Bailiff: “Lawyers should drop hourly rate charges”

Monday 07 September 2015

Lawyers have been told they should stop calculating fees based on an hourly rate by the Island’s chief judge.

In his first speech at the Assise d'Héritage – a ceremonial court event – since taking over the role of Bailiff, William Bailhache said this morning that the business model behind basing fees on hourly rates “must surely fail”, and that the end of the system “is in the interests of the public and the profession”.

He says that while most firms have moved on from hourly rate systems, some have not, and he has used the occasion to call on the profession to reduce the costs of legal services.

Mr Bailhache also appeared to back the current system of legal aid, under which Advocates have to give their time free of charge to defend people in court for their first 15 years after qualifying. He said that some features of the scheme would be kept under review, but added: “I hope it will not be lost”.

But his main focus was on the question of charges for legal services.

Mr Bailhache said: “From a business perspective, it is necessary to know how much one should charge to ensure that the business makes a profit and does not head for the bankruptcy court. On the other hand, the value of the job to the client does not normally depend upon the number of hours which have been spent by the lawyer and his employees on the job in question.

“That is so obvious, when one thinks about it, that it is perhaps surprising that difficulties have not arisen earlier. Charging by reference to an hourly rate alone ultimately will produce a business model which must surely fail, because it is also inefficient – the longer you take on a job, the more you can charge for it. How much worse does it not become when the more employees you have working on the same job at the same time, the more the fee increases?

“In the oath of office which all advocates have just taken appear the words ‘vous vous contenterez de gages et salaires raisonnables’.

“To my mind, that means – and has always meant – ensuring that the bill delivered is proportionate to the value of the job to the client, which of course carries the implication that the lower value jobs require to be done not only professionally but efficiently. If that business model can be adopted, then not only has the right service been performed, but in the context of a domestic legal service, particularly in family and criminal matters, the risks of damage to the reputation of lawyers and intervention in legal practice business are much reduced

“Most legal firms adopt this approach already. Regrettably, some do not. The challenge for the Jersey Law Society, because it is essentially for the Law Society at least in the first instance, is how to address this position sensitively but firmly, and it is in the interests of the public and the profession as a whole that it does so.

“I hope these remarks will set up a sensible debate in the profession about the appropriate use of rates, the need to focus on the value of the job to the client and the need to use the growing number of lawyers reflected in genuine price competition.“