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Litigation has a reputation for being costly and legal fees and costs are the main reason not to use the services of the legal profession. There are, however, several ways in which fees and costs can be funded, as well as free sources of legal help and advice.

Like many other services, legal services can be offered either on a fixed quote or an hourly rate basis. Fixed quotes are used for work of a standard nature

Hourly rates

Legal Services ChargesA lot of the work done by law firms is charged on an hourly basis (or fractions of an hour) according to a hierarchical structure where the more senior people (for example partners) charge the highest rates and more junior personnel charge lower rates for their services. A typical solicitor’s rate is around £200 an hour while a paralegal’s would be around half that amount. The rates charged may vary in different parts of the country, Central London being the most expensive as could be expected.

REFERENCEThe government publishes guideline hourly rates used for summary costs assessments in court. Actual rates may vary but this list provides useful guidance.

INFOIt should be noted that the hourly rates charged include all of the firm’s overheads including professional indemnity insurance and do not reflect what the firm’s employees and partners are actually paid, that figure would be much lower.

The main issues with hourly rates are:

  • They give no indication as to the total cost of the case, clients won’t know how many hours are required to do what they require.
  • TThe cost of disbursements and expenses is not included in the fees and clients can be be surprised to see how much things like photocopying can add to the total bill.
  • Should the client be paying the partner’s rate when the work can easily be done by a more junior member of staff such as a paralegal?
  • Should the client pay for a trainee or junior staff member to be present at a meeting taking notes in addition to the lawyer’s fees?

In many cases, firms are able to give an estimate of the cost for dealing with the case in question, however, this is just that, an estimate, and the actual cost may be much higher if things don’t go according to plan.

The SRA Code of Conduct states that solicitors must give clients the best possible information about costs.

O(1.13) SRA Code of Conduct
O(1.13) clients receive the best possible information, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of their matter;
INFOCosts should be explained from the beginning, with details as to how they are calculated and it should also be clear that VAT will be added to the total amount. A lot of legal work is done for businesses who are able to claim it back, however, individuals should be aware that quotes for legal services will be exclusive of VAT.

Fixed fees

In contrast, fixed fees are more accurate reflections of how much will be charged, however, many quotes do reserve the right to increase the fees if things get complicated and the fees don’t include expenses and disbursements. There is less chance of disputes and disagreements with fixed fees, unless the work turns out to take a lot longer than anticipated and the fee has to be increased. If that’s the case, the client should be notified immediately.

Fixed fees are used for work of a standard nature which can be quoted in advance, such as conveyancing, wills, drafting contracts and other documents where the amount of work involved and estimated time has already been calculated by the firm. For these services, clients can shop around and compare various quotes, however, it’s important to know exactly what’s included in the quote and what isn’t. For example, domestic conveyancing quotes will not include costs and disbursements and the client should not only be made aware of this fact but should also be informed about those costs and given an estimate.

It is also important to find out what the actual quote is once VAT is added to it and whether VAT will be added to the additional costs referred to. This is of more relevance to individuals than businesses, since VAT registered businesses are able to reclaim it back.