Costs lawyer warns commercial legal services clients are wising up to increasing costs
Clients are wising up to excessive costs, a leading costs lawyer has warned in the wake of a report that found Magic Circle partners billing £1,000 per hour.
The Centre for Policy Studies report, The Price of Law, produced by Jim Diamond, says hourly rates for a partner at a top London firm are now at “the highest level ever recorded”. This means “those seeking to comply with UK legal procedure are forced to pay extremely high costs to do so—high enough to restrict access to law, particularly for smaller business clients for whom bills can be prohibitive”.
The report points out that there is a lack of transparency since average hourly rates are not published online, and that “the remarkable similarity in the rates charged by each of the Magic Circle law firms suggests a shortage of competition between them”. The report makes no suggestion of collusion between the firms, but does take aim at the “outdated and unsustainable” concept of the billable hour.
Billable hours also came under fire last month from Lord Justice Jackson, who called for fixed fees for civil claims valued at up to £250,000.
Responding to Diamond’s report, Sue Nash, chair of the Association of Costs Lawyers (ACL), says: “I believe there is a real ‘wind of change’ among purchasers of commercial legal services who are beginning to realise that their legal spend is increasing and/or buying them less.
“There are smaller London-based firms probably every bit as competent but charging up to 50% less and then there are market-disruptors like Riverview Law. Costs lawyers have the experience and skills to analyse legal spend for commercial purchasers and to help ensure that they are getting value for money.
“However, we must not forget that these rates do not reflect the work done—or fees charged—by the vast majority of solicitors across the land. As for those solicitors and junior barristers doing legal aid work, with some hourly rates as low as £26 (and the absolute maximum for the most rare and complex cases is about £140 an hour), the vast majority can only dream of being able to bill £1,000 in a week let alone an hour.”
