UNDERSTANDING SOLICITORS' CHARGES (2)
Most solicitors in the UK use some sort of time costing system for charging their clients in cases where it is not practical or possible to quote a fixed fee. Solicitors' charges for buying or selling a house, for drafting a will or for obtaining a divorce. for instance, are often fixed fees agreed at the outset but other types of legal work cannot really be done on the basis of fixed fees.
The most obvious example of the latter is any type of litigation such as what are called 'ancillary relief proceedings' in divorce. If a client sues a debtor for money owed or wants to take out an injunction for some purpose there is no way of knowing at the outset how the case might be resolved. In many cases a simple letter from a solicitor will be sufficient to obtain the desired result - whether it is the payment of a debt or the abatement of a nuisance or whatever - and the work involved will have been minimal. Sometimes it is necessary to go rather further and actually issue proceedings. Very often the receipt of a summons or a writ is more persuasive than a simple letter and it will be enough to resolve matters.
Unfortunately, there are other cases which will be bitterly contested and the only way of resolving these cases is to have a full hearing before a judge. It is not generally apreciated that such cases are the exception rather than the rule - in percentage terms very few cases actually get before a judge for decision - but the costs involved in these cases will be very much more than the costs involved in the cases described above where a solicitor's letter is enough. It is because one cannot know into which category a given case will fall in advance that time costing is necessary in many types of legal work.
The system involved in this time costing is basically the same for most solicitors (although the figures may vary) and so the following is given by way of illustration. These were the Legal Aid rates applicable in Family Law Proceedings to non-franchised firms from 1st November 1997 and so they have greatly changed since then. They are given by way of illustration of the principle only because these are very definitely not the current figures.
Writing routine letters £3.65 per item
Receiving routine letters £1.85 per item
Routine telephone calls £3.65
All other preparation work including any work which was reasonably done arising out of or incidental to the proceedings: £41 per hour
# interviews with client, witnesses and other parties;
# obtaining evidence;
# preparation and consideration of, and dealing with, documents, negotiations and notices;
# dealing with letters written and received and telephone calls which are not routine.
In addition to items above to cover the general care and conduct of the proceedings. Plus 50%
There are a number of points to
remark upon on the above because the bare figures give a very misleading impression of what the client will eventually be requested to pay.
Firstly, note the last item - "Plus 50%". Where this applies it is important to be aware of it. For some reason (which no doubt has a very interesting historical background but which nowadays merely serves to confuse) many solicitors' charges are made up of a basic charge plus an element for what is called "general care and conduct". So, in this case for example, the normal cost for writing a routine letter is given as £3.65 but when the 50% "uplift" is added for "general care and conduct" the amount actually charged for writing a routine letter is £5.48.
In reality the 50% "uplift" is applied as a matter of course to all work and this approach is almost always endorsed by the courts if it is requested that a bill be examined as to its reasonableness. It is very important to be aware of this. Most people might think therefore that it would be better if the rate given for writing a routine letter was £5.48 rather than this notional figure of £3.65 plus a 50% "uplift" and we tend to agree with them. This firm does not apply an 'uplift' but it is very important to be aware of this "uplift" and to scrutinise a solicitor's terms of business carefully at the outset to see if it applies (as it often still does).
A second point is that almost all solicitors charge VAT whereas most private clients are not able to reclaim VAT and so the costs are further increased by this amount. The £5.48 letter given as an example above therefore becomes £6.44 after the addition of 17.5% VAT. It is true that VAT is not always charged - for instance, where the client is based outside the European Union or the solicitor is not registered for VAT - but it is charged in the overwhelming majority of cases.
There are a number of other points. For instance, you will see that the word "routine" features in the above charging structure. What this means is that "non-routine" items are charged differently. In practice this is not so much a problem as the two points mentioned above. The thing which really tends to catch clients unawares is the 50% "uplift" but it does show that you need to look carefully at a solicitor's terms of business and make sure you understand them fully at the outset. It is a pity that one needs to do this and it would be better if these things were written in a more understandable way but the sad fact of it is that they are often not so written and it is better to be aware of this.
If you do need any legal services from any lawyer please make sure you get written terms of business at the beginning and that you do not hesitate to ask if anything is not clear.