The Cost of Litigation
Welcome to the Lacer-Litigation Lacourcère LLP newsletter. This is our first edition and we are very excited at getting this initiative going. Our promise is that all Lacer newsletters will be simple, informative, and stimulating. We look forward to your feedback – we intend to pay attention to all feedback and improve.
The Cost of Litigation
One important factor that tends to limit people from going to court is the rising cost of legal services. The cost of legal services, especially litigation, is currently so prohibitive that people often shy away from the courts.
Attempts have been made to reduce costs. Examples include: increasing the amount over which Provincial Courts may hear matters, ($50,000.00); allowing self-represented litigants in Court; and keeping the Costs that Courts might award against a party low. Despite those initiatives, however, legal costs continue to trend upwards.
As litigators, we perennially hear these concerns and are continually challenged by clients to come up with new and creative ideas to billing. Lawyers have to navigate that well known path- being sensitive to the cost concerns, and at the same time, understanding that law practice is a business. Here are a number of approaches to billing:
- Flat Rate BillingTo the business minded client, this represents an ideal- they can budget and plan accordingly. While this might work in a document review context, it is rather difficult to carry out in a litigation setting. One reason for that is that litigators cannot predict the volume of materials they may receive from opposing counsel. Should parties agree to proceed with this approach, they are encouraged to have a candid conversation: a quoted budget by the lawyer. And if the fees are to exceed that amount, both parties to renegotiate.
- Hourly BillingThis traditional model of billing for legal services, although despised, remains stubbornly in place. Clients routinely ask why they should be billed at $800/hr and struggle to understand the value proposition grounding this. However, to a large extent, this model continues to inform how legal service is priced. The market can act on this by insisting that this approach should now be extinct, or alternatively, lawyers can come together to lead that discussion. It will take a determined effort to change this model of billing.
- Blended RateThe blended rate is an interesting one: it requires the average of two billing rates: that of the senior and the junior working on a file. That way, it assures that both the senior and junior lawyer are engaged in performing the task without really paying the rates of either. However, this approach still retains some of the difficulties observed in connection with the hourly billing approach.
The list here is not comprehensive. Nevertheless, the central concern remains how to convey value to the client within an acceptable pricing model. In our practice, we observe that clients: appreciate transparency in discussing fees; welcome fee- discounts; and will pay fees so long as they are carried along through the litigation process.
While we continue to retain billing by the hour, we take the position that a budget and/or a flat fee approach for legal services is perhaps the way to go: A budget arrived at, either for each stage of the litigation process, or for a particular phase- for example, a budget for up to and including the Questioning process. All in all, both the lawyer and the client should ensure an open conversation concerning fees.
Ugo Ukpabi, Ph.D