I’m giving a seminar on Wednesday: see http://bit.ly/npDJVY. I’m talking about Misconduct and Costs. The Supreme Court of Victoria’s Costs Judge, Associate Justice Jamie Wood, is talking about best practice in taxations of costs, and Liz Harris, the founder of Harris Costs Lawyers, is talking about costs agreements and risk management. I think it’s going to be a really good seminar. Now, I have an offer and a request. I have two free tickets to give away. If you would like one, let me know.
As to the request: foolishly, I have promised to tell those attending the answers to the following questions:
- Is it charging by the hour that stinks or the abuse of charging by the hour?
- Will fixed fees be any less problematic?
- For what activities is it permissible to charge time-based fees?
- Can you charge two clients for one piece of work?
- When does overcharging become gross overcharging?
There is no clear answer to the third question, except perhaps in the heads of taxing officers, and little commentary that I can find. If you have any experiences of what is allowed and disallowed in taxations between solicitor and own client (as opposed to taxations between parties on a solicitor-client basis) which are conducted by reference to a costs agreement specifying charges at an hourly rate, I would be interested to hear them.
Similarly any experiences of costs disputes involving fixed fees.
I agree with most of Daniel’s comments. We have been offering a hybrid version of time billing and fixed fees. Our costs agreements still allow for time billing and fees for court attendance etc, but our fees are capped so that our clients know they will not pay over a certain amount. We cap it at a level that we believe should cover the amount of work involved – after all if experienced lawyers can’t calculate how much the bill is likely to be what chance do clients have of budgeting appropriately for the bill? As Daniel mentioned, in our invoices we list all work performed even if we are not charging for it so that clients can see they are getting their money’s worth. We opted for capped fees as opposed to fixed fees on the basis that we can invoice the clients regularly as work is performed, and transfer money from trust soon after. We can continue to do this until we reach the capped amount. This helps the business cashflow. If we opted for fixed fees the fee wouldn’t be payable until the work in its entirety had been completed – we could not invoice the client as the work progressed and transfer funds from trust until the work we were being paid to do by way of a fixed fee, was completed. I think fixed fees would cause an awful lot of problems as to when we could validly invoice the client and receive payment into our business account as opposed to the trust account as a fixed fee for a matter implies that payment is not due until the matter is completed. I would welcome comments on this issue.
As a non-lawyer, but still involved in the industry, my views are more from a client management perspective rather than "what you can get away with" – and in my eyes, that's what's important these days, especially if you want clients to come back again!
So my views are:
Is it charging by the hour that stinks or the abuse of charging by the hour?
Obviously charging by the unit is always preferable. Even then clients think it's abhorrent to be charging 6 minutes for an email. A few minor items knocked off the bill (and noted so) always looks good and gives a feeling of value.
Will fixed fees be any less problematic?
In certain situations, they'd be preferable – we all want to know where we stand – how many clients are served up with a huge bill that they weren't expecting? The alternative is interim billing or even (shock horror!) a statutory requirement to provide a monthly update on costs.
For what activities is it permissible to charge time-based fees?
Everything except lunch.
Can you charge two clients for one piece of work?
Only if you halve the cost – is it reasonable to be paid twice for doing one thing?
When does overcharging become gross overcharging?
Firstly isn't all overcharging improper? The real question is at what point do charges become overcharging in the client's eyes?
My two-bits worth:
The ultimate solution is the introduction of 'before the event' legal insurance included in home contents policies – see http://www.theaa.com/insurance/home-insurance-leg… as an example. They are very popular in the UK and for a very small extra premium cover is provided to deal with life's legal uncertainties. I'd love to see this optional insurance 'add-on' available here in Australia. Being a panel solicitor for one of these firms may not necessarily pay your normal rate, but it brings in work on a reliable basis.
Have I earned a free ticket? 🙂