In a new report The Price of Law, published by the Centre for Policy Studies on Friday 5 February, leading legal costs expert Jim Diamond argues that the hourly rates charged by top London corporate law firms are so high that they risk restricting access to justice.
Hourly rates for a partner at a top London firm can now exceed £1,000 – the highest level ever recorded. In nominal terms the top City of London law firms charge almost the same amount per hour as their American legal cousins except that the UK firms charge their clients in sterling.
Furthermore the report warns that charging by the hour rather than by the result – as is commonplace in other top corporate industry – is highly inefficient and a potential drain on productivity.
The report has received widespread coverage in the national and legal press:
The report outlines three main causes for the rapid increase in hourly rates for top law corporate law firms:
Jim Diamond explains:
“The top commercial law firms in the City of London are regarded as some of the best legal practices in the world, and are some of the most expensive providers of legal services. However they are also some of the least transparent, particularly in terms of pricing: while they do publish yearly statistics on the performance of their firm, from turnover to profit per partners, they do not publish information on the hourly rates charged to their clients.
Steps should be taken to ensure fair practice in legal procedure. The “billable hour” is an outdated and unsustainable billing method for legal services to continue. Alternative billing methods must be considered and legal procedure must be simplified to ensure that the legal market place thrives in the long term, and the price of law is not punitive.”
Lord Justice Jackson has now put forward proposals for moving to a fixed fee basis for all litigation work, suggesting that fees are capped, stating last week that:
“Remuneration on a time basis rewards inefficiency. Unrestrained costs shifting drives parties to leave no stone unturned: the more costs mount up, the more determined each party becomes to ensure that the other party pays them. The result is inevitable – a civil justice system which is exorbitantly expensive.”
The Lord Chancellor should therefore give full consideration to these proposals in order to ensure that the legal market place thrives in the long term, and that the price of law is not punitive.
Click here to read the full report.