The high-fee culture that's hobbling British business
Another week, and yet another critical item in the press on the cost of obtaining corporate legal advice. And to be sure, it’s certainly a fairly open goal at which to aim. For while ‘fat cat’ lawyers may not attract quite as much popular opprobrium as ‘fat cat’ bankers, to many the distinction is largely one of degree.
The trouble is, there’s actually a downside to all this. A downside, what’s more, that affects a vast array of businesses, even those far from the orbit of the City and the upper echelons of British industry.
And it’s this: the perception of the high cost of corporate legal advice is damaging in itself—not to lawyers, but to corporate clients and would-be corporate clients.
Because that perception of high costs acts as a deterrent. So that when businesses ought to be taking legal advice, they’re not. With the inevitable result, of course, that things can all too easily go wrong.
Fanciful? Hardly. In fact, in many of the businesses that we’ve come across over the years, even quite senior executives have been discouraged from picking up the phone and speaking to a lawyer—thanks to worries that the fees-clock will start ticking, and that a significant expense exposure will consequently be triggered.
The result has been something of a ‘two track’ economy. On the one hand, there are the FTSE’s very largest organisations, where legal fees are seen as a tiny part of the cost of doing business. And on the other hand—well, there’s everyone else.
Yet, oddly enough, there’s a wind of change abroad. Partly due to the recession, and partly due to changed corporate procurement practices, businesses have at last been putting pressure on law firms to amend their pricing and charging structures.
But while this is to be welcomed, the result hasn’t always been what corporate clients may have envisaged.
For one thing, in order to maintain profit margins, it’s a fairly open secret that firms have been expanding the number of junior lawyers that they allocate to client work. The good news: you’re paying less in fees. The bad news? The calibre of the lawyer actually working for you often reflects that reduction in fee.
Is there an alternative?
Here at The Legal Director, we certainly like to think so. Which is why, when we work for you, your costs are fixed and known in advance.
How does it work? Two ways:
- First, a fixed-fee retainer. Many businesses—especially fast-growing businesses, or those in a fast-changing environment—need legal advice, but don’t always know in advance what sort of legal advice they’ll actually need. So we’ll assess the likely number of days of work per month, and quote a fixed fee for that amount of work—whatever it may turn out to be. The power of this approach is that there is never a disincentive or deterrent to picking up the phone and obtaining legal advice. The cost is already priced-in, and known.
- Second, working on a project-by-project basis. When the volume of legal work varies substantially, perhaps with events that are themselves variable (such as buying a new business, building a new factory, or some other major development), then we’ll quote a fixed fee for that work. Which subsequently then won’t change.
Disbursements to third parties are extra, but they are the only thing that is extra. Everything else is taken care of in the original quoted fixed fee.
The client perspective
Clients, needless to say, like our approach. They tell us that it gives them certainty of pricing, and certainty as to what they’ll pay. What’s more, they can forecast their legal costs for a full budgetary year, knowing that there won’t be a variance.
Better still, they know that the money that they’re paying is getting them guaranteed access to seasoned, veteran corporate lawyers—and an ease of access that’s akin to popping down the corridor to bounce an idea off a trusted colleague.
Simply put, at The Legal Director, we specialise in providing clear-cut legal advice in business-friendly language. Providing it affordably, to suit a business’s own needs and workloads. And providing it in a range of offerings stretching from a fixed-fee monthly retainer starting at £100 + VAT for telephone advice, to your own part-time legal director, working alongside your own board of directors.
To find out more, get in touch by calling Kirstie Penk on 01709 641 711.
Posted Tuesday, November 11th, 2014 by Warren RylandTweet
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