Legal fees halved in "all in" settlement figure

Brendan Burgess

Brendan Burgess

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www.irishtimes.com

Legal fees halved by judge in case of boy who lost part of finger

Judge previously expressed concern that costs were high relative to proposed damages
www.irishtimes.com www.irishtimes.com



A High Court judge has slashed a legal costs bill in a personal injuries case as he approved an “all-in settlement” of €30,000 for a young boy who had hurt his hand when playing near his home.
...
In the High Court on Monday, Mr Justice Garrett Simons reduced legal costs in the case to €6,788 from a proposed figure of €13,000 of the overall award.

This means that the child, who is now 15 years of age, will receive €23,211 of the total “all in” settlement.

...
An offer of €25,000 was brought to the court for approval in January this year which allotted €12,500 each to damages and costs.


On that occasion, the court expressed concern the legal costs appeared high relative to the level of damages.

Before the judge's intervention, it was €17k for the boy and €13k for the solicitor
The judge has increases that to €23k for the boy and reduced it to €7k for the solicitor.
 
I suggested this before.

Cap legal fees at 10% of the damages awarded. That would bring the costs right down. Which would bring insurance and the cost of public services down as well.

Brendan
 
Brendan Burgess said:
Before the judge's intervention, it was €17k for the boy and €13k for the solicitor
The judge has increases that to €23k for the boy and reduced it to €7k for the solicitor.
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Actually, there was no €13k for the solicitor and there was no €7k either. Assuming that the Irish Times coverage is accurate, it seems that the judge reduced the solicitor's fee from €6,000+VAT to €2,000+VAT. This must have been an exceptionally straightforward case (or there must have been other factors not obvious from the report). Certainly most solicitors (myself included) could not possibly agree to bring a case to trial in the Circuit Court, let alone the High Court, for €2k+VAT.
 
Reading between the lines, the judge was quite scathing and this may have reflected the direction.

Firstly he says the case should never have been brought to the high court and secondly he said that the case would most likely not succeeded.

More of this please.
 
If the case would not have succeeded, the judge should not be in the middle of arranging a settlement of a case he was likely to be adjudicating on!! Why was it not thrown out with costs awarded against the plaintiff? His role should be to apply the law, not get into gut instincts of how much to give chancers who take a case to the wrong court in the hope of a big cash-out!
 
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tallpaul said:
If the case would not have succeeded, the judge should not be in the middle of arranging a settlement of a case he was likely to be adjudicating on!! Why was it not thrown out with costs awarded against the plaintiff? His role should be to apply the law, not get into gut instincts of how much to give chancers who take a case to the wrong court in the hope of a big cash-out!
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That is not what was happening here. The all-in offer of €30k was already on the table. From the reportage, it does not seem that the judge sought to change that figure at all. Mind you, the all-in offer was increased by the defendant from €25k to €30k - so there may have been some perception on their part that this was needed to dispose of the matter.

The judge's intervention was because any case taken by a minor (or any person who lacks legal capacity) can be settled - but that settlement must be approved by a court. This is a safeguard for the child (or other vulnerable plaintiff).

I suspect that the loss of a finger down to the first knuckle, and permanent disfigurement, might be worth a little more than €17k in compensation if liability was admitted. In pointing out that liability was very much in issue, and that this was a case which might not succeed, I rather suspect the judge was simply putting on the record his reasoning as to why it was appropriate to accept this offer on the child's behalf.
 
Towards the end of article.
The judge also said the engineer’s suggested fee of €2,440 Plus VAT fee for site inspection and report was unreasonable and he allowed €650 plus VAT
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Fair play to the judge. How much effort does it take to inspect a drain and write up a report?
 
Legal costs are measurable on two bases.

1. Party and party.
2. Solicitor and client.

Party and party costs are those usually awarded to a successful plaintiff against the defendant.
They can be agreed between parties where there is a negotiated settlement.
They are the costs reasonably and necessarily incurred in bringing the case.

Solicitor and client costs would be those payable to a solicitor in respect of costs incurred in bringing (or defending) a case.
They could include some or all of those elements of party and party costs that were not allowed.

Suppose that P's solicitor present s a bill of €20,000 on a party and party basis.
After negotiation (or adjudication) the bill is reduced to €15,000.
Some or all of the shortfall could be billed to the client.

BTW if there is a dispute on costs that can be dealt with by the courts as a separate issue, e.g The Office of the Legal Costs Adjudicators.

"All in" settlements usually mean just that in so much as a global figure is offered and it is for the solicitor and the plaintiff to sort that out between themselves. This is normal where the case was of uncertain merit and or is dealt with on a nuisance basis.

The complication here was that the settlement had to be "ruled" because the plaintiff is a minor.
 
Wouldn't simplest solution be to cap solicitor fees at 10% of award. It incentivises the legal team to get a high award. But ensures there isn't this opaque practice of "all in" awards. I'm guessing a lot of people aren't sure when they settle cases how much the solicitors bill is going to be.
It seems a very odd system that people spend years lodging documents etc in court and then In a few hours an "all in ettlement" is scribbled out.
It seems people are not being told by their solicitors on the day of settlement : we will take x as our fees. Instead an "all in" figure is agreed THEN afterwards people are told actually you owe us x from that settlement.
Is that what the judge is trying to stop?
If so it's a good thing . For everyone
 
Capping solicitors' fees at 10% would not help.

Solicitors' fees are comprised of two elements namely the professional fee and the outlays.

The professional fee is the charge for the solicitor's expertise. It reflects the amount of work involved in the case and the complexity of the issues.
Outlays are other charges incurred by the solicitor such as counsel's fees, expert reports, postage and pettys.

Since Solomon started dispensing wisdom solicitors have always asked for an instructions fee alone that is 10% of the value of the claim. That figure was often convenient but not universally applicable.

Solicitors also have to charge VAT on their instructions fee @ 23%. Many of the outlays already include VAT such as counsel's fees.

Cases can rumble along for years for a variety of good reasons. You might have a complex and serious personal injuries case. It would be veritably negligent to settle some of those early until there is a solid prognosis.

Solicitors who are engaged for potentially contentious work should give the client an indication of the likely work involved. The client should always request an estimate of likely charges and an assessment of the risks of the case as there is just no such thing as a racing certainty in litigation.

The "all-in" type of settlement is perfectly satisfactory in some cases. Generally, a civil litigation settlement will see payment of agreed damages and legal costs to be agreed (or taxed in default). Where a case is perceived as unmeritorious or highly uncertain in it's prospects the "all-in" approach is a perfectly proper and satisfactory end result as, inter alia, it buys out the economic risks for both sides in proceeding to a full hearing.

I do not perceive that Simons J. was doing anything in the case under discussion other than seeking to properly and responsibly protect the best interests of an infant plaintiff - kudos to him.
 
Well he had a major issue with the fees. He went to the bother of breaking down the whole of the fees.
 
As for "buying out the risk" that's irrelevant to how the final "all in amount" is divided up between Legal fee and client compensation.
But it's hugely relevant to a claimant who may think they've settled for 30k only to find out afterwards actually solicitor gets 13k!
 
And they only get 17k.
I'm glad the judge broke down costs the way he did.
I think that will concentrate legal minds going forward.
The "ordinary man" can now point out what are considered reasonable legal costs.
 
Bolter said:
It seems people are not being told by their solicitors on the day of settlement : we will take x as our fees. Instead an "all in" figure is agreed THEN afterwards people are told actually you owe us x from that settlement.
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Perhaps this does happen. But it is certainly not what happened in this case. As already explained, when a minor or vulnerable person is settling a case, the settlement terms must be approved by the Court. This includes approval of the legal costs when there is an 'all-in' settlement to approve.
 
Bolter said:
But it's hugely relevant to a claimant who may think they've settled for 30k only to find out afterwards actually solicitor gets 13k!
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Again, perhaps this does happen (to be clear, it shouldn't. Ever.) But that is not what was happening in this case. The solicitor was never getting €13k. The solicitor was hoping to get €6k+VAT and instead got €2k+VAT.
 
Bolter said:
The "ordinary man" can now point out what are considered reasonable legal costs.
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I cannot pretend to know what was in the judge's mind, but I can tell you (and the ordinary man) that no solicitor can sustainably bring cases to trial in the Circuit Court for a fee of €2k+VAT - - that business model is simply not viable. The figure of €2k+VAT allowed for solicitor's fee in this case is simply not a useful benchmark.
 
I think the judge had an issue with the lack of transparency around legal fees. How can the legal fee aspect change in settlement negotiations so much as it did in this case?
Theres a real problem that when people settle their cases, they don't actually know what exactly net figure they will receive in their hand.
Theres an old thread about this in this forum for example back in 2018 .
 
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