Value Based Fees In Disputes


In this Lawyers Weekly article titled "An argument to stop the clock on disputes" Moores principal Catherine Brooks explains how you can do non time based fees in dispute work. The comments to the article are worth a read too especially Catherine's response to Bill Able's understandable proposition that until the legal profession (in Australia) does away with "itemisations" there is no point moving away from the billable hour. It is I believe worth reprinting Catherine's response in full here:

"Thanks for your question and comments Bill. You are right to draw a distinction between sophisticated clients and others. The likelihood of a request for an itemised bill from a sophisticated client is miniscule. I have made some inquiries in our 13 principal practice and we have never had one. A large part of our practice is still with private clients. Granted there is potential for a request for an itemised bill from a private client.

A request for itemisation is for itemisation of work done and not time spent. A conscientious lawyer maintaining a proper file in accordance with professional obligations will have copies of correspondence, documents and attendance notes on a hard copy or electronic file. Any litigation lawyer in Victoria who has been before a costs court knows the importance of the file note (as distinct from the timesheet) including the length of time involved in the attendance. So, in theory, there is no reason why a request for an itemised bill can’t be satisfied, even though there is no time sheet.

What happens in reality is that, when you combine value pricing with a service guarantee, you don’t have costs disputes. If the client feels that they haven't received the service they expected, they can talk with us about paying what they think is the appropriate price. I know it sounds incredible but it is one of the most powerful by-products of the pricing model we have at Moores. Obviously, this is not going to work for all those lawyers out there who love doing itemised bills, but I'm sure happy about no longer having to fill out timesheets!

One of Australia's most respected law firm costs consultant Liz Harris also has something to say about value pricing and lawyer regulations at least so far as Australia is concerned in this post from last October.

I personally think that for so long as the legal profession maintains any form of retrospective pricing (even if such fees are ultimately judged "fair & reasonable" by some third party) we will always be subject to criticism  and  forced  to  defend  the indefensible.

The moral of these stories? When you agree your fees up front ensure your Costs Agreement accurately reflects what is agreed (and not just the fee terms), keep accurate file notes, provide a Service Guarantee -and if you need to brief seek out a barrister who shares similar views to you and your clients on value.