Supreme Court: Clarity provided in relation to conditional fee and ‘no foal, no fee’ arrangements

About this case:

• Citation:
  [2026] IESC 34
• Judgment:
  External link
• Court:
  Supreme Court
• Judge:
  Mr Justice Gerard Hogan

Delivering judgment for the Supreme Court, Mr Justice Gerard Hogan emphasised: “In Ireland, the law relating to maintenance and champerty must be applied having regard to constitutional principles, including, in particular, the right of access to the courts. In that context, a practice which has become embedded in the administration of justice, and which operates to facilitate such access, should not be declared unlawful save on compelling grounds.”

Background

The respondent, the Collector General, claimed approximately €2.4 million from Mr Howard in respect of unpaid taxes. In a substantially identical case, the respondent claimed approximately €625,000 from Ms McClean.

Those sums were affirmed by the Tax Appeals Commissioner.

In 2021, the respondent commenced summary proceedings seeking the repayment of the sums outstanding. Both the High Court and Court of Appeal entered judgment in favour of the respondent.

The appellants subsequently appealed to the Supreme Court, with the single issue raised in both cases concerning whether contractual arrangements between the respondent and a panel of nominated solicitors’ firms in respect of legal costs had champertous features such as to render these agreements unenforceable.

The contract in question contained clauses providing for a fee structure which, in some instances, allowed for firms to charge an enhanced or “conditional uplift” fee dependent on the sums actually recovered from defaulting taxpayers.

The contract also provided for a form of “no foal, no fee” payment structure in that the fee payable to firms was dependent on whether Revenue actually recovered sums against the taxpayer.

The Supreme Court

Mr Justice Hogan noted that following the commencement of the proceedings, Revenue had sought to amend and delete Clause 5.2 of the contract, which amendment was contended to have been ineffective by the appellants.

Finding that the existence of a champertous agreement was a defence to the proceedings, the judge explained that “Any other conclusion would effectively undermine the rules on champerty and maintenance since it would mean that a defendant would be obliged to defend champertous proceedings (or proceedings which had been improperly maintained) with the only remedy being a separate action in tort for damages.”

Accordingly, the Supreme Court felt obliged to consider the validity of the clauses as they existed at the time of the commencement of the proceedings.

Moving to consider the conditional uplift fee contained in Clause 5.3 of the contract, the Court observed that same would clearly have been champertous at common law “not least” because solicitors obtained a success fee contingent on the sums actually recovered by Revenue against the defaulting taxpayer.

However, s.68 of the Solicitors (Amendment) Act 1994 had expressly allowed contingent fee recovery in actions to recover a debt or other liquidated sum before its repeal, the general effect of which was replicated by s.149(1)(a) of the Legal Services Regulation Act 2015.

In the circumstances, the conditional fee structure provided for by Clause 5.3 of the contract was, by virtue of s.149(1)(a), lawful where the Oireachtas had clearly decided to modify the traditional common law champerty rules by providing an exception for percentage fees in debt collection and liquidated damages claims.

Moving to consider the legality of the “no foal, no fee” cost structures provided for by Clause 5.2 of the contract, Mr Justice Hogan highlighted that counsel for the respondent had confirmed that it was proposed to claim costs only on the basis of Clause 5.3 and as such, the Court’s conclusions thereon would be strictly obiter.

Recognising that “no foal, no fee” cost arrangements are now very widespread throughout the legal system, particularly in the case of private litigants in areas such as personal injuries, clinical negligence claims and judicial review, the Court acknowledged that at one level, s.11 of the Attorneys’ and Solicitors’ Act 1870 could be interpreted to suggest that arrangements of this kind were unlawful.

However, Mr Justice Hogan explained that this was not how the section was actually interpreted prior to 1922 and that the balance of authorities demonstrated that such arrangements were not regarded as unlawful at common law as it stood prior to 1922, with cases such as Rich v Cook (1900) 110 LT Jo. 94 recognising that “there was no impropriety at all in a solicitor’s merely conducting a speculative action, for if it were improper for a solicitor to do so, many poor people would be unable to get their legal rights”.

Accordingly, the Court found that such arrangements formed part of the law carried forward into the Irish jurisdiction by the Constitution of the Free State in 1922 and later by the Constitution in 1937, highlighting that “Whatever doubts may arise from the language of s. 11 of the 1870 Act, the consistent judicial understanding of that provision, coupled with long-standing professional practice, supports the conclusion that such arrangements are not in themselves champertous or otherwise unlawful.”

As to developments post-1922 in England and Wales, Mr Justice Hogan explained that while modern English authorities such as Wallersteiner v Moir (No. 2) [1975] QB 373 tended to adopt a stricter view on maintenance and champerty, those developments do not reflect the law in Ireland.

The Court considered inter alia that “Article 34 of the Constitution vests the administration of justice in the courts and there is, moreover, a multitude of cases which attest to the proposition that Article 34, read in conjunction with Article 40.3.1⁰, guarantees a constitutional right of access to the courts. If that right is to be made effective, then an existing practice whereby persons of modest means can obtain access to justice should not lightly be held to be unlawful.”

Mr Justice Hogan then addressed the appellants’ contention that as solicitors can only furnish a bill of costs in respect of an actual obligation to pay costs, a conditional uplift fee of the kind contemplated at Clause 5.2 was invalid as it did not reflect the indemnity principle outlined in Attorney General (McGarry) v Sligo County Council (No.2) [1991] 1 IR 99 where there could be no legal liability to pay on costs on foot of a “no foal, no fee” arrangement.

The judge acknowledged that while there is English caselaw supporting that approach, and while such arrangements do not sit easily with the traditional articulation of the indemnity principle, that principle could not be regarded as absolute and “To insist on its unqualified application would, in effect, undermine a system of legal practice which is both longstanding and of practical importance.”

In the circumstances, Mr Justice Hogan determined that Clauses 5.2 and 5.3 of the contract were not champertous or otherwise unlawful.

Conclusion

Accordingly, the Supreme Court dismissed the appeal.

Howley v McClean; Howley v Howard [2026] IESC 34