“Millionaire” legal costs set by the Oireachtas continue to be the “going rates” in the courts despite calls for reform by judges and others over years, a High Court judge has said.
The State’s laws force a losing litigant in the High Court to pay their opponent’s lawyers legal costs, apparently based on hourly rates far in excess of what is paid to the Taoiseach, Mr Justice Michael Twomey said. This was “a matter of potential significance for everyone in the State” because, at any time, any individual could be sued, or may have to sue, in the High Court.
He said that it seems the State, by its laws, obliges losing litigants in High Court civil cases to pay their opponent’s lawyers at “very different” rates of pay from those paid by the State itself to its own lawyers acting in criminal cases in the Central Criminal Court.
In the case before him, a “relatively straightforward” case of alleged breach of contract, the losing side could face a costs bill of between €1 million and €2 million, he said.
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The lower of two estimates of the lawyers’ fees was almost €500,000 for the defendant’s solicitor, senior counsel and junior counsel for a trial over 7½ days, plus preparatory work, and the highest estimate was some €937,186, including VAT, based on a 16-day trial, he said.
Although he was unclear about the amount of preparatory work involved, it appeared from expert evidence, he said, that lawyers’ fees in the High Court are calculated by a Legal Costs Adjudicator (LCA), applying rates set by the Oireachtas that were “far in excess” of the €230,372 paid to the Taoiseach for 52 weeks’ work.
Mr Justice Twomey said these rates of pay are not set or controlled by lawyers or judges but by the Oireachtas and mean High Court legal costs are only affordable to millionaires and many litigants “end up not obtaining justice”.
The “real problem” is many cases end up being settled, not because that represents the justice of the case, but because the high level of costs is “weaponised” and used as “blackmail”, he said.
Users of strategic lawsuits against public participation can use this situation to stifle comment with the threat of litigation, he added.
The judge made the remarks in a judgment on Thursday dealing with a pre-trial application for security for costs in a case by Connective Energy Holdings Ltd against Energia Group ROI Holdings DAC alleging breach of contract arising from a 2018 Share Purchase Agreement.
Energia wanted Connective, which the judge said has little or no assets, to pay into court €937,186 as security for Energia’s legal costs before being permitted to continue with the litigation.
Connective’s lower costs estimate stated the LCA would calculate costs for Energia’s solicitor, senior counsel and junior counsel of €206,025, €146,677 and €114,597, based on a 7½-day trial, plus preparatory work. Energia’s higher estimate, for a 16-day trial, was €937,186, including VAT, comprising €473,550 for the solicitor, €214,020 for senior counsel and €148,830 for junior counsel.
The judge, having held the trial could be heard within 7½ days of court time, not 16, and there was “nothing out of the ordinary” about discovery in the case, concluded security should be provided, in cash or a bond, in the sum of €456,230, including VAT.
That was just one side and the losing litigant could end up liable for costs of between €1 million and €2 million, he said.
The evidence “starkly highlighted” what retired High Court president Mr Justice Peter Kelly meant when he referred to “millionaire” costs in the High Court.
Energia’s solicitor, he noted, estimated discovery costs for his firm at some €701,000 while its legal costs accountant estimated discovery costs at €184,000.
The 2020 Civil Justice Review, chaired by Mr Justice Kelly and known as the Kelly review, had described discovery as a major contributor to legal costs and called four years ago for its abolition, Mr Justice Twomey said.
The LCA does not apply different costs rates depending whether the litigant is an individual, a small business or a large company, he noted.
Judges have no control over costs rates and the solicitors and barristers in this case had not sought the costs at issue which were based on expert views on the current going rate for legal fees in the High Court, he said.
He stressed that a client can freely choose to pay their own lawyer ‘millionaire’ rates of pay in private cases and lawyers are entitled to seek to be paid what they believe to be market rates.
Four years since the Kelly review made recommendations for tackling legal costs, the “millionaire rates” continue to be the “going rates”, he said.
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