It will come as no surprise to readers that the most common questions we receive from our clients relate to litigation fees – What much does it cost? How do you calculate them? Who pays them?
Unfortunately, there isn’t a short answer to these questions. The reality is that it depends entirely on a variety of aspects – ranging from the complexity and urgency of a case to the specialisation and skill of the legal team involved.
We, at O’Brien Murphy Solicitors, understand that this can often cause confusion and frustration to those contemplating taking a case or those already involved in litigation; however, the best way to obtain an answer to these questions is to ask your solicitor.
Not only should they be happy to provide answers to these questions, but they are obligated to do so. There are a number of rules and regulations that govern how solicitors can charge their clients in contentious matters. These rules and regulations stipulate:
the mechanisms by which solicitors can charge their fees;
the factors that can be taken into account when charging fees;
the party responsible for discharging legal fees;
the obligations on solicitors to provide an outline of their fees; and
the remedies open to those who wish to challenge the fees they have been charged.
1. THE MECHANISMS BY WHICH SOLICITORS CAN CHARGE THEIR FEES
There are several mechanisms that a solicitor can use to charge their fees. They may, for example, charge a retainer. This is usually in the form of a fixed amount per month or a varying amount based on the work carried out within that period. Large organisations will often retain legal firms under such arrangements as their legal requirements will be many and ongoing.
Another mechanism is to charge a fixed fee for a specific purpose. This is often seen in conveyancing and other non-contentious matters in which the solicitor and client will agree a fixed amount for a defined purpose.
A solicitor can also charge a percentage or portion of an award or settlement. Although this type of fee mechanism is strictly prohibited in almost all contentious matters, it is often used in debt collection and probate.
In litigation and contentious matters, by far the most common way that fees are charged is in the form of ‘no win no fee’. This mechanism means that a solicitor will take on a case on the understanding that if the case is unsuccessful, they will not charge a fee for their services. This is very common in personal injuries and medical negligence cases due to the high legal costs involved in such cases. It also facilitates those who would otherwise be unable to lodge a claim due to financial constraints – thus serving a broader public good. Solicitors also provide no win no fee arrangement in other types of cases such as employment claims and general litigation.
2. THE FACTORS THAT CAN BE TAKEN INTO ACCOUNT WHEN CHARGING FEES
A solicitor will base their charges on the following factors:
the complexity of the case and legal work involved;
the time and labour that has been expended on the matter;
the urgency of the case;
the specialisation and skill of the legal team involved;
the place and circumstances in which the matter was transacted;
the amount, importance and complexity of the documents that require preparation or examination; and
the use and costs of expert witnesses or other expertise engaged.
3. THE PARTY RESPONSIBLE FOR DISCHARGING LEGAL FEES
The Irish legal system works on the general principle that ‘costs follow the event’. This means that the winning side will, in most instances, have their costs, expenses and outlays paid for by the losing side.
Therefore, if you are the successful litigant and you have engaged a no win no fee solicitor, the majority of your legal costs will most likely be paid by the other side in addition to any award for damages.
Having said that, it is important to bear in mind that the client (person or party engaging a solicitor) will always be responsible for discharging their own legal fees. Therefore, if there is a disparity between the costs incurred and the order of costs made by the Court, the client will be liable for the difference.
4. THE OBLIGATIONS ON SOLICITORS TO PROVIDE AN OUTLINE OF THEIR FEES
Section 68 of the Solicitors (Amendment) Act 1994 sets out how solicitors can charge their clients. They also state that a solicitor must let a client know, in writing, of the following information regarding fees:
In an effort to make legal fees easier to understand, section 68 will soon be repealed and replaced by section 150 of the Legal Services Regulation Act. This will require solicitors to be more transparent in the way they charge their fees. It will require solicitors let the client know, in writing, the following information:
the legal costs that have been incurred at the date of the notice;
the costs that are of a fixed nature or certain to be incurred (or if impracticable to do so, outline the basis on which they will be charged); and
the costs that are likely to be incurred.
The new regulations go much further than the previous obligations by requiring a solicitor to provide updated notices of fees if they become aware of a factor that will likely make the legal costs incurred significantly greater.
5. THE REMEDIES OPEN TO THOSE WHO WISH TO CHALLENGE THE FEES THEY HAVE BEEN CHARGED
Once legal proceedings have concluded, a solicitor must let the client have a bill of costs in writing. This should set out the legal services provided, the amount of money recovered by way of damages or otherwise and an account of fees and outlays expended on behalf of the client.
If the client is unhappy with the bill, they are free to have the matter set down for adjudication – the process by which a Legal Cost Adjudicator will take a look at the bill of costs and decide on its fairness. Clients can also make a complaint to the Law Society of Ireland who have the power to impose various sanctions (such as ordering a refund).