The Price of Justice

WORDS: Brendan Nyst- Dispute Resolution & Litigation, Wills & Estates, Defamation, Nyst Legal- www.nystlegal.com.au PHOTOGRAPHY Supplied

Time billing, fixed fees, no win no fee, value billing — when it comes to legal costs, the fee structure matters less than most people think. What really determines value is something far simpler.

What sort of fee arrangement will best ensure maximum value for my legal spend? 

 This is a difficult question to confidently answer, simply because most legal work – particularly in the litigation field – is contingent upon a broad range of vicissitudes that potentially alter the amount of work, time and therefore expense required to do the job properly.

Broadly speaking, there are two main ways in which lawyers charge for their services – time billing, and fixed fee billing.

The latter is more common in the case of transactional commercial work, such as a drafting a contract or advising on a commercial lease. In such circumstances, an experienced lawyer will have a relatively good idea of the metes and bounds of the job from the get-go, and may therefore be willing to quote a fixed fee.

However, with litigation, lawyers have to be very careful, because all court actions, from criminal prosecutions to civil and commercial disputes, have a nasty potential to take unpredictable turns that substantially alter the workload. It’s virtually impossible for any lawyer to predict with certainty how litigation is going to play out, so fixing the legal spend in advance is a dangerous and potentially expensive gamble.

The more unpredictable the task, the more likely the lawyer will insist on time billing. Certainly, there are always exceptions, and I’ve heard tell of lawyers running large litigation for a fixed fee. But such tales rarely end well. Most become horror stories in which either the client winds up feeling shortchanged, or the lawyers sink themselves in unanticipated cost and outlay.

In some cases, lawyers will conduct litigation ‘pro bono publico’ –  ‘for the public good’ –  without any charge at all. This is done for altruistic reasons, where the lawyer perceives a compelling public need to assist an impoverished litigant. In such cases, the lawyer gets nothing, win, lose or draw.

 On the other hand, “no win, no fee” cases – which are nowadays commonplace in personal injury litigation – proceed on the basis that the lawyer will charge nothing unless they succeed in getting an award of damages for their client, in which case they get paid their fee from that award. Perhaps unsurprisingly, lawyers rarely risk working on  such a basis unless ultimate success is assured. For example, in personal injury cases where the insurer has already admitted liability, and the only contest is about how big the damages bill will be, “no win, no fee” lawyers are happy to carry the case. But where liability is challenged, they are much more circumspect.

Another less traditional form of billing is what’s called ‘value billing’. Rather than paying strictly for the lawyer’s time, the client is charged for the outcome achieved. In large major commercial transactions or complex stakeholder disputes, corporate clients are sometimes happy to pay a premium for the right result, regardless of what went into it. But that’s a high-stakes game that can be costly on either sides of the ledger.

In my view, the best way to ensure value for your legal spend is to simply find a lawyer you trust to do precisely what they are ethically and professionally required to do – work as hard as they can to achieve for you the very best outcome they can.  There’s an overwhelming preponderance of them out there.

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