Should law and justice be free? Part 4: Lawyers fees

It is an axiom that everyone hates lawyers. Why is this?

• They are a smug lot, and often give the impression they think they are better than everyone else
• They are constantly using words and jargon that no-one else can understand. But most of all
• Their charges are HORRENDOUS

They regularly charge out their time at £100, 200, or in some cases £500 or more per hour. How can anyone justify that?

As a lawyer and one who has sometimes charged this sort of fee, I suppose I had better explain. There are actually a number of reasons.

It’s expensive to run a law firm

The money does not (normally) go straight into the lawyer’s pocket. You are paying for more than the lawyer’s time. You are also paying for the cost of running the office – including

• The cost of premises and business rates
• The utilities – electric, water and the like
• IT expenses – equipment, software, and its maintenance
• The lawyers practicing certificates
• Staff costs – including support staff and trainees, and
• Professional indemnity insurance

You get proper insurance

People don’t often think about insurance when instructing a solicitor but it is a big advantage. Solicitors have to pay extra expensive insurance (I should know, I paid it for years) which provides extra good cover.

Which is important. If you follow the advice of the man in the pub – you won’t get that (unless he is a solicitor of course!).

You are paying for the legal mind

Lawyers, good ones, are not just people who can recite statutes off by heart. What you get with a properly trained lawyer is someone with a legal mind.

This does not mean just being able to understand the statutes and cases (although this is part of it). It is a way of thinking, a way of analyzing things, which you learn through your training.

The study of law changes the pathways in your brain. I can remember when I studied law – I could almost feel it happening.

It is a very useful thing to have and is one reason why legal training is a great training for the future whether or not you end up practising law.

It takes a long time to train to be a lawyer and it is very expensive. So inevitably lawyers when selling their services are not cheap.

The final reason is

People are prepared to pay it

Not ‘ordinary’ people living on an ‘ordinary’ salary, of course – they can’t afford it. But businesses.

If you have a multi-million-pound business, or indeed even a £100,000 per year business, timely advice can be worth a lot of money. You can easily – for the right advice – justify a fee of £5,000, £10,000 or more. The right advice at the right time can save millions.

As a matter of office politics, if you are in a partnership in a firm of solicitors and the company commercial partner is regularly pulling in this sort of fee and the most that the family law partner can manage is £75 per hour on a good day – well, they are not going to be very popular are they? In some cases, the firm may even have to take a view as to the viability of the department.

But before going any further, perhaps we had better take a look at how charges are generally calculated.

The method of charging

One of the main complaints by clients about solicitors fees, for businesses at least, is that they are generally based on some sort of time costing.

Although people will generally accept this where the lawyer concerned is a top specialist, it is deeply unpopular for other work.  Charging on how long it takes you to do something encourages procrastination and means that people who work inefficiently are rewarded more than those who work quickly.

However, despite this, it remains, on the whole, the main method of charging for professional services.  For example, fixed fees are often based on what would normally be charged on a time costing basis.

Another important method of charging, perhaps used more for consumer claims, is the no win no fee agreement (often used for personal injury claims) where the solicitor is only paid when the case is won.  This has resulted in many claims being brought which the claimants could not otherwise have afforded and so has opened up justice to many.

However, it also means that firms are not going to take on claims where there isn’t a strong case as they cannot risk their solicitors working for no fee.  So borderline cases and cases where the compensation awarded is likely to be low are unlikely to be taken on.  Likewise, if the intended defendant is perceived as someone who will struggle to pay any award made.

Are there alternatives to all this?  Here is one idea:

A fee reversal?

Most legal work is dealing with things which have gone wrong.  Rather than preventing them from going wrong in the first place.

To use an image often cited by legal thinker Richard Susskind, they are the ambulance at the foot of the cliff dealing with their client’s injuries rather than the fence at the top preventing their clients from falling down in the first place.

Maybe another use of legal expertise would be to charge for a legal help service which aims to ensure their clients are compliant with the law.  Then if they do experience problems, provide legal help to resolve the problem either free of charge or as part of their general fee for the service as a whole.

I would be interested to know whether any lawyers are in fact doing this.

When using a lawyer is a good idea

You don’t have to use lawyers. There is nothing to stop you being your own adviser and looking things up yourself. However, there is a lot to be said for the old adage that if you advise yourself you have a fool for a client.

Here are some examples of situations where using a lawyer is a good idea:

HMO advice

If you manage an HMO you may sometimes attract the unwelcome attention of your Local Authority enforcement team.

Maybe they think you should get a license when you consider you are not liable. Maybe they suspect you of being in breach of the management regulations (which apply to ALL HMOs, whether they need a license or not).

Or maybe there is some other problem.

Whatever the issue is, you will probably save money, maybe a lot of money, by taking advice right at the start (from someone who knows what he is talking about, such as David Smith of Anthony Gold). Once they have you in their sight, the Local Authority is not going to go away – so the sooner you deal with it the better.

Litigation.

People often quite like the idea of having ‘their day in court’. Inevitably (in their imagination) they will triumph and will be able to feel smug about it forever more. The reality, however, is very different.

For a start, Judges don’t really want you to have your day in court. They would much rather you settled. The courts are under huge pressure – both financial and in court time. If a Judge thinks you have wasted their time when you could have settled a case they will not be happy – and you will probably be penalised in costs.

One of the most important jobs litigation lawyers do is trying to persuade their clients to settle.

There is also the fact that starting litigation is rather like getting on a fast train – you may not be able to get off it for a long time. If the claim is ill-conceived you may need to pay a lot of ‘wasted costs’ to your opponent as a condition of closing the claim.

So getting good advice before you start from someone who understands litigation and how it works is very important.

Then the whole business of bringing a claim at court can be very difficult and hard for someone who is not experienced and trained in the law. It is also very stressful. You need someone good to help and advise you.

But, as we have seen, lawyers’ advice does not come cheap.

Or does it?

We will be considering this over the next two articles.

 

NB A city firm has now (December 2017) published its hourly rates which you can read here.