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Question

159. Deputy Thomas P. Broughan asked the Minister for Justice and Equality if she will address the rising costs of legal services; the lack of any independent regulatory mechanism to decrease these costs; and if she will make a statement on the matter. [35233/15]

Answer

Minister for Justice and Equality (Deputy Frances Fitzgerald): The Legal Services Regulation Bill 2011, which was passed by the Dáil in April and is now before the Seanad where it will commence Committee Stage in the coming weeks, gives legislative expression to the commitment in the Programme for Government to "establish independent regulation of the legal professions to improve access and competition, make legal costs more transparent and ensure adequate procedures for addressing consumer complaints". The Legal Services Regulation Bill is, therefore, a key component of the Government's strategy to bring greater transparency to legal costs and to reduce their burden on consumers and enterprise. Historically, legal costs matters have been obscured in legal rules, jurisprudence and practice notes which were largely out of sight to the consumer and, for that matter, to many legal practitioners. The Bill is set to codify and open up the legal costs regime to greater scrutiny while also achieving greater balance and transparency in relation to how such costs arise and are made known to the consumer.
The Bill makes extensive provision, in Part 10, for a new and enhanced legal costs regime. Legal practitioners, whether solicitors or barristers, will be obliged to provide more detailed information about legal costs from the outset of their dealings with clients. This will be in the form of a Notice written in clear language which must be provided when a legal practitioner takes instructions. Among other things, the Notice must, as set out in section 123 of the Bill, disclose the costs that are involved, or, where this is not reasonably practicable, the basis upon which such costs are to be calculated. A cooling-off period is to be allowed for the consideration of costs by the client. When there are any significant developments in a case which give rise to further costs, the Bill provides that a client must be duly updated and given the option of whether or not to proceed with the case in question. In addition, the Bill sets out that it will not be permissible for legal practitioners to set fees as a specified percentage or proportion of damages payable to a client from contentious business and that it will no longer be permissible for barristers to charge junior counsel fees as a specified percentage or proportion of Senior Counsel fees.
An aggrieved client also has the option of applying for the taxation of disputed legal costs by the Office of the Taxing-Master. Under the Legal Services Regulation Bill the current functions of the Taxing-Master will be taken over by the new Office of the Legal Costs Adjudicator. The Bill sets out, for the first time in legislation, a series of Legal Costs Principles. These are contained in Schedule One and enumerate the various matters that may be taken into account in the adjudication of disputed legal costs. The Bill also provides for the establishment of a public Register of Determinations which will disclose the outcomes and reasons for decisions made by the Legal Costs Adjudicator.
The Bill also contains other measures that are intended to bring greater competition in relation to legal costs. For example, the Bill facilitates the introduction of Legal Partnerships, that is to say partnerships between barristers and solicitors or between barristers themselves and, in due course, of Multi-Disciplinary Practices, that is to say practices in which legal practitioners provide their services alongside other non-legal service providers. The intention is that these new legal service models, which are already available in a number of other common law jurisdictions, will be available alongside the Law Library and other traditional legal service structures. These new practice options will facilitate legal practitioners by removing current restrictions on the way they can deliver their services. They will facilitate consumers by providing more choice, better access and, in due course, lower costs, and they will facilitate the removal of a number of barriers to competition previously identified by the Competition Authority. They will also complement the availability of alternative dispute resolution frameworks such as those contained in existing arbitration legislation or in the proposed Mediation Bill which provide more affordable alternatives to the pursuit of court or other litigious proceedings. In a parallel reform initiative I will also be introducing legislative measures to support the introduction of pre-action protocols in relation to medical negligence cases and of periodic payment orders in relation to which draft legislation is at present under scrutiny by the Joint Committee on Justice, Defence and Equality.
Other direct measures have been taken by the Government to reduce legal costs. This has included a series of cuts and savings in legal costs that were made across the board by State Bodies who are, in combination, the largest consumer of legal services. The range of reductions made has included,
- an 8% reduction to all legal fees with effect from 1 March 2009 applied to legal counsel fees in the Chief State Solicitor’s Office; Brief and Refresher fees in the Director of Public Prosecution’s Office; Payment of Witness Expenses; Criminal and Civil Legal Aid fees including barrister, private practitioner, medical and legal fees; and Tribunal fees,
- a further 8% reduction with effect from 1 January 2010 applied to legal counsel fees in the Chief State Solicitor’s Office; Brief and Refresher fees in the Director of Public Prosecution’s Office; and Criminal and Civil Legal Aid fees,
- a fee reduction of 10% on Criminal Legal Aid fees was applied with effect from 13 July 2011 and 1 October 2011 for District, and Circuit and Higher Courts, respectively,
- a reduction of 50% in the rate paid in respect of travel and subsistence and a reduction of 50% in the rate paid for sentence fees in respect of adjourned sentence hearings in the Circuit and higher courts was applied,
- in October 2011, a further 10% reduction was applied to brief and refresher fees paid by the Director of Public Prosecutions Office to reduce the level of fees in parallel with the reductions applied to fees payable under the Criminal Legal Aid Scheme, and
- a further 10% reduction was applied to Tribunal fees on 1 March 2012.
By way of a centralised Government approach to legal costs, the Deputy will also wish to be aware that, in conjunction with the appointment of a Chief Procurement Officer for the Public Service, the Department of Public Expenditure and Reform issued a circular in July 2013 on "The Procurement of Legal Services and Managing Legal Costs" which outlines the appropriate competitive procedures that can be used in the engagement of legal services and sets out a number of approaches and tools for public bodies to use in managing legal costs.
Notwithstanding some evidence of an initial time lag when compared, for example, to accountants, there is an amount of statistical and anecdotal evidence pointing to downward pressures having been exerted on legal costs during the recent recession. At the same time, the National Competitiveness Council, in its "Costs of Doing Business in Ireland 2014" report, has highlighted the continued need to embed structural reform in the legal services and other sectors if we are to achieve sustained economic recovery. The Council observes that, "looking to the future, further structural or policy induced changes are necessary to ensure that prices do not escalate and erode competitiveness as the Irish economy returns to stronger rates of growth". With this in mind, I would expect that, along with those other cost reduction measures that have and continue to be introduced by the Government, the Legal Services Regulation Bill will support greater competition and choice in the provision and pricing of legal services while also supporting our future economic growth.