Practice Direction Payment on Account

On the 28th March 2017, the President of the High Court, the Hon. Mr Justice Peter Kelly issued a Practice Direction to the legal practitioners in Ireland.  This was welcomed by legal practitioners on all sides.

Practice Direction 71 titled “Payment on accounts of costs pending taxation” means that from the 24 April 2017, on the conclusion of a case a successful party will be able to seek an order from the court directing payment of a reasonable sum on account of costs by the unsuccessful party pending the taxation of such costs.

Why was it needed?

Currently, on conclusion on a case the successful party is ordinarily awarded their legal costs.  The Solicitor then drafts a bill of costs – the bill would include solicitor and barrister’s fees and all outlay spent such as stamp duty, expert fees etc.  If the case was lengthy and/or complicated then usually a Cost Accountant would be employed to draft the Bill. The Solicitor seeks to agree the bill with the unsuccessful party.  Where the bill cannot be agreed, the bill is then submitted to the Taxing Master for a process called Taxation.  Ultimately the Taxing Master will review the bill and hear evidence from both sides and make a determination.  In Ireland the Taxation process has effectively ground to a halt. There are considerable delays for a variety of reasons including staff shortages, increased volume and more complicated review of bills.

The Courts recognised that the position is untenable.  A system where legal costs are not paid affects the legal provision on all sides.  It is popular to criticise lawyers and legal fees.  Everyone agrees that inflated fees are not right.  However a fair price should be paid for services given and in a timely basis.  If lawyers are not paid then they cannot continue to employ staff and they cannot continue to take cases.  No business can be expected to carry overheads for a number of years.  The public will be left with a situation where they may be told, yes we believe that you have a case but it would be unprofitable for us to take it on.  Without intervention, the current system had the potential to impede access to justice.

How does it work?

In an attempt to improve the situation, the Court issued this practice direction.  From the 24 April 2017 on the conclusion of a case, the Solicitor for the successful party will present a draft bill to the Court and the defendants.  The judge will review the bill and if they deem it appropriate will make an order directing the unsuccessful party to make a reasonable part payment of a portion of the bill.  The bill will then be finalised and either agreed between the parties or go through the lengthy taxation process.  If a smaller sum is awarded in due course then the successful party will be required to repay the overpayment.

The Taxation system in Ireland still requires radical overhaul.  It is inefficient and not fit for current demands.

This innovative practice direction is welcomed.  It is hoped that it will go some way to easing the burden on practitioners.  It will provide relief to firms struggling to carry the cost of litigation which can take years to be resolved and enable practitioners to continue to take a variety of litigation.

Contact us at Cantillons Solicitors at +353 (0)21 -4275673 or info@cantillons.com if you would like more information.

“In contentious business, a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.”