Lawyers and their bills is subject that often raises hackles. Richard Burcher of Edmonds Marshall Burcher in Katikati gives some guidelines on what goes into calculating bill, along with advice on what you can do to help keep costs down.
Those of you who are over 40 may still remember the days when the cost of most legal services, particularly property transactions, was determined by scale of charges decided upon by the New Zealand Law Society.
It certainly had its advantages because both the lawyer and the client knew precisely where they were on the subject of costs from the start.
The lawyer could run his or her finger down the list of charges until reaching the appropriate purchase price and the fee alongside it was the figure charged to the client.
However, the scale did have its anomalies and with general move towards ?user pays’ regime, the law society’s scale of charges was abolished in 1984.
Calculation guidelines
From that time, lawyers had to rethink how they calculated their fees. Lawyers sell their expertise and time. Therefore the accurate recording of time is crucial to determine how much client is charged for job.
The scale was replaced with guidelines which lawyers must follow under the ?Rules of Professional Conduct’.
The rules begin: charges by lawyer for professional work shall be calculated to give fair and reasonable return for the services rendered having regard to the interests of both client and lawyer… The rule lists some relevant factors that must be taken into account when charging clients. These include the skill required for the job, its urgency and importance, value of the transaction, complexity of the job and the number of documents prepared or to be read.
A lot of legal work can be accurately and fairly charged by the amount of time spent by the lawyer or the office staff multiplied by that particular person’s appropriate hourly charge out rate.
This is much the same as when tradesperson charges his or her time to customers. Lawyers are however legally required also to take all the other factors such as urgency, and the level of skill involved into account. Once these are considered and an assessment made, the charge may be greater or smaller than simply figure achieved by multiplying the hourly rate by the amount of time spent on the matter.
For example, if property transaction only involved section of modest value, the lawyer may well consider it appropriate to charge bit less than the value of the billable time recorded, even though on the fact of it, the recorded time may be justified.
Conversely, if you need your lawyer to drop everything and urgently prepare an agreement to buy $l.5 million commercial property over the weekend, it’s inevitable you’ll be charged more than the amount of time actually spent.
This fee would reflect both the urgency of the matter and the relatively high value of the property. At the end of the day, the overriding concern of both the lawyer and the client is to ensure the client gets value for money.
Communication is key
Value is best achieved by good communication – both from the client explaining what outcomes are needed and from the lawyer explaining what’s likely to be involved to achieve those objectives.
Lawyers often find themselves in the difficult position of trying to provide clients with an estimate in circumstances where it’s difficult if not impossible, to know what the cost may be.
Other trades and professions have similar problems. Builders, for instance, are unlikely to give guaranteed quote on foundation work because they don’t know precisely what they’ll find when they start to dig.
However, there are of course many aspects of legal work where the lawyer can provide an estimate or some helpful guidelines to help the client budget. Again, the golden rule is communication on both sides.
How to help keep costs down
A client can do number of things to help keep costs down.
? See your lawyer before signing anything. It can save you time and money in the long run.
? Make sure you give your lawyer all the relevant information, papers and instructions. Your lawyer can’t do the job properly unless all the facts and papers are supplied.
? Don’t leave things to the last minute if you can avoid it. Urgency will usually increase your costs.
? Respond promptly to requests for further information or assistance. If your lawyer has to chase you, it takes time which you are paying for.
? Be willing to do some of the ?legwork’. Lawyers are generally only too happy to have their clients assist by organising valuation reports themselves, obtaining information from the local authority and lot of other things that the lawyer would have to undertake personally or which would be undertaken by staff member at your cost.
If you disagree
There will always be disagreements about bills. Good communication is the key to resolving most of these problems. If you have concern about the bill, don’t hesitate to take it up with your lawyer in constructive way. There may be misunderstanding or mismatched expectations. Either way, it’s important to discuss it and give your lawyer the opportunity to either address an occasional error or explain in more detail how the account was calculated.
The Law Practitioner’s Act 1982 provides an independent cost revision procedure if the lawyer and client can’t agree on bill. Hopefully good communication in most cases will avoid the necessity for that.
