The Gazette 1986

GAZETTE

JULY/AUGUST

Correspondence

The Editor,

Law Society Gazette,

Blackhall Place,

Dublin 7.

Basis of Charge in Relation

to Rack Rent Leases

Dear Sir,

I receive frequent enquiries from solicitors as to the

usual and proper basis of charging fees when acting for

the Lessor in a typical 35 year Rack Rent Lease of a

business premises.

If a Bill has to be prepared for taxation it would

comprise the appropriate Solicitor's Remuneration Act

scale fee together with a charge for all of the other work

in relation to the matter on an item for item basis.

The changes in practice that have taken place since

1966 in relation to items which are not part of the scale

fee have resulted in these other items creating the

greatest amount of work and complications, i.e.,

furnishing of title, V.A.T. on the granting of the Lease,

planning, etc. (See the Guidelines issued by the

Conveyancing

Committee

published

the

January/February

Gazette

1980.)

I have examined various attempts to devise unofficial

scales which some firms use to attempt to come up with

a fair and reasonable method of charging in relation to

such transactions. Because of the wide variety of work

that can be involved in such cases I have found no scale

that I would favour and recommend that solicitors

charge on a time basis which is most acceptable to the

business community and which is the standard basis of

charging in such matters in U.K. and America.

For example, the most hideously complicated Lease I

was ever involved with was at quite a small rent and a

scale fee would hardly have paid the postage in that

case. On the other hand one still occasionally comes

across a case where very little work is involved but the

rent is very high. In these cases one would love to charge

a scale fee but these type of Leases are invariably for

one's best client who wants reasonable value for money.

Most of the Solicitors I know who do a lot of work in

this area all rely on time records as the basis for

calculating their fee. Solicitors often ask what a typical

time charge would amount to but this is rarely helpful

because a reasonable charge in a case in my experience

may vary from £600.00 to £6,000.00.

The most favoured way of calculating a fee based on

time is to ascertain what the actual time cost to the

office is based on records of times kept. This does not

have to be a fancy time recording system kept on

computer. Even solicitors who do not record time

generally frequently note time whether on the back of

the file or otherwise and all they need to know in

addition is how to calculate the cost of time in

accordance with recognised accountancy standards. The

English Law Society publish a booklet entitled 'The

Expense of Time', 3rd Edition, which can be obtained

from The Law Society, 113, Chancery Lane, London

WC2 IPC. Price £2.00 Stg. Methods of calculating the

cost of time were also outlined in an article in

the

Gazette

in October, 1984. Assuming that the cost of

time comes to say £500.00 the solicitor should then

consider all of the normal factors that govern what is a

fair and reasonable charge having regard to all of the

circumstances of the case. These factors are as per

Schedule II of the Solicitor's Remuneration General

orders:

(a) The complexity, importance, difficulty, rarity or

urgency of the matter;

(b) Where money or property is involved, its amount

or value;

(d) The skill, labour and responsibility involved

therein and any specialised knowledge given or

applied on the part of the solicitor;

(e) The number and importance of any documents

perused;

The place where and the circumstances in which

the business or its part thereof is transacted; and

(g) the time reasonably expended thereon.

The practice is then to charge this all-in fee without

specifying the basis upon which it is prepared which, of

course, can be gone into with the client if necessary.

There may indeed be cases where a great deal of trouble

was involved but in which the client may not have been

aware of this and where it might be desirable to discuss

the matter with the client. Solicitors who customarily

use time records to calculate fees in this way report that

they rarely have any difficulty in relation thereto as

most of the clients are business people who recognise the

reasonableness of this method of charging.

If there is any possibility of a disagreement arising

with a client on the basis of charge it would be necessary

to obtain the client's written agreement to charging on a

time basis.

Yours faithfully,

Rory O'Donnell,

Solicitor,

16 Fitzwilliam Place,

Dublin 2.

We are an Agricultural Consultancy and Auctioneering

Company providing the following services:—

* AGRICULTURAL REPORTS AND

ATTENDANCE AT COURT - ARBITRATION

* LAND ACQUISITION WAY LEAFE C.P.O. CLAIMS.

* INSURANCE CLAIMS.

* LAND - PROPERTY EVALUATORS.

For further information contact:

NAGLE GAYNOR AND ASSOCIATES.

AGRICULTURAL CONSULTANTS AND AUCTIONEERS.

CLOGHEEN, MONASTEREVAN,

CO. KILDARE. TEL: (045) 25451.

KILFERA. CO. KILKENNY. TEL: (056)6212

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