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News : Irish Last Updated: Mar 22, 2011 - 6:11 AM


Commercial litigation in Ireland on €200,000 claim double cost in Europe; Average Irish court case takes 515 days
By Finfacts Team
Mar 21, 2011 - 4:28 AM

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Commercial litigation in Ireland carries a heavy burden of cost relative to other jurisdictions  -- an average of €53,800 (27%) on a €200,000 claim compared to €25,337 (13%) in the rest of Europe. Besides cost, the average Irish court case takes 515 days to resolve.

The new coalition government, public sector and private sector companies in Ireland could save in excess of €1bn per annum in legal costs if they follow EU and Irish Law Reform Commission recommendations and engage in mediation for dispute resolution before pursuing cases through the courts, according to the Irish Commercial Mediation Association (ICMA).

Delegates at the bi-annual ICMA conference, which will take place in Dublin on Friday (March 25), will learn that the average cost of bringing a dispute to resolution through the process of mediation costs an average of €7,000 (3.5%) on a €200,000 claim.

On Feb 01 last, the day the 30th Dáil was dissolved, the Oireachtas Public Accounts Committee published a report which shows that public bodies are the largest procurers of legal services in the State with an estimated spend of anything up to €500m.

The Committee said it heard evidence to suggest that the cost of legal services in Ireland is amongst the highest in the developed world and it has been suggested that the State itself is one of the primary drivers of high legal costs.

Overall, the report stated that the likely cost to the State of three public tribunals based on the pattern of costs experienced to date is estimated to be in the range of €336m to €366m.

The Committee also reported that five of the barristers working for the Mahon (Planning) and Moriarty tribunals earned in excess of €5m, with two of them earning almost €10m.

The Committee referred to "three senior counsel at the Moriarty Tribunal being paid €2,500 a day for an extraordinary 304 days in 2008. The Moriarty Tribunal sat in public session for an average of 20 days in each of the past three years. The report advised that there were no specific attendance records for the legal teams maintained at the Morris and Mahon Tribunals. The Moriarty Tribunal records attendance of tribunal legal team members but does not take account of arrival and departure times."

The Committee "was exercised to learn that at the Moriarty Tribunal, an extra €1m has been paid to counsel because of an error in the Department of the Taoiseach, where counsel have been paid a per diem rate of €2,500 instead of €2,250 and where the matter was allowed continue without rectification."

MORIARTY TRIBUNAL

Jerry Healy SC €9,490,181

John Coughlan SC €9,285,628

Jacqueline O’Brien SC €6,707,917

MAHON TRIBUNAL

Desmond O’Neill SC €5,279,311

Patricia Dillon SC €5,591,889

Patrick Quinn SC €4,975,377

PAC - Third Interim Report on the Procurement of Legal Services by Public Bodies - January 2011 (pdf)

This surely encapsulates the failure of Irish governance and the system that allows lawyers as public contractors to become multimillionaires in a small country, while in some cases investigating bribes lower than they themselves are getting paid per day.

In addition to the legal costs involved in court cases, CIMA says there is enormous business interruption, time wastage and stress involved by the protracted nature of litigation cases. The average case in Ireland takes 515 days to resolve though the courts, whereas the figures show that cases that opted for mediation were resolved in an average of 40 days.

Following the McCarthy Report findings in 2009 of massive waste relating to litigation spending and the 2010 Law Reform Commission’s recommendation that Government Departments and State bodies be required to consider and attempt mediation or conciliation in appropriate cases before initiating court proceedings, the Irish Commercial Mediation Association welcomes the commitment in the Programme for Government to address legal costs: “We will encourage and facilitate use of mediation to resolve commercial, civil and family disputes in order to speed up resolution of disputes, reduce legal costs and ameliorate the stress of contested court proceedings” (page 51 Government for National Recovery 2011-2016 pdf).

“The onus is now on government to take immediate action to reduce spending in this area and also on law firms to advise clients on alternatives to costly court actions” said ICMA chairperson, Austin Kenny as he calls for government, businesses and law firms to become more ‘dispute-wise’. He says: “The culture in Ireland is still to run to the courts to resolve disputes. The key benefits mediation brings to businesses are that it saves money (by substantially reducing legal costs), saves time (by allowing parties to settle within weeks rather than years) and it can also preserve valuable business relationships which can be ruined by going through the court system”.

CIMA says research conducted in France* and the EU** shows that although the success rate of cases mediated is 75%, use of mediation across Europe is still extremely low at 0.5% of all commercial cases, showing there is huge potential to improve business practice in this area.

Data revealed from surveys in the EU show that litigation costs are a major barrier to companies doing business in Europe. In fact it was revealed that 50% of companies across Europe say that they do not do cross border business because of the litigation implications when a deal goes wrong.  Most companies say that a cross border claim under €50,000 is not worth pursuing. 

CIMA saya as a country seeking to trade out of its present economic recession through export growth, Ireland should take the opportunity to address the barriers to cross boarder trading.   There is an EU Directive on Mediation that the member states must adopt by May 2011. This Directive calls for mediation to be treated as a matter of public interest by the Governments of all EU member states.

In relation to the nature of disputes appropriate for mediation, Kenny says: “There are a vast number of disputes which are ideal for this type of resolution. For example, disputes arising between businesses and their customers, manufacturers, suppliers, banks, insurers or employees. Mediation has been used in Ireland to help families in business disputes deal with difficult issues of succession and to address division of assets. It has helped settle claims between landlords and tenants and resolve boundary disputes over adjoining properties. It has also been used to settle massively complex cases effecting large numbers of parties and involving difficult personal and technical issues. A prime example is the recent Pyrites case that was resolved through mediation, having spent 150 days in court, Justice Paul Gilligan noted that this was “one of the longest running and probably the most expensive, from the point of view of litigation costs, in the history of the state”.

The ICMA Conference, which will explore the theme of what mediation means for business and business people, takes place on Friday 25th March at D4 Berkeley Hotel. Registration is at 8am.

The Conference will include presentations from business owners and managers, including John Bowen, CEO and chairman, Bowen Construction, Fiona Mullen, Human Resource Director, Microsoft Ireland, and Viv Styles, Intel Regional Sourcing Manager for Europe, Middle East and Africa, who will talk about their personal experience of mediation and will honestly assess what they see as the commercial benefits of mediation when compared with other methods of dispute resolution.  Other speakers include:

  • Austin Kenny, Business Consultant and Mediator

  • David Nolan, Senior Counsel and Mediator

  • Donal Courtney, Retired International Rugby Referee

 Bookings can be made by emailing admin@icma.ie

*Survey in 2009 by French Law Firm FIDAL and the American Arbitration Association (AAA) of 75 French Companies in order to study their conflict management practices.

** Survey undertaken by ADR Centre (member of JAMS International), EU Association of SME’s and EU Association of Company Lawyers

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