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Commission: Legal services are still too expensive in Ireland

Ireland’s bailout partners also want a more efficient judicial system.

Image: Four Courts Photo via Shutterstock

WHILE OTHER SECTORS of the economy have experienced “considerable cost adjustments”, the Troika has expressed its concern that legal services remain expensive in Ireland.

According to a draft European Commission report seen by TheJournal.ie, the high cost of legal services continues to pose problems for the country.

The necessary reforms are important to competitiveness and must be implemented quickly and effectively, the Troika told the authorities.

The document explains the high level of legal costs is a particular issue for SMEs that are trying to remain cost competitive. Such high legal costs can “act as an impediment” to business success, it said, citing “contentious contract law issues” as a particular problem.

“Since non-tradables like legal services also feed into the cost base in the Irish export sector, high legal service costs also hamper external competitiveness.”

As the State is the largest buyer of legal services, continuing elevated costs poses a further challenge in terms of meeting fiscal targets under the bailout programme, continues the report.

High legal costs also lead to equity concerns, as low income households who cannot afford high legal fees may be locked out of equal access to justice, according to the Commission.

The Troika cited a 2006 study by Ireland’s Competition Authority which said that unnecessary barriers to competition included bans on advertising, bans on the formation of partnerships and restrictions in the free availability of training and accreditation into the profession.

Although the report says the Legal Services Regulation bill (a requirement of the bailout programme) addresses many of the issues raised, it added that it is important to note that full cost savings requires further modernisation and higher efficiency of judicial procedures and the entire judicial system.

“Renewed consideration should also be given to some recommendations of the 2006 study, notably the prohibition of the ‘solicitor’s lien’ (by which solicitors may hold a client’s file pending payment of fee).”

“Finally, the authorities should ensure timely and effective implementation of the measures to achieve the benefits quickly.”

The Legal Service Regulation Bill has completed second stage. Committee stage is planned for early this year.

The cost of legal services remain 12.1 per cent above their 2006 level. According to the Commission, this contrasts markedly with the post-crisis development of other services, whose prices did not rise as much to being with and have since adjusted back to levels of seven years ago.

- Additional reporting by Gavan Reilly

In full: TheJournal.ie’s coverage on the leaked European documents >

Read: Troika wants less pay, more hours for public sector workers >

More: New insolvency regime may not help troubled mortgage holders – Troika

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