Why are legal costs in Ireland so high?

Analysis: lack of competition, cumbersome procedures and a reluctance to change combine to keep costs high

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Law has long been seen as a very lucrative profession: the Four Courts are known as 'the Four Goldmines' for a reason, and many avoid litigation if at all possible. The reasons why have been extensively researched. The most recent discussion was in the report of the Review of the Administration of Civil Justice in 2020, led by Mr Justice Peter Kelly, who was President of the High Court at the time.

The report concluded that ‘Ireland ranks among the highest-cost jurisdictions internationally for civil litigation’. In arriving at this summary, the report noted our poor performance in a number of international rankings:

- 91st out of 190 economies in terms of the ease of resolving a contract dispute

- the fourth most expensive jurisdiction in the EU for litigation of commercial contract disputes (although we do not rate so poorly when compared only to global common law countries)

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From RTÉ Radio 1's Morning Ireland, Minister for Justice Helen McEntee on her proposed series of reforms to reduce legal costs

- one of three Western European jurisdictions with particularly high litigation costs in relation to the value of the case (the other two were Denmark and England and Wales)

- the fourth highest cost for resolving claims as a percentage of Gross Domestic Product between Europe, the US, Canada and Japan

- the Medical Protection Society views Ireland as a very high cost country

The National Competitiveness Council focused on legal costs in 2019 and noted that these had increased dramatically. While research commissioned by the Law Society of Ireland points out that legal services are not uniform and are therefore difficult to price-compare, costs can nonetheless be a real barrier to access to justice. In 2017, then Chief Justice Frank Clarke noted that ‘it has increasingly become the case that many types of litigation are moving beyond the resources of all but a few’.

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From RTÉ Archives, RTÉ News report from October 1988 about a row between barristers and the insurance industry over the size of legal teams in personal injury cases.

So why are legal costs so high in this country?

Lack of competition and cumbersome procedures largely keep costs high. In 2013, Forfás looked at legal costs in some detail. Despite several positive recent developments, they concluded that "the profession remains characterised by a range of restrictions on competition. Relative to the other professions examined, prices for legal services have proven extremely sticky and have not adjusted downwards to the degree that might have been expected given current economic circumstances."

This report welcomed reforms which would allow for the creation of multi-disciplinary partnerships, which could combine legal, accounting, and other professional services in a single practice. It highlighted other aspects of the market that raise costs, such as the differentiation between senior and junior counsel, limitations on solicitors as lead advocates, and the lack of a dedicated conveyancer profession (as exists in the United Kingdom). It also pointed out the need for reforms in court practice and procedure, such as more case management, in order to create greater efficiency. Some progress has been made since. but it has been slow.

What could reduce the costs of legal action?

The Forfás report was not the first to look at what could be done to reduce legal costs. In 1990, the Fair Trade Commission considered whether the distinction between solicitor and barrister should be ended (sometimes called the ‘fusion’ of the two professions, which has already occurred in several common law countries) and decided that it was not a restrictive practice.

The pace of change so far means you should be prepared for a substantial bill if you need a lawyer

The idea is still being considered: the Legal Services Regulatory Authority published a detailed report on it in September 2020. This recommended that the professions should not be unified but that it would re-consider the question in five years time.

In 2006, the Competition Authority produced a report on Competition in Professional Services- Solicitors and Barristers which recommended a number of changes. Some of these have been implemented, making it easier for clients to change solicitors, and for lawyers to transfer from one branch of the profession to another. Its main recommendation, the creation of an independent regulatory authority, was not acted on before the bailout in 2010.

'Intransigent in the face of reform'

Creating more competitive conditions in the legal services market was raised by the EU-IMF team during the bailout negotiations, and the Government committed to remove restrictions to trade and competition in the legal profession. However, practitioners tended to view reform as ‘threats to the integrity and independence of the legal profession’. Maeve Hosier’s in-depth study of the regulation of the legal profession concluded that it 'has been somewhat intransigent in the face of the Troika's pressures to reform.’

Despite this reluctance, the Legal Services Regulatory Authority was established in 2016, limited liability partnerships are an option for solicitors since 2019, an independent Legal Costs Adjudicator was put in place in that year and there is more transparency around legal costs. The last two changes had also been recommended by the 2005 Report of the Legal Costs Working Group. Legal partnership firms, which combine both solicitors and barristers, will be introduced by Government, but this will not be soon as legislation is still being drafted. Multi-disciplinary partnerships are quite some time away.

More recently, the Civil Justice Review made over 90 detailed recommendations for reform in 2020, including significant changes to discovery (the pre-trial provision of relevant documents to the other side), legislation for ‘multi-party actions’, and greater use of technology. While there are clearly opportunities to reduce the cost of legal services, the pace of change so far means you should be prepared for a substantial bill if you need a lawyer.

The views expressed here are those of the author and do not represent or reflect the views of RTÉ