We recognise that clients like to have a fixed price for legal services where possible – it makes budgeting so much easier.
Of course, not all legal work can be quantified in advance – sometimes we just have to see what work is required in a developing situation, and keep the costs under review.
However, where the likely work can be quantified, we think that fixed prices work better for lawyers as well as for clients. This is why:
- As indicated above, hourly billing means the client does not know, until the job is done, how much it will cost. We hate taking our cars for a service, dreading the phone call that asks us to autrhorise unexpected extra work at an unexpected extra cost. Surely clients equally hate committing to an hourly rate with no sure way of knowing how many hours will be spent on the work.
- Further, hourly billing emphasises the amount of time the lawyer spends on doing the work – potentially rewarding inefficiency – rather than on the value of that work. Clients do not buy effort, nor do they buy hours – as far as possible, they buy results, though no lawyer can guarantee a particular result.
- Also – and perhaps most importantly – charging by the hour risks putting the lawyer’s interests in conflict with those of the client. All too often, we see other lawyers create work for no apparent reason – unless it is to “pad the bill”. If the lawyer is charging a fixed price, there is no incentive to do this and every incentive to be as efficient and swift as the work allows.
So: if fixed fees are such a good idea, why don’t we always use them?
First, there are many types of work where we simply cannot quantify in advance what will be involved. In those circumstances, a fair fixed fee cannot be assessed, so the “old-fashioned” charging method must apply.
Second, the hourly charging rate is the default method of charging
Third, there is the risk of getting it wrong. If we were to mis-estimate the work due to our own lack of experience or inefficiency in doing the work, we would have to take that on the chin. However, in most work, even making a simple Will (for instance), we can be caused extra work through the actions – or inactions – of others, and it is not fair that we should suffer for that.
Fourth, we find that clients do not always give us all of the information we ask for, whether to minimise our work and therefore their cost or for other reasons
We estimate our charges – see Normal Fees – on the assumption that the work is reasonably straightforward with no significant unexpected complications or delays, but the estimates are estimates, not fixed prices. If you want, we will be happy to fix our fees at the estimated fees plus 10% – to cover the risk we take of there being complications or delays – on condition that:
(a) you supply us reasonably promptly with all information, documentation and instructions we request from you and
(b) other parties and their lawyers co-operate reasonably well and do not cause grotesque delays or a large amount of extra work that could not have been expected and
(c) any non-routine, significant complications or extra work we identify – either at the outset or during the course of our work – are billed for separately