405 / 822
GAZETTE
JULY/AUGUST 1988
CORRESPONDENCE
97 Upper Georges Street,
Dun Laoghaire,
Co. Dublin.
The Editor,
The Gazette,
The Law Society,
27 th May, 1988
Dear Sir,
Time costing, cross
subsidisation etc.
President Tom Shaw's message to
the profession in the April issue of
the
Gazette
is timely.
I am committed to the discipline
of time recording having used it as
a management aid since the intro-
duction of the Law Society's pilot
scheme launched in the early 70's.
During this period our office has
assiduously recorded the time of all
fee earners. Our experience leads
me to believe that recording is an
essential management tool. How-
ever, in the absence of informed
experience and acceptance by
solicitors generally the President's
call to it and aga i nst c r oss
subsidisation could fail to make any
really wo r t hwh i le impact.
I believe that one way his
message would get through would
be by having a national saturation
of the profession along the lines of
Loosemore and Parsons or other-
wise through various Bar Associa-
tions so that all wou ld realise how
absolutely essential it is that the
profession begin to price on a cost
plus basis. Such method of pricing
wou ld be new only to solicitors.
Traders and artisans and others
have been pricing in that fashion
for centuries.
The reason I suggest such a
radical approach is that unless the
profession begins to understand
where it's cost centres are there
will retain huge variations in billings
for similar wo rk between one
solicitor and another wh i ch will
ensure that solicitors generally
continue to retain their low public
image when it comes to charging.
As an example, most practi-
t i o n e rs w i ll have had t he
experience of dealing in lessors'
c on s ent cases w i t h t e n a n t s'
solicitors whose clients are obliged
to pay their costs. Eventually they
will have been forced to agree fees
t h a t
w o u ld
gene r a l ly
be
considerably less than the cost to
their office of producing the work
in the first instance. There would
in all probability be resentment on
the tenant's solicitor's part that his
client has been forced to pay too
mu ch and on t he l and l o r d 's
solicitor's part that he has been
paid too little and would not be able
to recover sufficient (if any) from
the client to ensure a profit. Were
t he l a t t er to t ry to ob t a in
compensatory payment from the
client he would be likely to come
in for adverse criticism.
There are other such glaring
examples.
My records show that much
domestic conveyancing in recent
times does not pay on full scale, let
alone half scale, and that one does
not get anything like the cost on
average of producing a carefully
drawn Will. There are other similar
extractable examples. Unless the
entire profession i.e. solicitors on
both sides of the transaction, has
a satisfactory and acceptable (by
consensus) method of costing and
therefore of pricing work it, and
particularly individual members in
localised areas, could be exposed
t o o d i um and c o n t empt f or
charging reasonable cost based
fees unless these fees would be
seen as a norm. The public is
critical of the normal huge price
variations for similar work that an
inexact science produces.
There is no doubt that in the
short term w i th the adoption of
time costing and charging the fee
per job in certain types of matters
would rise, that many traditional
types of work wou ld be seen to be
unattractive by solicitors and might
possibly risk, except in extremely
specialised practices, extinction.
The discipline of time recording
for a solicitor need be no more
demanding than about 45 minutes
a week. The calculation of expense
rates because it relates to the
extraction of budget information
would take some hours but then
that need only occur once annually.
It would be up to the expertise
of the Council to ordain practice
standards and to decide how to
combat the possibility of short term
adverse publicity that might occur
from the hiking of some traditional
fees, the lowering of others and the
dropping of some types of work
that cannot be transacted by
solicitors at a reasonable price.
I have no doubt that, in the long
run, provided there is universal
solicitor acceptance of the cost of
time spent as a basis or one of the
bases for billing, solicitors' charges
will tend to level off and be
predictable and give less reason for
complaint by the public. As a
valuable side effect the issue of
solicitor and client charging in
litigation cases should become
clarified as being normal and above
board, party and party costs (if
awarded) being merely a none-
i n d emn i f y i ng subs i dy to t he
successful litigant.
The abolition of binding scale
fees for conveyancing and other
types of work and the introduction
of a con t i ngency e l ement in
successful litigation cases could
form part of the scenario but these
are
po l i t i cal
ma t t e r s.
The
embarkation of individual firms on
advertising to my mind will not help
the billings of the profession except
marginally. The basic problem of
over c a p a c i ty and under re-
muneration on the profession will
take other solutions to cure. Time
costing and charging would make
a major impact if accepted and
applied.
Yours sincerely,
JOHN HOOPER
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