Wednesday, January 11, 2006

Reform of Legal Costs announced

McDowell announces radical reform of legal costs system and establishment ofLegal Services Ombudsman

Press Release:

The Minister for Justice, Equality and Law Reform, Mr. Michael McDowell T.D., has announced that the Government have accepted the recommendations of the Legal Costs Working Group and that he will now take the necessary steps to implement them. He also announced plans for the establishment of a Legal Services Ombudsman.

Legal Costs Reform

The Legal Costs Working Group, which was chaired by Mr. Paul Haran, the former Secretary General of the Department of Enterprise, Trade and Employment, was established by the Minister in 2004 to look at ways of reducing civil legal costs. Speaking this evening before contributing to a debate in the Trinity College Historical Society on the motion "That regulation of the legal profession should be reformed", the Minister said "I intend to empower the consumer of legal services - the client - and give him or her the information they need to make informed choices. I intend to transform the way in which legal costs are determined and, where legal costs are disputed, how costs are to be assessed. I very much appreciate the painstaking work done by Paul Haran and his Group. The recommendations are wide-ranging and represent significant change in the manner in which legal costs are determined and assessed.

The recommendations span the operational, policy and legislative areas and it is clear that a great deal of preliminary work will be required before the new systems can be put in place. I am therefore pleased that the noted accountant and businessman, Mr. Desmond Miller FCA, has agreed to chair a team to work out an implementation plan and timescale."


The report recommends that costs guidelines should be based on an assessment of the amount and nature of work required to be done in a case. The "work done" principle is central to the Report's recommendations. Recovery of costs for "work agreed to be done but not done" will end. This will be achieved by the replacement of the existing taxation of costs system (by the "taxing masters") with a new regime which would comprise the establishment of:

a legal costs regulatory body to formulate recoverable cost guidelines based on an assessment of the amount of work reasonably required to be done in typical cases;
a written assessment process, based on the recoverable cost guidelines prescribed by the regulatory body, to be carried out by a Legal Costs Assessment Office where legal bills are disputed;
and an oral appeals process conducted by an Appeals Adjudicator.

The Group recommends that the solicitor's instructions fee be broken down into its component parts. A similar approach should also be adopted in relation to the counsel's brief fee. All fees should be itemised and it must be clear to the client what they are being charged, why they are being charged and the basis upon which they are being charged. Given the recommendation that costs should primarily be recoverable by reference to work done, the Group considers the almost universal practice whereby Junior Counsel is paid two thirds the rate of Senior Counsel is unacceptable and unfair given its arbitrary nature.

The Minister said it was also his intention to radically strengthen the law in relation to the charging of percentage deductions from awards by solicitors and barristers. "Once the new costs arrangements have been put inplace and have bedded into the legal system, the market for civil legal services will become more predictable, consistent and transparent to consumers. This transparency will also make it easier for consumers to recognise competitive prices for the services they require and facilitate access to the State's system of justice" he said.

Legal Services Ombudsman

The Minister also confirmed the Government have approved his plans to establish a Legal Services Ombudsman to strengthen the mechanisms for dealing with complaints against solicitors and barristers. The Ombudsman will oversee the handling by the Law Society and Bar Council of three classes of complaint against solicitors and barristers, namely -inadequate services, excessive fees and misconduct.

The Ombudsman's key functions will be:

to provide a forum of appeal for clients of solicitors and barristers who are dissatisfied with the outcome of a complaint made to the Law Society orBar Council;
an overseeing role by examining a selection of complaints files each year taken on a random basis;
monitoring access to the professions and reporting to the Minister and the Oireachtas on the adequacy of numbers admitted annually to each profession.

The Legal Services Ombudsman will effectively subsume the Law Society's existing office of Independent Adjudicator and carry out the same functions in respect of both solicitors and barristers. Provision for the Legal Services Ombudsman will be included in a Civil Law(Miscellaneous Provisions) Bill which is currently being drafted and is likely to be published in the spring with a view to enactment before the end of this year.

The Minister said that "Replacement of the Law Society's Adjudicator with a Legal Services Ombudsman will enhance transparency and accessibility and introduce proper accountability to the system. There is a clear public interest in ensuring a high level of confidence in how the professions regulate their affairs and the Ombudsman will contribute to this."

10 January 2006.

Notes for Editors

Existing Complaints information

In 2004 there were 1,103 admissible complaints to the Law Society of which 547 alleged misconduct, 481 alleged inadequate professional services and 75 related to alleged overcharging. Out of 730 completed complaints cases in 2004, 61 were upheld. The Independent Adjudicator reviewed 79 cases in 2004 at the request of complainants and also reviewed a randomly selected sample of a further 40 cases. There are over 6,700 practising solicitors at present. The average number of annual complaints received by the Bar Council is approximately 25. There are 1,540 practising barristers.

Biographical Note on Mr. Desmond Miller, F.C.A. Desmond Miller is a chartered accountant and a former partner in KPMG. He is a past President of the Dublin Chamber of Commerce and the Chambers of Commerce of Ireland. He is currently Chairman and Director of several public and private companies and is Chairman of the Waterford Institute ofTechnology Foundation.

The Report of the Legal Costs Working Group is available at Choose: Publications > Courts Policy
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