Published Friday, 25 February 2011
However, the company says the expenditure should be viewed in the context of the size and nature of the organisation.
A NI Water spokesperson said: "Legal fees paid by Northern Ireland Water reflect the varied and often complex nature of the operations undertaken by this organisation. These include its legal and regulatory obligations as well as necessary work that needs to be undertaken on its behalf by its legal advisors on various issues.
"The level of fees incurred are comparable with those incurred by other similar organisations and are subject to close scrutiny to ensure value for money is demonstrated at all times."
The company also pointed out that NI Water reclaim VAT with no cost going to the taxpayer.
The figures came to light after SDLP MLA John Dallat raised the issue. He told UTV that the amount "shocked" him.
"Complaints had been made by me certainly from a source inside that the legal fees were high and to be honest, when I looked up the figures I was absolutely shocked," he said.
"When you add the Value Added Tax it's over £3m since 2007-2008. I have since tabled further questions to try and establish just how a public utility could run up such a bill like that in such a short period of time."
In response to Mr Dallat's comments, Regional Development Minister Conor Murphy said:
"Whilst Mr Dallat is quite entitled to ask questions about expenditure in public bodies including NI Water, I find it rather hypocritical that he should be so vocal in expressing his concerns about NI Water when at the same time he has also consistently criticised the ongoing investigation into £28m of procurement governance issues in NI Water and the removal of four non-executive directors from the Board of NI Water.
"Mr Dallat has called for reinstatement of some of these board members including the former Chairman who publicly referred to these serious issues as simply a matter of 'paper-work'."
He added: "I am consistently on the record about saying I have concern about the current status of NI Water and I have raised these governance issues with both the Executive and the Assembly."
© UTV News