We must not ignore the warnings about fixed fees (From Solicitors Journal)

Divorce|June 15th 2012

From my latest Solicitors Journal column “Family Business”, 11/06/2012.

The dire situation in the residential property sector gives us a taste of things to come if we adopt this method elsewhere: quality will plummet and negligence claims and insurance premiums will escalate, argues Marilyn Stowe.

It seems that rarely a month goes by without a high-profile legal figure passing comment on the state of solicitor’s fees. Earlier in the year it was the legal ombudsman, Adam Sampson, and his office criticising what they see as “arcane pricing and billing practices” and calling for a widespread move away from hourly billing to fixed fees.

And last month Lord Neuberger of Abbotsbury, Master of the Rolls, delivered a speech to the Association of Costs Lawyers in which he said: “An alternative to hourly billing for legal work is needed urgently.” He even went so far as to suggest that businesses that base their charges simply on costs “do not deserve to succeed”, or even “survive”.

I suppose that, as a former barrister, Lord Neuberger has no difficulty with the concept of fixed fees. Barristers receive the papers in their entirety from instructing solicitors, and then calculate how much an opinion, conference or court hearing is going to cost. I can see how, given Lord Neuberger’s own experience, a similar fixed-fee model may seem entirely logical.

But to a solicitor who doesn’t have the papers all neatly bundled, paginated and explained in detail in a composite brief; to a solicitor who brings the case into existence from a solitary instruction; to a solicitor who spends a day, week, perhaps months or years to get the case in a fit state to go to counsel, and doesn’t know, in fact can’t know, which way the case is going to develop, it is illogical.

Lord Neuberger asserts: “I would have thought that fixed-fee arrangements are likely to become more attractive to both clients and lawyers in the coming years.” Perhaps there is something in his argument. I have recently noticed, for example, that a Google search for our firm is accompanied by paid listings from those offering fixed-fee family law services. In many ways that tells you all you need to know about the state of the fixed-fee market, as I think for many it is nothing more than a marketing ruse – one that capitalises on the fact that people have less money in their pockets.

And if law firms are now resorting to doing work for modest, fixed fees, is it because they want to, or because they desperately need to? Under such pressures, I wonder what might happen to the quality of service: how much of that work will be done well and be approached by a skilled and experienced partner if it’s far less remunerative? Will it instead be passed on to an associate or trainee who can do 
it cheaper?

Declining standards

For irrefutable proof of the dangers that fixed fees can bring, think of the plight of residential conveyancing. It is now more than 20 years into a fixed-fee system and is increasingly being ditched or downsized by law firms. This is because market forces have meant widespread undercutting, leading to poor standards. Indeed, professional negligence cases arising out of poor conveyancing are now so high that some firms, even if they have reasonable records, cannot easily afford the insurance excess and premiums. Is this not a warning for firms offering fixed fees in other areas?

In some firms, profitable depart-ments are supporting the loss of fee income in other departments, mounting insurance premiums and the ever-increasing overdrafts necessary to meet them.

On top of a firm’s normal overheads, this creates a strangle-hold. I think that, far from being beneficial, fixed fees have set the bell tolling in firms across the country.

The reality of fixed fees is this: fewer skilled fee earners engaged on less rewarding but no less complex work, and the likelihood of increased negligence claims and insurance premiums.

That is why I don’t believe the ‘pile ‘em high and sell ‘em cheap’ model is attractive to skilled lawyers who are dedicated to rendering the best service and results to 
their clients in the topsy-turvy field of family law.

Author: Marilyn Stowe

The founder of Stowe Family Law, Marilyn Stowe is one of Britain’s best known divorce lawyers. She retired from Stowe Family Law in 2017.

Comments(6)

  1. Steve says:

    Hi Marilyn

    Interesting article and the issue of Solicitor fees will rumble on for a long time yet. I can only comment on my own experience but the fees are high, yes upto and exceeding £400 per hour and the old “lets hide behind perusal and consideration” to “bump” up fees. I can only comment on documents that take 15 mins to complete and then appear to take 9 hours plus to review. I only had two bank accounts on paye and three credit cards

    I think more honesty i required from family lawyers and lets remove those who are simply known as “Cost-build” family lawyers.

  2. DT says:

    I dislike the idea of fixed fees second only to ‘Tesco Law’ (ABS).

    Fixed fees might be a nice idea in practice, they might be a vote winner but they just won’t work!

    Solicitors face enough criticism as it is; if fixed fees were to be introduced, all it would result in is a reduction in quality and availability – not costs.

    Furthermore, in the long-term, it will inevitably lead to closure of firms and/or departments. How will that help competition and choice?

    Fixed fees are for car M.O.T.s, hairdressers and window cleaners, to name but a few areas of work where one is dealing with known quantities.

    One might get a fixed fee for an M.O.T., however, if there was a problem with the car, I doubt the same mechanic would oblige you with a fixed fee promise to undertake the work before he/she knew what was going to be undertaken – and therein lies the problem – solicitors just don’t know quite often what the end result will be, what unknown quantities will occur along the way.

    And now for Lord Neuberger.

    In my opinion, solicitors and barristers are like medics and surgeons. They’re two different creatures, trained in two different ways, for two different purposes.

    Medics and surgeons are both healthcare professionals. They are both often required to ‘join forces’ to make the patient better, however, they are looking at the problem from entirely differing angles; I won’t continue with the analogy, I think the point has been illustrated sufficiently.

    Now, I know that in recent times there has been a somewhat ‘blurring’ of the distinctions between the two professions, (which I’m not in favour of), however, the two are and still remain quite different.

    Marilyn was of course right when she described how a case initially comes about and how it ends up with counsel with a lot of the footwork having been undertaken in-order to get it to the “good-to-go”, bundled, paginated, indexed, pink-ribboned state which is then picked up and read by counsel.

    I’m disappointed with Lord Neuberger’s comments, particularly as he showed so much common sense when it came to his comments on judicial independence which Marilyn featured in, ‘The Marriage Foundation: playing devil’s advocate’ (May 4th 2012); but then, he was comments were in his capacity as a member of the judiciary which is something he knows a lot about!

    I think that Lord Neuberger’s remarks serve to demonstrate just how he cannot possibly understand and appreciate what a solicitor does otherwise he just wouldn’t say these things. Perhaps he needs to undertake some ‘shadowing’ in a busy office to see what the realities are.

    DT

  3. DT says:

    Hi Steve

    I recall your comments/and mine to you from: ‘Et tu, Brute? The Legal Ombudsman attacks solicitors’, in March this year.

    Did you question your invoice?

    DT

  4. Steve says:

    Hi DT

    Remember this is the only profession who charges you to investigate themslves re costs…….a very sorry situation

  5. DT says:

    Steve

    Solicitors cannot charge to investigate a complaint; it’s against the rules. Such an investigation MUST be done free of charge.

    DT

  6. Steve says:

    Hi DT

    If its re costs then ythey have the right to investigate themselves, if they are right they take the liberty of charging you.

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