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Updating Archaic Legal Fees

by fatweb

John Shingleton

Director of Onlinelawyers
www.onlinelawyer.nz

There is a growing pressure on lawyers worldwide to ditch the archaic practice of charging clients by six minute units and convert to upfront fixed pricing.
British legal costs expert, Jim Diamond said in a recent post in the Centre for Policy Studies that Steps should be taken to ensure fair practice in legal procedure. The ‘billable hour’ is an outdated and unsustainable billing method for legal services to continue. Alternative billing methods must be considered and legal procedure must be simplified to ensure that the legal market place thrives in the long term, and the price of law is not punitive.”
Lord Justice Jackson, a senior British judge, has proposed a move to fixed fee basis for all litigation work, suggesting that fees are capped. He is reported as saying Remuneration on a time basis rewards inefficiency. Unrestrained costs drive parties to leave no stone unturned: the more costs mount up, the more determined each party becomes to ensure that the other party pays them. The result is inevitable – a civil justice system which is exorbitantly expensive.”
If you think about it, charging six minutes for having sent a short email or leaving a 30 second message does not sound right. Time based billing places most of the commercial risk on the client’s shoulders.
There is regular commentary in the UK, United States and Canada that the market now expects greater transparency on fees and that fixed price billing is the economic tool that will allow consumers of legal services to compare and benchmark the cost of legal services.
So what of the New Zealand market? It is fair to say that the traditionalist lawyers are resistant to upfront fixed pricing.
They will tell you that it is sometimes impossible to predict how long a task may take. Incidentally, this view would clearly not wash with Lord Justice Jackson.
However, there are other lawyers in New Zealand who take the view that if you promote yourself as having the necessary legal expertise and experience, then providing an upfront fixed price, with the ability to review for contingencies, should go without saying.
There is also an issue of affordable access to justice. A number of lawyers are also concerned that more and more SMEs are muddling through legal issues themselves, because accessing quality legal services has become too expensive.
But, like a lot of things, market change will only occur with pressure from consumers and the increasing presence of more transparent, streamlined and cost effective alternatives.
A number of these alternatives are operating from a cloud basis.

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