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28 May, 2007  
Into the briar patch, again

Bright new “consumer protection” and “fee disclosure” provisions as part of the national model laws for the legal profession ensure that, once more, Christmas has come early for lawyers

imageLawyers, an economist would say, sell “credence” services. The value (of the lawyers or the services or both) is difficult or impossible for the customer to ascertain, both before and after the event.

The only way to set a fair fee for legal services is for experts, once the job is done, to decide what value the lawyers added. All attempts to define, prior to that, what the “legal services” will be, or what the client should pay for them, are of no use except for routine “commodity” transactions. Since that market is competitive, most lawyers keep as far away from it as possible.

Even after the job is done, there are still problems. Consider the quintessential lawyering activity – litigation. As Alfred Philips writes in his book Professional Ethics and Practice for Scottish Solicitors:

“In litigation, the outcome is in a sense imposed. Its relationship to the quality of the performances which have preceded it is certainly complex, if not obscure.”

Most law firm litigation partners have had the experience of sending off the office dummy (who might have been the imageonly lawyer available at the time) to appear on some sure fire loser bit of litigation, only to see the dummy come back from court having won it.

Professor Carl Bogus (pic), of Indiana University, wrote in 1994:

“Forty years ago, legal billing was an art. A billing partner would consider the amount of work that was done for the client, the results obtained, the value of those results to the client, and the client’s ability to pay… Lawyers sometimes also quietly applied a Robin Hood factor: wealthy clients were charged more than those of less means, scoundrels more than the worthy. Fees were not calculated objectively – not truly calculated at all – but rather were the product of professional judgment, and the typical bill stated a single, round figure with no more explanation than, ‘For Professional Services Rendered’.”

Back in those days the fee calculation process took place inside the law firm. Nowadays it is probably necessary that the expert be “independent”, but the process should still be the same. It worked. It was ethical. Greed was not regarded as good. What senior counsel Bret Walker has described as the “vulgar equation of size and fee levels with intellectual excellence” did not exist.

The litigation lawyers knew that the only thing the property lawyers did was to fill in the blanks in conveyancing forms, even though the conveyancers’ fees dwarfed those of the litigators. Admittedly, the conveyancing monopoly, and lack of overcrowding in the profession, coupled with outrageously high prescribed “minimum” conveyancing fees, underpinned the honest assessment of fees for all the other lawyering, but it did show how an ethical process of fee assessment could work.

The legal profession has now cleverly shifted the “assessment of fees” goalposts from the end of the lawyer client relationship to the beginning. The emphasis is on “controlling” lawyers’ fees and “protecting” clients by “onerous costs agreements” (running to many pages) and complex “disclosure requirements”.

Who writes the “costs agreements”? The lawyers do. Who does the disclosure? They do. Who prescribed this method of “protecting” clients as the best way to go? They did. Who fell for it? Everyone else.

imageWhen Brer Rabbit eventually got caught by Brer Fox, Brer Fox said to him:

”’Maybe I should roast you over a fire and eat you … No, that’s too much trouble. Maybe I’ll hang you instead’.

‘Roast me! Hang me! Do whatever you please,’ said Brer Rabbit. ‘Only please, Brer Fox, please don’t throw me into the briar patch’.”

Brer Rabbit had been born and bred in a briar patch. Briar patches would not constrain him. He could run through them like they weren’t there. The same goes for lawyers’ convoluted “costs agreements and disclosure” processes.

A few days ago the lawyer propaganda machine was on full throttle:

“New laws will force lawyers to set out their fees in detail. Recent changes to the Legal Profession Act 2004 cement onerous costs disclosure obligations for lawyers, designed to prevent nasty surprises for clients.”

Brer Rabbit (aka Jeff Dunlevy, the president of the Law Society of NSW) said, “The new laws are good for consumers.”

He also mentioned the small matter of “rolling disclosure”. I think this means that every time a Brer Rabbit finds a new “fee generating” hole in the briar patch, he must tell Brer Fox about it.

imageKate Strahan (pic), a legal costs consultant with NSW company Litigation Funding Specialists, said that once a client questions a bill, it goes to the costs assessor, and that whether a client has been overcharged or not “depends on the solicitor-client agreement”. That probably means that if the costs agreement says overcharging is not overcharging, it isn’t.

The Legal Profession Act also creates another interesting concept: the “sophisticated client”. Under the legislation, they don’t need as much “protection”. These are clients who, for example, have tangled with lawyers before, and know how cunning they can be.

But wait a moment. Brer Fox had tangled with Brer Rabbit before, and he was fooled again.

Sometimes lawyer unions tell the truth despite themselves. When the 2004 Legal Profession Act came into force the NSW lawyer union magazine the Law Society Journal ran an article on the new costs agreement and disclosure regime by a costs expert. It began:

“Christmas comes but once a year and this year (well, 21 December 2004), it brought a new Legal Profession Act 2004.”

For Queensland lawyers Christmas has come early this year. Their new Legal Profession Act was minted by the Queensland Parliament last week. The AG’s media release says:

“The new provisions on legal costs would provide greater consumer protection. Important safeguards include stricter disclosure requirements…” Etc, etc.

Into the briar patch for those pesky lawyers. Again.