knowledge 7 July 2026 |

Supreme Court confirms the lawfulness of conditional fee and “no foal, no fee” arrangements

The Supreme Court in Howley v Howard; Howley v McClean considered the interaction of the law of champerty and common fee arrangements within the legal profession.  The ancient legal concept of ‘champerty’ prohibits a person or entity who is not a party to a legal dispute assisting or continuing that dispute in return for a share of, or profit from, any award if the legal dispute is successful.  It was in that context that the Supreme Court took the opportunity to consider particular costs arrangements, widespread throughout the legal profession, namely conditional uplift fees and ‘no foal, no fee’ arrangements.

Background:

The appellants to this appeal maintained that certain contractual arrangements between the respondent, Collector General, and a panel of nominated solicitors in respect of the recovery of legal costs had champertous features such as to render those agreements unenforceable.  First, solicitors could, in some instances, recover an enhanced percentage fee depending on the sums actually recovered from defaulting taxpayers referred to as a “conditional uplift” fee.  Second, the agreement contained a “no foal, no fee” element where the fee payable was made dependent on whether sums were actually recovered from the taxpayer.  If sums were not recovered, Revenue was confined to a separate fee structure outlined in the agreement.

Supreme Court Findings:

1. The Court emphasised that the essential rationale of the rules on champerty and maintenance is to maintain the integrity of the administration of justice, and that this rationale would be undermined if the existence of a champertous agreement could not be raised as a defence to proceedings.

2. The Court held that while the conditional uplift fee would have been champertous and unlawful at common law, this is no longer the case with respect to actions to recover debts or other liquidated sums pursuant to s.149(1)(a) of the Legal Services Regulation Act 2015.  Further the Court held that “mixed” fee arrangements consisting of a flat commission payment plus a percentage fee for sums actually recovered are not excluded from this statutory exception, as to do so would undermine a deliberate policy choice of the Oireachtas.

3. The Court acknowledged that s.11 of the Attorneys’ and Solicitors’ Act 1870 could be construed as deeming “no foal, no fee” arrangements unlawful, but that the section had been judicially interpreted to allow these arrangements for over 150 years.  To find otherwise would be contrary to well-established practice and would not be in the interests of justice.

4. The Court confirmed that contemporary UK case law suggesting that “no foal, no fee” arrangements are unlawful do not reflect the law in Ireland.  On the contrary, Irish cases such as McHugh v Keane (Unreported, High Court, 16 December 1994) and Synott v Adekoya [2010] IEHC 26 are authorities for the lawfulness of such arrangements.  This view is bolstered by the fact that the Legal Services Regulatory Authority has regulated the advertising of “no foal, no fee” arrangements, and that deeming the practice unlawful would undermine the constitutional right of access to the courts. The Court stated 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 40.3.1, 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”.

5. The Court held that, if necessary, the indemnity principle must yield to allow the “no foal, no fee” system to function in practice.  While central to the system of costs, the principle is not absolute.

6. The Supreme Court dismissed the appeal.

The decision provides welcome clarity for both practitioners and clients in relation to the legality of conditional fee and “no foal, no fee” arrangements.  The decision however cannot be read as a general liberalisation of third-party litigation funding, which remains prohibited under Irish law (subject to limited exceptions) and which is to be the subject-matter of a much-anticipated report from the Law Reform Commission later this year.