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Legal Costs

Britain is about to go through one of its periodic episodes of legal dyspepsia. HERE is a report from the “Telegraph”. It suggests that the money to pay a successful party’s legal costs, following litigation, should, or may, be paid by the successful party from the compensation awarded in the litigation.

It must be borne in mind that the reporting of issues like this, in the UK or in Ireland, is always of a low quality. The journalists are invariably fully paid up members of some lobby group or other. The current dominant lobby group in the UK is the Conservative party, the principal party in the UK coalition Government.

Britain and Ireland have similar legal systems. “Similar” implies there are differences, and indeed there are. A very practical difference is the attenuated Irish system of State assistance for civil legal costs, compared with the UK system.

In Ireland, family law aside, there is, effectively, no State assistance to pay for civil legal costs. This means that an Irish resident must find the money to pay for lawyers from his or her own resources. Or, he or she must suffer a possible injustice in the absence of legal advice or representation.

It is worthwhile to contemplate what is meant by the phrase “legal advice”. In practice it might be the equivalent, metaphorically speaking, of a radio conversation from air traffic control to a lay passenger in an aircraft, guiding the passenger in the use of the controls and the method for bringing the aircraft to a safe landing on the runway. The chances of a crash are very high and if a pilot could be delivered to the aircraft it would be better.

Flying an aircraft is a learned skill. It costs money to learn the skill and to keep abreast of developments in aircraft design. In short, if the lives of passengers or the preservation of aircraft or property is a recognised goal it is necessary to make social arrangements to have a system that will produce pilots and pay them to land aircraft. Without that system it would be necessary to restrict or prohibit the use of aircraft.

On this view of matters, the UK favours the use of aircraft (meaning resort to legal principles and vindication of rights); Ireland restricts such use.

The UK, to encourage lawyers to work for plaintiffs who have insufficient funds to pay for personal injury litigation, introduced “conditional fee arrangements”. These are also known as “no win, no fee” agreements. If the plaintiff wins the action the unsuccessful defendant will pay the plaintiff’s lawyers. This alone was not a novelty; it is a principle (usually adhered to) that a losing litigant must indemnify the winning litigant against the winner’s legal costs of the litigation. This principle is intended to suppress unreasonable litigation. (It works, assuming litigants and lawyers are reasonable. Sometimes they are not.) In the UK this was implicitly seen as shifting a social burden (funding the vindication of rights) onto lawyers. For the lawyers this was a voluntary burden and they were only willing to take it up if they were paid for it. The pay was to be in the form of an enhanced fee if they were successful. This was seen as reasonable: they were carrying the costs of unsuccessful cases. The unsuccessful defendant, of course, paid the enhanced fee. This was seen as fair; the defendant could always limit his costs by not litigating. (As a practical matter, it can be always assumed a personal injury plaintiff has suffered a loss. It can also be assumed that the chosen defendant was very closely associated, at least, with that loss).

Ireland has established a very elaborate structure to facilitate some defendants who wish to limit their costs by not litigating; it set up the Personal Injuries Assessment Board. (“PIAB”). This also addresses a “social burden”. For the UK the social burden is the vindication of Plaintiffs’ rights; for Ireland it is the vindication of Defendants’ rights.

This judgment is broadly correct despite readily found exceptions. (Ireland expressly safeguards the rights of injured persons; the UK readily undermines their claims).

The legal system does not exist in a vacuum. It reflects society. It is pointless (and wrong) for a millionaire to sue a homeless person in a dispute about the ownership of a coat. Even if the millionaire is in the right, the cost of the litigation will outweigh the value of the coat. However, nobody (excepting the millionaire) would think it pointless, or wrong, for a homeless person to sue a millionaire about the ownership of a coat.

The UK, formerly, would facilitate a homeless person in those circumstances; Ireland did not and will not. The UK is now proposing that the coat be shared between the homeless person and his/her lawyers, to pay for the cost of the litigation. Now, the value of the coat will again determine whether there is to be a vindication of rights.

Real justice would recognise the inequality of arms in this struggle. The formal equality of litigants is often illusory. Lawyers know this and act accordingly.

So, we are back to the lawyers.


One Comment

  1. Check out Business of Law in The Sunday Business Post on 22 April 2012