We must not ignore the warnings about fixed fees (From Solicitors Journal)
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?
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.
Share this post
Get free family law updates
Marilyn Stowe’s new book: expert advice on all aspects of divorce, just 99p!
Divorce & Splitting Up by Marilyn Stowe is the essential how-to book for anyone who is getting divorced or splitting up from a partner. Read more >>
"A must buy that really opens your eyes to what is involved if you are considering or going through a divorce." - Amanda Brown
"This will answer your questions in a way that non-lawyers can understand." - Miss P.
"Don't get divorced without it. I read this book despite being divorced for more than 10 years. I wish I'd had this book to hand at the time. Great examples, simple to read and understand." - Jamie
"This really has helped me to see that there is light at the end of the tunnel and I will come out of it a stronger person." - J
Marilyn Stowe on SKY News & ITV This Morning
Thought For The Day
- Jenny on Delaying the Decree Absolute: another look at Miller Smith v Miller Smith
- Louis on Applying for the Decree Absolute and what comes next
- Kim on President of the Family Division to intervene in courtroom assault case
- debra on The FDR hearing and the First Appointment: what you need to know
- Andrew on Delaying the Decree Absolute: another look at Miller Smith v Miller Smith
Subscribe & Follow
In the Media
Marilyn Stowe is the senior partner in Stowe Family Law, which has offices in Yorkshire, Cheshire and London. With more than 30 years’ experience handling divorce cases and family law proceedings she is regarded as one of the most formidable and sought after divorce lawyers in the UK. In 2012, Marilyn became one of the first solicitors to qualify as a family law arbitrator.
All persons mentioned in the scenarios are fictitious: details have been deliberately changed in order to protect identities and other confidential circumstances of my clients. All advice and information on this blog including posts written by guest authors, is given only as a general guide to the operation of the law on the date of publication. Readers must place no reliance whatsoever on the content of this blog and must always obtain their own legal advice. Marilyn Stowe, Stowe Family Law LLP and guest authors accept no liability whatsoever arising as a result of reliance upon its content.
Contact Stowe Family Law
These downloads accompany Marilyn Stowe's latest book: Divorce & Splitting Up: Advice From a Top Divorce Lawyer. After opening, right click to save to your computer.
For more free downloads, visit the Downloads section.