The legal services market is changing. Here’s how to benefit when engaging your lawyer.
At Pragma Lawyers, we opened our doors in 2014 to disrupt the traditional business model of law firms charging in 6-minute blocks with no motivation to reduce billable hours. We saw an opportunity to create a swifter, sharper, more nimble law firm that resolves matters fast to reduce costs. It seems we were onto something. Today, Pragma Lawyers has grown to over 40 staff with an astounding success rate in dispute resolution and litigation.
To celebrate a decade in business, we are giving back to WA businesses with our 10 tips for protecting your business when legal issues arise.
1. Resolve disputes in a timely a manner
If you are involved in a dispute, it is nearly always more cost-effective to resolve a dispute before a court proceeding commences. If this isn’t possible, there are other intervals that impact the costs you will incur. For example, you can significantly reduce costs by taking a matter to mediation before other formal steps of the litigation process, particularly discovery.
Discovery, also known as ‘disclosure’, is the exchange of all documents in a party’s possession, custody or power which are relevant to the issues in dispute in a particular court proceeding. Each party is entitled to know of and inspect each document that the other party has. The more documents there are, the longer the process will take and the more expensive it will be.
The discovery process was described in an Australian Law Reform Commission Report as:
- “often the single largest cost in any corporate litigation”
- “high and often disproportionate”
- “may inhibit access to justice”
If you think there is scope for your matter to be resolved at a mediation, then consider requesting for your matter to be programmed to early mediation for a faster and more cost-effective resolution. And, for further savings, consider requesting a fixed fee arrangement for the mediation process, as referred to above.
Things you can ask your lawyer:
- What strategy can we put in place to try and resolve this quickly and at the lowest cost?
2. Be pragmatic and proportionate
Your lawyer can reduce the cost to you by being pragmatic and proportionate in their legal strategies. By the term pragmatic, we mean being practical and making concessions where it is in your overall interests to do so. By proportionate we mean only taking a step on your behalf which is in proportion to the matter at stake.
To put this another way, when a lawyer is negotiating on your behalf, they should be prepared to make concessions if failing to do so would cost you more in legal fees than the concession allows you.
For example:
- There is no need for your lawyer to negotiate an extra $10,000 payment to you in a negotiated settlement sum if it is going to cost you $15,000 in legal fees and extra weeks to do so
- There is no point in your lawyer asserting that you ought not be responsible to pay management fees under a lease when those fees will be less than the extra legal fees you will incur in adopting that position
Insist that your lawyer takes a common sense and practical approach to negotiating and save incurring legal fees.
Things you can ask your lawyer:
- What will be the extra legal cost in taking that step or position?
- Is the legal cost associated in taking that position in my interests, given what's at stake?
- Will the legal fees I incur in progressing this way be proportionate to what I could gain or lose?
3. Get an expert
There are many different areas of practice within the legal profession. It is not practical for one lawyer to be across the ever-changing developments in all the different specialised areas of law.
By engaging an expert who specialises in the area of your matter, it will likely result in:
- Services being provided in a shorter time frame and less cost
- Higher quality of service
In Western Australia, there are rules around lawyers presenting themselves as “experts” or “specialists” to ensure that lawyers do not engage in misleading advertising.
The term ‘specialist’ predominately connotes a lawyer who has undertaken a specialist accreditation program, although this is not mandatory. The Law Society of Western Australia (Law Society) currently only offers a specialist accreditation program in family law (although other institutions around Australia offer others). To be eligible to participate in such an accreditation program, a lawyer must have practised for at least five years and be able to demonstrate substantial involvement (at least 25%) in the area of the accreditation for the three years prior to application. In circumstances where a lawyer has not undertaken a specialist accreditation program but has advertised as being a specialist, the Law Society will take into consideration the same criteria set out above in determining whether the advertisement was false or misleading.
The term ‘expert’ in advertisements may be understood by the public as implying that the lawyer has a particular knowledge, skill, training or experience in an area of law above that of other practitioners, even accredited specialists. In circumstances where a lawyer has held themselves out to be an expert in advertising their services, the Law Society will take into consideration a number of factors including the same criteria set out above, and a similar criteria used by the courts to satisfy themselves that a witness is a qualified expert, such as whether the lawyer “has some particular knowledge, skill, training or experience in that area of law and would properly and reasonably be accepted by his or her peers as being an expert in that area of law”.
While the hourly rate of a lawyer who holds themselves out to be an expert in a particular area may be higher than another lawyer, their knowledge, skill and experience will enable them to provide you with the services and outcome you require in a faster time frame, ensuring that the amount you pay is lower.
Things you can ask your lawyer:
- How much experience do you have in this area of law?
- Have you dealt with a matter like this before? What was the outcome?
4. A pinch of prevention is worth a pound of cure
This phrase was used by Western Australia’s former Chief Justice to emphasise the point that documenting a transaction properly from the outset will cost your business a fraction of the cost associated in resolving a dispute later on.
Take for example the scenario of starting a new business with a new business partner. Adopting the adage “a pinch of prevention is worth a pound of cure” would mean that you would prepare a partnership or shareholders’ agreement which acts as a ‘rule book’ for the future to govern the parties’ rights when they want to introduce more capital, make decisions, hold meetings or sell their interest in the business. Without this in place, if you later disagree on a business decision which could have easily been documented at the outset, it will almost inevitably be costly to resolve once both parties engage legal representation.
The financial cost in documenting the transaction at the outset will be much less than the financial cost (as well as reputational cost) of being involved in a dispute later.
5. Avoid advice in writing if you wish to reduce expense
Asking a lawyer to put their advice into writing is a time-consuming step which is likely to be more expensive. In some rare cases, it may be needed and unavoidable, particularly where your matter is complex and verbal advice is likely to be confusing or forgotten.
However, there is usually no need to be provided with detailed advice in writing that cites relevant sections of legislation or leading cases. You just want the answer.
In these situations, it is often better to:
- Engage your lawyer
- Allow them to consider the issue, including reviewing any relevant documents you may have, legislation and case law
- Request that they meet with you to receive their advice. This will also enable you to ask any questions or clarify any points about the advice easily
A prudent lawyer will most likely keep a written note of the advice they have provided you, and sometimes forward it to you for your records, in a more simplified format. You can also do this, and send them an email afterwards confirming the substance of their advice.
This will almost always be cheaper than asking your lawyer to provide you with written advice. When a lawyer puts their advice in writing they are mindful that it may be showed to third parties or even other lawyers. They will need to take time to use precise legal language to provide comprehensive and clear advice that is easily understood, as many principles of law can be confusing. They will wish to distil their opinion in the most succinct way possible. This takes time.
This extra time is unlikely translated into any extra value to you, but will be an extra cost. It’s so much easier and cost-effective for your lawyer to communicate freely and openly in person or over the phone.
Things you can ask your lawyer:
- Can you please consider these documents and then can we arrange a time to meet and discuss?
6. Ask your lawyer to fix their fee
The most obvious way to reduce how much you pay is by asking your lawyer to provide you with a competitive fixed fee for their services. Lawyers, particularly in litigation, rarely offer this. However, “more and more clients, both large and small, are starting to proactively ask for the cost predictability, certainty and transparency which [alternative fee arrangements, like fixing fees] provide”.
Lawyers normally charge their clients in 6 minute blocks of time known as “units”. Each hour is comprised of 10 units. The more units your lawyer spends working for you, the more they are entitled to charge.
The widely acknowledged difficulties with this system are:
- Your lawyer has no incentive to complete the work for you in the shortest period of time
- Your lawyer has no incentive to adopt a strategy to achieve your goals in the shortest time possible
- You feel discouraged from contacting your lawyer (because each phone call and meeting is costing you money)
- It is difficult for clients to understand how quickly their legal fees are escalating – resulting in “bill shock”
A fixed fee agreement with your lawyer avoids these eventualities. It also offers you:
- Greater transparency and budget planning. You know what services will be provided and at what cost
- Increased efficiency. Your lawyer is incentivised to work in an efficient and effective manner whilst being ethically obligated to act diligently and professionally
- Increased communication. You can freely call or meet your lawyer to discuss your concerns
There is absolutely no harm in asking your lawyer whether they will fix their fees for the scope of work. In fact, this is becoming an increasingly common request. Many lawyers are amenable to alternative fee arrangements. However, they’re probably unlikely to suggest them. So it pays to ask.
Many modern law firms believe the new way of providing exceptional client service, in addition to maintaining a profitable law practice, is to open themselves to accepting alternative fee arrangements, however “by far the most difficult [challenge for law firms] is negotiating prices with clients, cited as challenging by 73% of top-tier firms and 78% of mid-tier firms".
While it’s common for lawyers to be amenable to a fixed fee in conveyancing matters (like engaging a lawyer to prepare a lease or an agreement) it’s less common in litigious matters. This is due to the inherent uncertainty that can arise in a legal proceeding. However, some lawyers are still willing to fix fees for certain stages of a legal proceeding such as mediation or discovery.
Please do not confuse fixing fees with providing an estimate. Many law firms will and, in most cases, are obligated to provide you with a legal cost “estimate” before commencing work for you. Estimates are not quotes and can be subject to increase.
Services which could typically be offered for a fixed fee include:
- Drafting letters of demand
- Drafting court documents to initiate legal proceedings
- Progressing a matter to early mediation
- In commercial matters, the drafting of particular documents or undertaking a settlement
- Drafting documents like leases or commercial agreements
Things you can ask your lawyer:
- Are you willing to fix your fees for this scope of work?
- Are there any other portions of this matter that we can agree will be completed for a fixed fee?
- Are there any other alternative fee arrangements we can negotiate?
7. The fewer the lawyers, the lower the costs
If there are several lawyers within the firm working on your matter at the same time, you will be charged time for each of them. A simple way to reduce your legal bill is to ensure your law firm only utilises a core team.
The number of lawyers is a question of degree. In our view, it is rare for there to be more than two lawyers needed on a straight-forward commercial matter. Often, firms will have a senior lawyer (such as a Partner or Director) overseeing the matter, and a junior lawyer who completes a large portion of the work, supervised by the Partner or Director. A junior lawyer will have a lower hourly rate than the senior lawyer, and this can assist in keeping legal costs to a minimum while ensuring you are still being provided with the skill and oversight of a senior lawyer.
Larger teams of fee-earners can produce duplicate costs, such as each of them charging time to read the same email and consider the same documents.
If your matter is litigious, or involves a large transaction, having additional fee-earners working on your matter may be unavoidable. The scale or urgency of the matter may dictate that a larger legal team is required to progress the matter effectively and efficiently.
When engaging a firm, consider seeking clarification as to who the fee-earners are, and what their hourly rates will be. Insist that should any additional fee-earners be required, you should be informed of their hourly rates and the reason for their input.
Things you can ask your lawyer:
- Who will work on my matter, and what are their hourly rates?
- Will a junior lawyer with a lower hourly rate assist in this matter?
- How many lawyers do you consider are required?
- Can we please keep the number of lawyers working on my matters to as few as possible?
8. Ensure your lawyer has a competitive hourly rate
If you are engaging a lawyer on a time-billed basis (6 minute billable units), make sure that you understand what that hourly rate is. Sometimes, the higher a lawyer’s hourly rate is, the more experienced they are. Hourly rates can also vary between the location of the lawyer (whether in the city, the suburbs or the country), the size of the firm and the area of law. You’ll want a lawyer who charges a competitive rate but also has the requisite skill and experience to act for you effectively.
A great way to lower your legal bill is by knowing the “Scale of Costs” (Scales) and how the rate and experience of a potential lawyer you wish to engage compares to it.
What are the scales?
The Scales regulate the remuneration a lawyer may receive for providing services to clients in circumstances where there is no written agreement. With most lawyers operating by a retainer, it may appear that the Scales are of no relevance. However this is not the case. Pursuant to the legislation which governs the provision of legal services in Western Australia, a lawyer must give their client a costs disclosure where it is likely the legal costs will be over $1,500.
The Scales provide you with an opportunity to compare any quote you have received against a matrix which has been determined by an independent set of lawyers. If your lawyer is proposing higher charges than The Scales, you can request substantiation for the higher fees before entering into a written agreement with them.
The scales and taxation
The Scales also play an important role when cost issues arise in a dispute, be that between parties (party / party costs) or between a client and their lawyer. If a client enters into a written agreement but is unhappy with the services provided, they may apply to have their lawyer’s invoices taxed. Taxation is the process of examining and, if necessary, reducing the bill of costs of a lawyer by an officer of the court appointed for that purpose.
Current WA Scales
Currently in Western Australia, the Scale rates (inclusive of GST) are as follows:
- Senior Practitioner (being permitted to practice for 5 or more years): $506 per hour
- Junior Practitioner (being permitted to practice for less than 5 years): $374 per hour
- Restricted Practitioner: $319 per hour
- Clerk/Paralegal: $242 per hour
- Counsel: $473 per hour or $4,730 per day
- Senior Counsel (as recognised by the High Court or the Supreme Court): $693 per hour or $6,930 per day
Things you can ask your lawyer:
- Is your hourly rate more or less than the scale?
- If higher than the scale, how is your rate justified?
- Can we negotiate that part or all of this matter will be charged at the scale rate or below?
9. Ask your lawyer to use their own precedent documents
When you engage a lawyer to assist you in a transaction or to resolve a dispute, there will almost inevitably be a requirement to document the agreement or transaction being concluded. In that circumstance and in our view, the party whose lawyer is engaged to prepare the documentation in the first instance has an advantage.
This is for at least the following reasons:
- Lawyers know their own suite of precedent documents (as opposed to lawyers knowing the documents of their colleagues at other firms)
- Psychologically, it is advantageous for your lawyer to prepare the first iteration of a document where there is likely to be further negotiation. That is because your lawyer will draft the document in a manner which is inevitably skewed to your advantage in its drafting, ultimately requiring any counterparty to negotiate back from this position
- It is in our experience invariably cheaper to engage a lawyer to prepare a first cut of a document than to engage a lawyer to review another lawyer’s document for the reasons expressed above
10. Know your rights
Knowing your rights before entering into an agreement of any kind with a lawyer can save you time and money. And it always pays to get a second opinion. A good summation of your rights is provided by the Legal Practice Board of Western Australia available here.
Things you can ask your lawyer:
- Can I negotiate your fees?
- Can you please provide me with an itemised invoice?
- Can I question the invoice you have issued to me?
- Can you tell me when you expect that this matter will cost more than originally anticipated?
- Can you provide me with a progress update on my matter, including the fees incurred?
- What can I do if I dispute your bill?
- What do I do if I have a complaint about your bill or your services?
If you have any questions about the information provided, you can get in touch with the team at Pragma Lawyers by emailing hello@pragma.law or call (08) 6188 3340.
