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How you can save on legal fees

Posted on February 6, 2017 at 6:25 PM Comments comments (0)




This post discussed why legal fees tend to be so high. The good news is that as a client there are a number of ways you can reduce your legal fees, as the rest of this article will show. 


Be proactive


Most clients only come to see a lawyer when they are in legal trouble. Unfortunately, by this stage there is often only so much your lawyer can do to help you, and usually the remaining legal options are going to cost a lot of money.


For instance, when you have an important agreement or arrangement with a person, it’s often better to obtain legal advice and have a written agreement. This will prevent disputes about the content of your agreement and make everyone clear on their rights and obligations under the agreement. This in turn significantly reduces the risk of a dispute and you later having to go to court and pay massive legal fees.


Also, if you recieve a letter of demand, you should either pay the demand or see a solicitor immediately. Not doing anything about it normally leaves the other party with little choice other than to commence proceedings, which are going to be expensive for all parties.  


In a way, visits to your lawyer can be seen as similar to check-ups with your dentist. Regular check-ups with your dentist will ensure that any cavity or decay is detected early, ensuring that such problems are tackled early and preventing the need for root canal or tooth extraction. Similarly, an appointment to see your lawyer about a major transaction can help ensure that your interests are properly protected and serious legal problems later on are avoided.


Shop around/Don’t go with any inner-city law firm


Different lawyers charge different amounts for the same work. You may be quite surprised at the differences.


The best way to shop around is to look on the internet. That way you don’t feel obligated by having a lawyer see you and spend a while talking with you, or have to pay them for an initial consult when in the end you decide you would prefer another firm. By looking at a firm’s website you can ascertain where they are, what areas they practice in and get a general impression before you email them. When you email them, tell them very briefly what your matter is about in 4-6 sentences and ask them how much their fees will be. You should get a response within two business days if the firm is willing and able to take on your matter.


In terms of fee structure, the best approach is to agree on a fixed fee if that is a practicable option. Ask your solicitor to give you a fixed fee for your matter. That way, you know how much you will have to pay in advance and there are no nasty surprises later on. Also, your solicitors will not have the incentive of spending more time on your matter than necessary so that they can charge you more.


Of course, sometimes it is not possible for a fixed fee to be arranged. A typical example of when a fixed fee is unlikely to be possible is in court proceedings. Whether it’s civil litigation, family proceedings or a criminal case, it is impossible to precisely predict in advance how many court dates, how much preparation and generally how much work your solicitor will have to carry out. In such matters you may have to settle for an hourly rate, but you should still ensure that it’s competitive by getting a few different quotes.


Law firms in the CBD and other expensive areas pay enormous amounts of rent for their office spaces. Naturally, these costs are passed onto you, the consumer. In order to pay their massive overheads, inner-city firms charge very high hourly rates and most put lots of pressure in their ‘fee earners’ to generate as many ‘billable hours’ as possible every day.  In such firms, the performance evaluation of their solicitors (or ‘fee earners’) is mostly based on the amount of money they generate for the firm. The focus in such firms is essentially on extracting as much money from you as possible.


Of course, there are times when it may be better to go with an inner-city law firm, such as if your claim is worth millions of dollars, or due to the complexity of your legal matter you require an accredited specialist (although there are accredited specialists in the suburbs as well!). Otherwise, it is generally advisable to see a suburban solicitor who pays far less rent. If your matter requires specialist advice or is going to court, your solicitor can always engage a barrister on your behalf to provide such services which shouldn’t come to too much.


Settle the case


Litigation is essentially a zero-sum game, as there can only be one winner, and the person who wins does so at the expense of another party. In fact, describing litigation as a zero sum game is actually unduly optimistic: both parties normally pay highly expensive legal fees, and only in exceptional cases do successful parties get costs orders which indemnify them for the massive amounts of legal fees they have paid.


In civil litigation, the normal course is that costs are awarded to the successful party on the court scale, which is usually substantially less than what your lawyers charged you. So even if you do win in court, the legal costs you recover will normally be a lot less than the amount that you paid in legal fees. Costs are usually not awarded in family matters in the federal courts or in estate matters.


On the other hand, if you lose you will have to pay your lawyer’s fees, the judgment sum and the other side’s costs. Unless you are quite wealthy, this is a triple whammy you probably can’t afford.


Furthermore, the outcome of litigation is normally uncertain, as it concerns disputes of fact or disputes over the meaning, effect or application of relevant laws. Litigation is also often unpredictable, as there are issues which often come up by surprise, and sometimes the judge just takes a particular view of the case and decides accordingly. You can never be completely sure of a good outcome, even if you have an apparently strong case.


As a result, it is generally advisable to try to settle the case before going to court. If you want to sue somebody, get your lawyer to send a letter of demand first and/or an offer to settle the civil dispute. If you receive a letter of demand, see a lawyer to get advice and then get the lawyer to draft a response. The response should be aimed at preventing the need for court proceedings, either by pointing out why you don’t owe the money demanded or making an offer to settle the dispute for once and for all. Because court proceedings are so expensive, you should try and avoid them whenever possible.


If you are a party to a court proceeding, consider the possibility of settling your case. There are three major advantages to this option:


1)      The uncertainty is eliminated: the outcome you have both agreed upon you will almost certainly get, thereby removing the risk of financial disaster if you lose;

2)      You can save on legal fees: as the matter will not have to proceed to final hearing; and 

3)      The matter is over far more quickly: so that you avoid unnecessary stress and can move on with your life.


A negotiated outcome could be a win for you and a win for your opponent, but in order for it to work you would have to put an offer that they may accept. Remember that the other party to the case will only accept if they see the outcome as beneficial for them. You should try and see things from the other party’s point of view and ask yourself what you would accept if you were in their shoes. It would be sensible to offer somewhat less than what you would get if you won in court to take into account the risk and expense of a trial.


Spend less time talking to/ emailing your lawyer


Many clients like to spend lots of time chatting to their lawyer on the phone. Some clients do not realise that lawyers are performing work by discussing your case with you or listening to you, and are perfectly entitled to charge for this.


Other clients like to send numerous long and/or repetitive emails to their lawyers. Of course, your lawyer is also entitled to charge for reading each of these emails.


A lawyer’s most valuable asset is his or her time. Minutes spent by a lawyer talking to you or reading your long emails are minutes that can be spent working on another client’s matter. By taking up a lawyer’s time discussing your case or sending many unnecessary emails, you are using up his or most valuable resource. If you want to save on your legal bills you should limit the time spent chatting with or emailing your lawyer. Wherever possible, make it short and sweet!


If you need to vent, talking to your partner or a friend is a much cheaper option. Remember that your lawyer can only help you with the legal side of your problem.


Do what your solicitors tells you the first time


Many clients fail to do what their solicitor asks them to do the first time. This leads to the solicitor having to chase up the client by writing letters and emails as well as calling the client. Sometimes the solicitor will also recieve correspondence and calls from third parties in relation to the delay occasioned by the client. All of this leads to additional and unnecessary costs being incurred on the client's file.  


Don’t change lawyers


Every time you change lawyers, your new lawyers will have to spend time reading the file in order to become familiar with its contents and the issues, and to know what steps need to be taken. Naturally, you will be charged for this time. 


As a result, it is generally adviseable to stick with the same lawyers from start to finish. 


Don’t change your instructions unnecessarily


Your instructions are what you as a client tell your solicitor to do for you. Your lawyer has to carry out your instructions unless you ask him or her to do something which is illegal or unethical.


Your instructions will sometimes have to change as the case evolves. Changing your instructions can often be desirable, and is sometimes necessary (for example, if an event has made what you are seeking impossible to obtain). However, changing instructions can result in more legal work having to be undertaken, and therefore more fees. As a result, you should carefully consider your options before you give your lawyer instructions and not change those instructions without a very good reason. Changing instructions without a good reason can result in your legal bills being needlessly higher than they would otherwise be.


Conclusion


As this article demonstrates, there are a number of ways that legal consumers can save on legal bills. The important principle to remember is that a lawyer's most valuable resource is his or her time, and the more time you consume the more you will be charged. Essentially, saving your solicitor time saves you money. 

Why are lawyers so expensive?

Posted on August 16, 2016 at 11:40 PM Comments comments (0)



Most complaints about lawyers concern how high their legal fees are. The professional fees charged by lawyers are notorious. When many clients earn an average of $20-40 per hour, it can seem unfair that your lawyers charge you hundreds of dollars per hour. However, as this article will demonstrate, there are reasons why legal fees are so high.


Operating costs


The main reason legal fees are so high is because it costs a lot of money to lawfully run and operate a law firm. Law firms incur all of the costs normally associated with operating an office (rent, wages, photocopy leases, furniture, power, stationary, paper, ink, tax etc). Inner city law firms pay massive amounts of rent and of course this cost gets passed onto you. Additionally, there are extra costs that law firms have to pay, mainly because the legal profession is so highly regulated.


In addition to normal business costs, lawyers also incur the following costs:


Professional indemnity insurance - this is liability insurance that all law practices are required to have. The costs of this depends on the size of the practice, but it is invariably expensive. This insurance is ultimately to the clients' benefit, as it ensures that in cases where lawyers make mistakes, clients can be compensated for this.


Practicing certificate fees - lawyers also must pay thousands of dollars every year to the Law Society in order to renew their practicing certificates. The cost of a practicing certificate depends on the type of certificate which is granted. Included in the cost of a practicing certificate is a fidelity fund contribution fee of several hundred dollars in order to reimburse clients who are defrauded of money by a small number of unscrupulous members of the profession.


Continuing Professional Development - every year, lawyers are required to complete 10 points CPD as part of their continuing legal education. This typically costs thousands of dollars per practitioner as the seminars/courses that must be attended or undertaken are rather dear. Lawyers can be severely disciplined for not complying with the above requirements. Because a solicitor's time is worth a lot of money, the monies spent on CPD are arguably small compared to the time expended on CPD which could be used on chargeable activities. 


Trust account expenses - most firms hold at least one trust account, which is a bank account where monies which do not belong to the firm are deposited. Examples of trust monies include funds used for paying house deposits or outlays, and monies paid upfront by clients or third party payers on account of the firm's professional fees. Firms have to pay for annual external audits of their trust accounts, which usually cost a minimum of $1,500.  Firms also have to deposit 2/3 of the lowest balance held in their general trust account of the previous year into a separate account. In addition, firms can be audited by the Queensland Law Society, with the costs of such audit being passed onto them.  And of course, banks impose monthly account keeping and other fees on solicitors' trust accounts.  Finally, the costs of keeping and maintaining records, including trust accounting software and the time spent by members of the firm also add up.

 

As a result, the financial costs of practicing law are enormous. There are however other reasons why legal fees are high.


Demanding occupation


Being a lawyer is one of the most demanding occupations. Lawyers have to negotiate competing demands placed on them by their clients, the courts, their employers, disciplinary bodies and their families. Some clients are difficult or have unrealistic expectations, and this ensures that they walk away unhappy with their lawyer, even when their lawyer has done an OK job.


The law is a competitive, adversarial and aggressive environment. Lawyers typically are required to work long hours, including sometimes on weekends. The consequences of mistakes and failures can be severe, including embarrassment, loss of reputation, being sued and even being disciplined.


As a result of these pressures, lawyers are one of the occupations whose members most prone to suffering depression.


For these reasons it is unsurprising that lawyers expect to be adequately compensated for the work they do. 


Becoming a lawyer


The process of becoming a lawyer is a long and expensive one. The reality is that lawyers become qualified and eligible for practice at enormous personal and financial cost.


Lawyers have typically gone to university for many years in order to obtain a law degree and have then undertaken a diploma in legal practice in order to become a solicitor, or undergone training and mentoring to become a barrister. Before being able to practice law, they must be admitted to the legal profession. This is an expensive and time-consuming process which involves paying a large fee to the Legal Admissions Board, and filing an application and affidavit in the Supreme Court.


Even when they are admitted to the profession and commence legal practice, it takes many more years before a lawyer becomes sufficiently experienced and knowledgeable to practice without any supervision. 


Conclusion


Put simply, lawyers are so expensive because the financial and other costs of practicing law are enormous. Many of these costs are due to the onerous regulation of the profession. The costs of legal practice inevitably must be passed onto the legal consumer, ie the client. 


The good news is that clients can minimise their legal fees, as this article explains.