Tuesday 5 December 2017

Is Jersey Law a Gold Mine?



















There is an expression that “the law is an ass”, but reading the recent JEP front page article, it would seem more that the law is a gold mine!

The report says that:

“ISLANDERS need far greater protection from lawyers charging extortionate fees, according to a legal costs expert who discovered that a Jersey advocate was charging £1,015 an hour.”

The advocate in question is not mentioned by name, which is as it should be, as it would be a breach of privacy were he or she to be named, but they seem remarkably reticent in coming forward to say who they are. I imagine there will be quote a lot of speculation, especially among law firms, as to who it might be.

The JEP also has this to note:

“The JEP has been shown a copy of the bill in question, which clearly shows that the hourly figure charged was £1,015.16 – or £17 a minute. “

It also reports that:

“Neville Benbow, the chief executive of the Jersey Law Society, said that clients could ask for the charges to be examined by an independent review board, but that third parties did not need to be engaged for a review to take place. He added that suggestions that law firms charged more than £1,000 an hour was ‘totally incorrect’.”

Clearly, Mr Benbow needs to find out the facts before he makes statements using phrases such as “totally incorrect”.

The JEP actually shows part of the invoice which confirms that their story is correct. It really does not do much for the credibility the Jersey Law Society much good if their Chief Executive makes statements which are soundly contradicted by documented evidence.

It is worth looking further afield. The Guardian in February 2016 noted that:

“Partners at top City law firms are charging clients more than £1,000 an hour, according to a Conservative thinktank which condemns fee rises for restricting access to justice. ‘The hourly rates for a partner at a top London firm now exceed £1,000 – the highest level ever recorded,’ the CPS [Centre for Policy Studies] report states. ‘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.’

It goes on to add that: “Those seeking to comply with UK legal procedure are forced to pay extremely high costs to do so – high enough to restrict access to law, particularly for smaller business clients for whom bills can be prohibitive.”

It comes perhaps as no surprise that Jim Diamond is the author of the CPS report. What is interesting, but not reported are some of the explanations he considers:

“The primary cause of the escalation in rates can be attributed to the increasing complexity of the UK tax and legal systems. The Hong Kong tax code, for example, widely considered the most effective in the world, is 276 pages long. The British tax code, which has more than trebled in size since 1997, is currently over 22,000 pages long.”

Then he considers transparency over costs:

“The lack of transparency on legal costs allows top law firms virtual control over their prices. Transparent pricing is vital for a marketplace to function fairly and efficiently. Yet it does not exist within the market for UK commercial law. Average hourly rates for commercial legal services are not published online.”

“Transparent pricing is vital for a marketplace to function fairly and efficiently. Yet it does not exist within the market for top commercial law firms. Average hourly rates for law firms are not published online (although smaller English legal practices do often publish their hourly rates).”

And lastly, he suggests that the basis of hourly costs is a system which rewards inefficiency:

“Hourly rates are inefficient, opaque and encourage inefficiency. Other top corporate industry charges by results, not hour.”

The report also shows that hourly rates for partners at leading commercial law firms have risen in real terms from a high point in £598 in 2003 to at least £775 an hour in 2016, with with some lawyers – the real outliers - charging £1,000 an hour

And this brings us to the nub of the issue. We have no idea what rates different legal practices charge, and without that, we cannot see what the average charge is, or whether the charges are skewed by some very high charging lawyers, and a median might be a better measure of spread.

That is something which is the case both in London, as in the 2016 report, and in the recent Jersey report. The lack of transparency means we do not know what the usual fee that you and I might expect to pay, or for that matter if any matters, such as making a will, come in at fixed costs.

The Jersey Law Society itself says:

“In Jersey, there is no fee schedule for legal services, and the Law Society of Jersey has no authority to control what lawyers charge.”

From Neil Benbow’s rather ill-advised remarks – it is always better not to make statements without checking the evidence giving rise to a news story – it is certainly likely that the rate in question is something of an outlier since he was not aware of it.

I’ve made a cursory glance at different websites, and some are more transparent that others. Some do not provide charge out rates, while others do.

Le Gallais and Luce, for example has hourly rates:

Partner/Consultant: £375.00 (non Court), £400.00 (Court)
Senior Associate £310.00 (non Court) £320.00 (Court)
Associate £275.00 (non Court) £300.00 (Court)
Legal Assistant £180.00 (non Court) £230.00 (Court)
Secretary £125.00 (non Court)

That is a far cry from over £1,000 an hour!

As a different example, Mourant Ozannes doesn’t have any schedules of costs but states that:

“At Mourant Ozannes we know how important it is to keep the costs of moving under control. We offer the opportunity for clients to meet with us free of charge for an initial consultation to discuss what is involved in the transaction and to provide a preliminary indication as to costs and things to look out for. We also provide a draft statement at the outset of the transaction clearly setting out these costs in order to ensure that there are no nasty shocks along the way. This is just one example of our commitment to keeping clients fully appraised at all times, whether in relation to fees or the progress of the transaction generally.”

It is certainly clear that the figure of £1,015 an hour, while it makes a good story – lawyers are not the most beloved of professionals, and Dante puts a good many in Hell – and invites anger – is actually rather meaningless, as it is so devoid of context. Is it a wild outlier or close to the median? In the absence of more facts, there is no way to tell.

It just goes to show that it is not wise to take headlines at face value.

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