2.63 Demand for legal services comes from individual consumers, from businesses and other corporate bodies and from the State. Individual members of the public are usually infrequent buyers of solicitors’ services,61normally
only requiring legal services when buying or selling property, if they suffer or cause personal injury or need advice on probate or family law. This relatively rare use of solicitors, allied to the sometimes complex nature of legal services, means that many individual buyers are not well informed as to what legal services they need, how much these services cost, and the relative merits of different providers.
2.64 Due to the nature of legal services it is difficult to judge the quality of the service provided by a lawyer, even after it has been delivered, or to compare the quality of the services offered by different lawyers. Infrequent buyers choose solicitors in a variety of ways. They may use a solicitor who has acted for their family, follow recommendations from friends, estate agents or their bank or select a solicitor from advertisements, for instance in the Golden Pages.
2.65 More frequent buyers, including many business clients, are usually better informed about the services they purchase. Regular business clients tend to have clear ideas of what services they want and from whom. Businesses with in-house lawyers are particularly knowledgeable buyers. Some business clients divide their custom between firms. Large clients are important to solicitors’ firms, and consequently such clients can, and do, use their buyer power to obtain service on good terms.
2.66 Both individual and business clients can easily switch from solicitor to solicitor between different transactions. However, it is more difficult for the client to switch during the course of a transaction, for instance, during a conveyance or mid-way through litigation. This difficulty arises because solicitors have a legal right to withhold the transfer of a client’s file to another solicitor if payment is outstanding or disputed. A solicitor may hold the file on the transaction and refuse to return it to the client, or transfer it to the new solicitor, until payment has been received for the work to date. This issue is examined in more detail in Chapter 5.
2.67 Advocacy, involving representing a client in court, is not required in every legal case, as many cases settle before a court hearing. Even where advocacy services are required a solicitor may, on occasions, not engage a barrister but represent the client himself/herself in court. Clients may also engage barristers to provide opinions on specialised legal matters, irrespective of whether or not a case goes to court.
2.68 Reputation plays a large part in distinguishing between barristers and, consequently, in the selection of a barrister. The public perception is that having a superior advocate, even if only marginally better, is crucial to success in litigation and this may indeed be the case. This can lead to the solicitors for one side of a case
62 Source: Data from the Central Statistics Office, derived from the Annual Services Inquiry (ASI). This is a large-scale survey of the contribution of the services sector to Irish GDP. The ASI was initially based on a 1988 Census on Services. It was first carried out in 1992, and then in an incomplete manner in 1995. It has been carried out annually since 1996, though the last year where results are available is 2003. The sample size is approximately 30% of the entire sector.
63 Note that, after a large increase in expenditure in 1999, the CSO changed its methodology of calculation. This resulted in the level of total expenditure being revised downwards in 2000. This means that the figures from 2000 are not strictly comparable to the figures up to 1999 in absolute terms. However, the trend of increased expenditure on legal services is common for periods both before and after 1999.
64 There are, however, some solicitors whose practices consist almost entirely of criminal law. 65 Table 5.3: Indecon’s Assessment of Restrictions in the Supply of Professional Services, March 2003.
their client. Barristers with the title Senior Counsel tend to be in demand for High Court and Supreme Court cases, with each side having at least one and sometimes two “SCs” in court.
2.69 The amount spent on legal services in Ireland has risen significantly over the past ten years and was approximately €1 billion in 2003, up from approximately €320 million in 1992.62
2.70 As a proportion of total expenditure in the economy, expenditure on legal services has remained relatively constant at just under one per cent of Gross Domestic Product (GDP), as shown in Figure 1 below.63During
this time, expenditure on legal services has kept pace with the growth in GDP, which has increased by an average of nearly seven per cent per year.
Figure 1: Expenditure on Legal Services as Percentage of GDP
2.71 Demand for legal services varies depending on the area of law involved. There is no current information in relation to the proportion of fee income generated by the various areas of law, although a survey conducted for the Law Society in 1999 indicated that personal injury (33%) and conveyancing (31%) were the major contributors to solicitors’ incomes. There is no equivalent information in relation to barristers, but it is likely that criminal law constitutes a higher share of fee income for barristers than for solicitors64and conveyancing a lower
share. Survey data from the Indecon Report suggests that half of the demand for barristers’ services stems from private individuals, the other half from corporate clients and the State.65
2.72 The volume of personal injury litigation has grown considerably over the past twenty years and is now the main source of private litigation. As a result, insurance companies and other companies frequently involved in personal injury claims have developed internal litigation departments to deal with these claims.
Source: Analysis of data from the Central Statistics Office provided to the Competition Authority by Dr Vincent Hogan, Department of Economics, UCD
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 1.00% 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%
66 See Final Report of the Motor Insurance Advisory Board, published April 2002.
67 Non-compensation costs are costs and disbursements paid to other parties such as solicitors, barristers and experts.
68 In its first Annual Report, published in September 2005, the PIAB stated that the average cost of settling claims was ten per cent of the amount awarded, compared to up to 46% under the old system. A similar result was achieved in 2005. Source: PIAB Annual Report 2005, 11th October 2006. 69 [2005] IEHC 100. This judgement has been appealed to the Supreme Court by the PIAB. At the time of writing the appeal is still awaiting hearing. 2.73 Litigation costs add, on average, in excess of 40% to the cost of compensation in personal injury cases.66In an
analysis of non-compensation costs67in personal injury cases for the years 1996-2003 the Irish Insurance
Federation found that, for all types of claims, non-compensation costs had risen from 35.5% in 1996 to 45.9% in 2003. A breakdown for various classes of claims is given in Table 6 below.
Table 6: Non-compensation costs as a percentage of compensation 1996-2003
Class of claim Non-compensation costs as a Non-compensation costs as a percentage of compensation 1996 percentage of compensation 2003
Motor claims involving injury 34.5% 41.5%
Employer’s liability 42.2% 51.7%
Public liability claims involving injury 52.7% 65.3%
2.74 The increase in insurance premiums, in part due to the volume of personal injuries claims, and the increase in non-compensation costs contributed to the formation of the Personal Injuries Assessment Board (PIAB) in 2004. The PIAB aims to reduce the expenditure on lawyers in personal injury cases.68The High Court
judgement of January 2005, which suggests applicants to the PIAB may not be prevented from being represented by lawyers, may limit any such reduction in demand.69
2.75 Despite the possibility that the demand for legal services in the area of personal injuries may fall, the general belief among the legal profession is that the demand for other legal services will remain strong. New laws and regulations are constantly enacted, and demand in certain areas, such as corporate compliance and e-commerce, is expected to grow in the future.