Fees by Hourly Rate - VFM
Discussion
A friend has just instructed a legal firm in a civil matter. We were talking about fees, and the following was disclosed as an estimate:
Managing Partner - £450.00 plus VAT
Partner - £425.00 plus VAT
Senior Paralegal - £200.00 plus VAT
Associate - £350.00 plus VAT
Associate - £350.00 plus VAT
All this is PLUS disbursements (including a £2.00 pp credit check).
He was saying that he liked the person he was dealing with and thus chose this particular firm based on that likeability factor despite having a second estimate from another firm which was significantly cheaper (broadly £250.00 + VAT p/h).
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price? I remember when dealing with a trademark specialist and when it came to chargeable time on the phone, she would suddenly speak slower and take longer to think!! Her paralegal sent me a drafted letter and I spotted some errors and duly pointed them out; they tried charging me for 'alterations' to that letter!!
In the motor trade, fault diagnosis can be tricky and therefore understandably is charged at an hourly rate. But how does the customer know they're getting a full bang for their buck? Mechanics compete by lowering their hourly rate, but most jobs are known quantities. Do those jobs need to be pitched on hourly rate? I've just compared motor engineer rates to that of a legal professional but that wasn't the aim; just wanted to give examples.
I cost out a replacement windscreen on known factors. If I feel there may be an issue during that process, such as rust or paint issues, I will add a caveat accordingly (come to think of it, I should charge waiting time to one or two of my main dealer customers!). The solicitor's hourly rate has made me think: £450 + VAT, plus disbursements (oh and can we have the two-quid to see if you're good for you money?!).
Hourly rates: justified, or a way to maximise fees?
Managing Partner - £450.00 plus VAT
Partner - £425.00 plus VAT
Senior Paralegal - £200.00 plus VAT
Associate - £350.00 plus VAT
Associate - £350.00 plus VAT
All this is PLUS disbursements (including a £2.00 pp credit check).
He was saying that he liked the person he was dealing with and thus chose this particular firm based on that likeability factor despite having a second estimate from another firm which was significantly cheaper (broadly £250.00 + VAT p/h).
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price? I remember when dealing with a trademark specialist and when it came to chargeable time on the phone, she would suddenly speak slower and take longer to think!! Her paralegal sent me a drafted letter and I spotted some errors and duly pointed them out; they tried charging me for 'alterations' to that letter!!
In the motor trade, fault diagnosis can be tricky and therefore understandably is charged at an hourly rate. But how does the customer know they're getting a full bang for their buck? Mechanics compete by lowering their hourly rate, but most jobs are known quantities. Do those jobs need to be pitched on hourly rate? I've just compared motor engineer rates to that of a legal professional but that wasn't the aim; just wanted to give examples.
I cost out a replacement windscreen on known factors. If I feel there may be an issue during that process, such as rust or paint issues, I will add a caveat accordingly (come to think of it, I should charge waiting time to one or two of my main dealer customers!). The solicitor's hourly rate has made me think: £450 + VAT, plus disbursements (oh and can we have the two-quid to see if you're good for you money?!).
Hourly rates: justified, or a way to maximise fees?
The majority of service-centric business will calculate fees based upon an hourly rate.
Most will estimate the number of hours needed and present the total fee that will apply to a given amount of work. Although I believe that law is one profession where the total amount is left 'open' on the basis of them not knowing how long a case may take to resolve.
As mentioned above, it's a very transparent way of pricing. As to whether the amount provides value of money is another matter.
Most will estimate the number of hours needed and present the total fee that will apply to a given amount of work. Although I believe that law is one profession where the total amount is left 'open' on the basis of them not knowing how long a case may take to resolve.
As mentioned above, it's a very transparent way of pricing. As to whether the amount provides value of money is another matter.
Many, many years ago I was part of a team developing a new finance system for an international law firm. Not Magic Circle but not far off. After one particularly long workshop I was chatting with one of their payroll staff and swapping stories. They shared that the partners were paid a fixed amount each month and then at the end of the year they were paid the balance of their profit share. The monthly amount was huge, was the equivalent of £60k ish nowadays.
One day a partner came down to the payroll office and asked if they could tell him into which bank account were they sending his monthly pay.
One day a partner came down to the payroll office and asked if they could tell him into which bank account were they sending his monthly pay.
As others say - hourly is the most transparent, you pay for work done, not made up figures... Also (assuming the company has plenty of business) there should be no incentive to try and charge more - because if they are not working for you, they are working for someone else, so still make the same amount of money...
We charge on an hourly basis and have done for 20+ years - I did have a client who queried this and wasn't happy the conversation went:
- he pointed out that a recent trip looking for business in the middle east - he hadn't charged his client for the hotel or airfare...
- I asked him - did you lose money on that trip? if not surely those costs were within your fee...
- he said, but I charge the same to the chap around the corner in London - we have a standard fee
- I pointed out that probably meant that proportionately the chap in London was subsidising the chap in the Middle East
I guess you can argue it any way - if you don't take his approach, then it would be trickier to do business with the middle east, but an hourly rate is more transparent...
We charge on an hourly basis and have done for 20+ years - I did have a client who queried this and wasn't happy the conversation went:
- he pointed out that a recent trip looking for business in the middle east - he hadn't charged his client for the hotel or airfare...
- I asked him - did you lose money on that trip? if not surely those costs were within your fee...
- he said, but I charge the same to the chap around the corner in London - we have a standard fee
- I pointed out that probably meant that proportionately the chap in London was subsidising the chap in the Middle East
I guess you can argue it any way - if you don't take his approach, then it would be trickier to do business with the middle east, but an hourly rate is more transparent...
A friend is currently going through a years-long divorce and is on his third solicitor. Previous one charged £15k and the new one is on legal aid basis but regardless is all hourly rates
I'm currently going through some conveyancing and standard security on property and that's all fixed fee, quoted upfront.
I'd see no issue with trying to nail down an estimate at the outset. At those fees I'd expect them to have dealt with similar matters before and be able to provide a rough order of magnitude.
I'm currently going through some conveyancing and standard security on property and that's all fixed fee, quoted upfront.
I'd see no issue with trying to nail down an estimate at the outset. At those fees I'd expect them to have dealt with similar matters before and be able to provide a rough order of magnitude.
As others have said, hourly rates are relatively transparent.
Things like conveyancing can be offered on a fixed fee because the nature of the work involved is largely consistent and predictable. In some cases the fixed fee will work out well for the firm. In others it will be a loss. Do enough of that sort of work, pitch the price right, and the firm will do ok in the long run.
Other types of work, especially where there is another firm involved representing a client with conflicting interests, are far less predictable. Many clients would like a one way bet: they want the firm to charge for what it does up to a capped amount, and thereafter keep working but stick to the cap. That isn’t a sound business proposition though where you are dealing with a large volume of unpredictable matters.
The short answer to the OP’s query is shop around. There will always be someone willing to do the job at a cheaper rate. You have to ask yourself though when do I get to the point at which I switch to paying a low rate for someone because they aren’t any good, and mainly attract work by undercutting the competition?
And, as the OP acknowledges, there is something to be said for paying a premium to work with someone who is both good at what they do and is enjoyable to work with. The latter ought to be a given, but it isn’t.
Things like conveyancing can be offered on a fixed fee because the nature of the work involved is largely consistent and predictable. In some cases the fixed fee will work out well for the firm. In others it will be a loss. Do enough of that sort of work, pitch the price right, and the firm will do ok in the long run.
Other types of work, especially where there is another firm involved representing a client with conflicting interests, are far less predictable. Many clients would like a one way bet: they want the firm to charge for what it does up to a capped amount, and thereafter keep working but stick to the cap. That isn’t a sound business proposition though where you are dealing with a large volume of unpredictable matters.
The short answer to the OP’s query is shop around. There will always be someone willing to do the job at a cheaper rate. You have to ask yourself though when do I get to the point at which I switch to paying a low rate for someone because they aren’t any good, and mainly attract work by undercutting the competition?
And, as the OP acknowledges, there is something to be said for paying a premium to work with someone who is both good at what they do and is enjoyable to work with. The latter ought to be a given, but it isn’t.
Some legal work lends itself to fixed fees, some doesn't.
We offer divorces fixed fee because the work required is very predictable.
Other work, such as disputes around children, is just too unpredictable. You might be able to resolve the matter with a simple letter. Or it might require mutliple court hearings, with experts, social services, Cafcass, barristers etc. So it might cost a few hundred quid or possibly many tens of thousands. If I say, well the average cost is £10k so that will be my fixed fee, how would you feel as a client if I sorted the problem in less than an hour?
Litigation is particularly difficult because the amount of work depends so much on the attitudes of the parties involved.
We offer divorces fixed fee because the work required is very predictable.
Other work, such as disputes around children, is just too unpredictable. You might be able to resolve the matter with a simple letter. Or it might require mutliple court hearings, with experts, social services, Cafcass, barristers etc. So it might cost a few hundred quid or possibly many tens of thousands. If I say, well the average cost is £10k so that will be my fixed fee, how would you feel as a client if I sorted the problem in less than an hour?
Litigation is particularly difficult because the amount of work depends so much on the attitudes of the parties involved.
Glassman said:
A friend has just instructed a legal firm in a civil matter. We were talking about fees, and the following was disclosed as an estimate:
Managing Partner - £450.00 plus VAT
Partner - £425.00 plus VAT
Senior Paralegal - £200.00 plus VAT
Associate - £350.00 plus VAT
Associate - £350.00 plus VAT
All this is PLUS disbursements (including a £2.00 pp credit check).
He was saying that he liked the person he was dealing with and thus chose this particular firm based on that likeability factor despite having a second estimate from another firm which was significantly cheaper (broadly £250.00 + VAT p/h).
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price? I remember when dealing with a trademark specialist and when it came to chargeable time on the phone, she would suddenly speak slower and take longer to think!! Her paralegal sent me a drafted letter and I spotted some errors and duly pointed them out; they tried charging me for 'alterations' to that letter!!
In the motor trade, fault diagnosis can be tricky and therefore understandably is charged at an hourly rate. But how does the customer know they're getting a full bang for their buck? Mechanics compete by lowering their hourly rate, but most jobs are known quantities. Do those jobs need to be pitched on hourly rate? I've just compared motor engineer rates to that of a legal professional but that wasn't the aim; just wanted to give examples.
I cost out a replacement windscreen on known factors. If I feel there may be an issue during that process, such as rust or paint issues, I will add a caveat accordingly (come to think of it, I should charge waiting time to one or two of my main dealer customers!). The solicitor's hourly rate has made me think: £450 + VAT, plus disbursements (oh and can we have the two-quid to see if you're good for you money?!).
Hourly rates: justified, or a way to maximise fees?
Those are actually what would be classed as reasonable hourly rates for lawyers from my recent experience. We've not long instructed a firm to work as co-council for some corporate litigation where the hourly rare for the Partners is knocking on £1000 per hour.Managing Partner - £450.00 plus VAT
Partner - £425.00 plus VAT
Senior Paralegal - £200.00 plus VAT
Associate - £350.00 plus VAT
Associate - £350.00 plus VAT
All this is PLUS disbursements (including a £2.00 pp credit check).
He was saying that he liked the person he was dealing with and thus chose this particular firm based on that likeability factor despite having a second estimate from another firm which was significantly cheaper (broadly £250.00 + VAT p/h).
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price? I remember when dealing with a trademark specialist and when it came to chargeable time on the phone, she would suddenly speak slower and take longer to think!! Her paralegal sent me a drafted letter and I spotted some errors and duly pointed them out; they tried charging me for 'alterations' to that letter!!
In the motor trade, fault diagnosis can be tricky and therefore understandably is charged at an hourly rate. But how does the customer know they're getting a full bang for their buck? Mechanics compete by lowering their hourly rate, but most jobs are known quantities. Do those jobs need to be pitched on hourly rate? I've just compared motor engineer rates to that of a legal professional but that wasn't the aim; just wanted to give examples.
I cost out a replacement windscreen on known factors. If I feel there may be an issue during that process, such as rust or paint issues, I will add a caveat accordingly (come to think of it, I should charge waiting time to one or two of my main dealer customers!). The solicitor's hourly rate has made me think: £450 + VAT, plus disbursements (oh and can we have the two-quid to see if you're good for you money?!).
Hourly rates: justified, or a way to maximise fees?
Mr Pointy said:
How is it "transparent" to charge 0.1 hours for a two minute phone call?
Hours being broken into blocks of 10 and charged as "part thereof" has been the industry norm for a while. I remember being charged for 6 minutes as our counsell had thought of us on his drive to the office haha! I should have really applied myself at university and got into the legal profession, they're the only people who have the ability to take the piss more than tradespeople and still make a great living!nuyorican said:
In a way, hourly rates are the most transparent way of pricing work. It will take as long as it takes and then you will be billed accordingly.
Well.... I used to work for an ad agency and when times were tight the artists were instructed that all time was chargeable. In other words, they had to declare 8 hours of actual client work a day. Naturally that's impossible so in practice, as account execs, our clients would get invoices far higher than expected, ring in to complain and we had to sort it out. The best one was an artist who declared an hour on his time sheet as 'Being welcomed back from holiday'.So charging by the hour can be a corruptible folly.
Simpo Two said:
Sy1441 said:
I should have really applied myself at university and got into the legal profession, they're the only people who have the ability to take the piss more than tradespeople and still make a great living!
Yes, but the downside is you'd spend your whole life arguing...!Amateurish said:
barryrs said:
Its not just the 2 minute call as it needs to be logged and invoiced.
Plus a written note of the call on the file.She expected my fee to be my time for drafting the letter only. Not the hours spent reading the two files to be in a position to actually know what to write.
As for hourly rates, yes it’s not necessarily known at the outset but it’s usual for a lawyer to provide an estimate of overall costs exposure at the outset.
Glassman said:
A friend has just instructed a legal firm in a civil matter.
<snip>
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price?
An awkward opponent can vastly increase the work involved in resolving seemingly straightforward matters…<snip>
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price?
LooneyTunes said:
Glassman said:
A friend has just instructed a legal firm in a civil matter.
<snip>
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price?
An awkward opponent can vastly increase the work involved in resolving seemingly straightforward matters…<snip>
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price?
Sy1441 said:
Glassman said:
A friend has just instructed a legal firm in a civil matter. We were talking about fees, and the following was disclosed as an estimate:
Managing Partner - £450.00 plus VAT
Partner - £425.00 plus VAT
Senior Paralegal - £200.00 plus VAT
Associate - £350.00 plus VAT
Associate - £350.00 plus VAT
All this is PLUS disbursements (including a £2.00 pp credit check).
He was saying that he liked the person he was dealing with and thus chose this particular firm based on that likeability factor despite having a second estimate from another firm which was significantly cheaper (broadly £250.00 + VAT p/h).
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price? I remember when dealing with a trademark specialist and when it came to chargeable time on the phone, she would suddenly speak slower and take longer to think!! Her paralegal sent me a drafted letter and I spotted some errors and duly pointed them out; they tried charging me for 'alterations' to that letter!!
In the motor trade, fault diagnosis can be tricky and therefore understandably is charged at an hourly rate. But how does the customer know they're getting a full bang for their buck? Mechanics compete by lowering their hourly rate, but most jobs are known quantities. Do those jobs need to be pitched on hourly rate? I've just compared motor engineer rates to that of a legal professional but that wasn't the aim; just wanted to give examples.
I cost out a replacement windscreen on known factors. If I feel there may be an issue during that process, such as rust or paint issues, I will add a caveat accordingly (come to think of it, I should charge waiting time to one or two of my main dealer customers!). The solicitor's hourly rate has made me think: £450 + VAT, plus disbursements (oh and can we have the two-quid to see if you're good for you money?!).
Hourly rates: justified, or a way to maximise fees?
Those are actually what would be classed as reasonable hourly rates for lawyers from my recent experience. We've not long instructed a firm to work as co-council for some corporate litigation where the hourly rare for the Partners is knocking on £1000 per hour.Managing Partner - £450.00 plus VAT
Partner - £425.00 plus VAT
Senior Paralegal - £200.00 plus VAT
Associate - £350.00 plus VAT
Associate - £350.00 plus VAT
All this is PLUS disbursements (including a £2.00 pp credit check).
He was saying that he liked the person he was dealing with and thus chose this particular firm based on that likeability factor despite having a second estimate from another firm which was significantly cheaper (broadly £250.00 + VAT p/h).
I respect that good professionals come at a price, and legal cases can be tricky to quantify in terms of how much time might be likely, but really? Is it that difficult to round up the hours and give a price? I remember when dealing with a trademark specialist and when it came to chargeable time on the phone, she would suddenly speak slower and take longer to think!! Her paralegal sent me a drafted letter and I spotted some errors and duly pointed them out; they tried charging me for 'alterations' to that letter!!
In the motor trade, fault diagnosis can be tricky and therefore understandably is charged at an hourly rate. But how does the customer know they're getting a full bang for their buck? Mechanics compete by lowering their hourly rate, but most jobs are known quantities. Do those jobs need to be pitched on hourly rate? I've just compared motor engineer rates to that of a legal professional but that wasn't the aim; just wanted to give examples.
I cost out a replacement windscreen on known factors. If I feel there may be an issue during that process, such as rust or paint issues, I will add a caveat accordingly (come to think of it, I should charge waiting time to one or two of my main dealer customers!). The solicitor's hourly rate has made me think: £450 + VAT, plus disbursements (oh and can we have the two-quid to see if you're good for you money?!).
Hourly rates: justified, or a way to maximise fees?
Gassing Station | Business | Top of Page | What's New | My Stuff