Court focus on access to justice echoes litigation funding debate

The Supreme Court judgment in Howley v Howard is an important consideration of Irish law on maintenance and champerty.

It confirms that long-established “no foal no fee” funding arrangements are compatible with Irish law and has distinguished the Irish position from more restrictive English authorities.

The Court also held that statutory provisions permitting percentage-based fees in debt recovery proceedings validate fee structures that would previously have been regarded as champertous at common law.

The matters explored in this judgment echo some of those arising in recent discussions around the liberalisation of third-party litigation funding in Ireland. 

Background

The proceedings1 arose from the Revenue Commissioners’ efforts to recover unpaid tax liabilities from two taxpayers. The taxpayers did not dispute that the tax debts had been conclusively determined. Instead, they challenged the contractual arrangements between the Collector General and Revenue's panel solicitors.

The challenge focused on two aspects of the remuneration structure. First, the panel solicitors were entitled in certain circumstances to receive a “conditional uplift fee”, which was a percentage-based fee calculated by reference to the amounts successfully recovered from defaulting taxpayers.

Secondly, the agreement contained a form of “no foal, no fee” arrangement whereby the solicitors' entitlement to recover certain fees depended upon Revenue successfully recovering costs from the taxpayer.

The taxpayers argued that these arrangements were champertous and that the existence of the champertous agreement was a defence to the proceedings against them.²  

Both the High Court and the Court of Appeal rejected that argument. However, the Supreme Court considered that aspects of the law of champerty remained sufficiently uncertain to warrant a further appeal.

Conditional Uplift Fees

The Supreme Court first addressed the legality of the percentage-based or “conditional uplift” fee. Mr Justice Hogan accepted that such arrangements would historically have amounted to champerty because by virtue of such an arrangement, a solicitor acquired an interest in the proceeds of litigation.

However, he held that the common law position had been modified by legislation so far as an action to recover a debt or other liquidated sum was concerned.

He said that section 149(1)(a) of the Legal Services Regulation Act 2015 restated the general rule as it prohibited solicitors from charging fees calculated as a percentage of damages or other monies recovered, but then expressly excluded proceedings seeking recovery of a debt or other liquidated demand.

As Revenue's proceedings fell squarely within that statutory exception, the contractual arrangements were lawful. He also rejected an argument that the legislation should be interpreted narrowly so as to prohibit mixed fee structures combining a flat commission payment with a percentage fee in respect of the sums actually recovered.

"No Foal, No Fee" Arrangements

Hogan J next considered the legality of “no foal, no fee” costs arrangements. He recognised that these agreements were common throughout the Irish legal system. However, the issue was whether they were nevertheless unlawful as a matter of common law.

He concluded that the clear balance of authority before Irish independence was that “no foal, no fee” agreements were lawful. This represented the common law which was carried over in the State following independence.

He was unpersuaded by the majority of later English authority which suggested that such arrangements were unlawful. Those cases emphasised concerns that lawyers with a financial interest in the outcome of litigation could compromise their professional independence or act improperly. Instead, he preferred the view taken in Thai Trading Co v Taylor,³ that such fears were exaggerated and that “there is a countervailing public policy in making justice readily accessible to persons of modest means”.

He said that the practical experience in this jurisdiction, where the “no foal, no fee” system was pervasive, had not shown that this was a serious practical problem and the reasoning in Thai Trading was more convincing and realistic than other contemporary UK authorities. 

Hogan J went on to say that one also had to balance any concerns of possible abuse against the fact that the legal aid system in civil cases could not possibly meet the full range of unmet demand. If the “no foal, no fee” system was held to be unlawful, it would immediately present the legal system with a serious crisis. 

Hogan J also pointed to the constitutional right of access to the courts. For that right to be effective, then an existing practice whereby persons of modest means could obtain access to justice should not lightly be held to be unlawful.

All of this meant that the common law rules as to maintenance and champerty should not be extended such as to render the “no foal, no fee” system unlawful, if this could be avoided. He also noted that the Oireachtas had not seen fit to prohibit these arrangements and that the LSRA regulated their advertisement. He concluded that “no foal, no fee” arrangements were in principle not unlawful at common law.

Hogan J accepted that “no foal, no fee” arrangements did not fit comfortably within the orthodox statement of the indemnity principle but concluded that this principle could not be regarded as absolute. To insist upon its strict application would effectively undermine a system of legal practice that had become fundamental to the operation of civil litigation in Ireland. Accordingly, the indemnity principle should yield where necessary to accommodate lawful “no foal, no fee” agreements. 

It followed that the contractual provisions challenged were not champertous or otherwise unlawful.

Comment

This judgment makes it clear that the prohibition on maintenance and champerty in this jurisdiction does not extend to solicitor-client “no foal, no fee” arrangements that have long been accepted in Irish practice.

Equally significant is the Court's refusal to adopt the more restrictive approach developed by the English courts, instead grounding its analysis in Irish constitutional principles and the practical realities of the domestic legal system.

As mentioned above, this judgment is also of note in the context of the ongoing discussion around the modernisation of the law on third party litigation funding. With certain limited exceptions, the prohibition on maintenance and champerty in this jurisdiction has meant an effective prohibition on third party funding of litigation. While the Court in these proceedings confined its decision to the issues before it, the emphasis placed on access to justice is noteworthy in the context of the ongoing debate on litigation funding reform.

The Law Reform Commission is currently finalising its report on third-party litigation funding, which will consider whether such funding models should be permitted in this jurisdiction.

For legal advice or further information please contact Ian Lavelle, Partner or Heather Mahon, Managing Associate on our Litigation and Regulation team.

¹ Howley v Howard [2026] IESC 34.

² Maintenance is the improper provision of support to litigation in which the supporter has no direct or legitimate interest. Champerty is an aggravated form of maintenance and occurs when a person maintaining another’s litigation stipulates for a share of the proceeds of the action or suit. See Greenclean Waste Management Ltd v Leahy (No. 2) [2014] IEHC 314.

³ Thai Trading Co v Taylor [1998] QB 781.