it on Taxation. If they did not beat it then again they should have to pay the Duty.

But either way are there any noises coming from the government about what will be contained in the Bill?

How likely is it to be passed through by the end of the year?