Family Law and Pricing for Value
The Family Law system is a hot topic in Australia at the moment, with even suggestions a royal commission is needed to address the failings. It is also a practice area which is particularly vulnerable to disruption by AI and alternative service offerings as consumers look for more cost effective ways to resolve their personal disputes. The winner of the 2018 ALPMA Lexis/Nexis Thought Leadership Award was Adieu Legal - software for use by lawyers, financial advisors, accountants, mediators and clients (i.e. non-lawyers) to mediate a settlement utilising technology to facilitate the process. It appears lawyers (from a panel), will be involved in the finalisation of the settlement. There are numerous similar offerings (some with no lawyers involvement at all) on offer in the USA.
One of the stresses of a family law dispute is the legal costs. Too often, at the end of the dispute, the legal costs outweigh the benefits, and with the benefit of hindsight the parties can see all the reasons they should have resolved matters earlier. Hourly billing, where the price is only determined at the end, is the cause of this regret. When the client knows the price upfront, they are an informed purchaser, and able to take the legal fees into account in decisions about resolving their dispute.
In late 2017, Judge Robert Benjamin, in a widely reported decision criticising the level of legal fees charged by the lawyers for both parties in a fiercely contested dispute stated:
“Whether this win at all costs, concede little or nothing, chase every rabbit down every hole and hang the consequences approach to family law litigation is a reflection of a Sydney-based culture by some or many litigants or whether it is an approach by some legal practitioners or a combination of both, I do not know.”
Yet, too many lawyers are happy to roll out myths as the reason they cannot price upfront. Classic myths and the myth buster answers are:
The Legal Profession Law requires me to keep time records.
There is no requirement under either the Legal Profession Act or the Legal Profession Uniform Law requiring lawyers to maintain time records - or to charge by time. There is an onus to charge fees which are fair, reasonable, and where the Uniform Law applies, proportionate. But again, this does not translate into a requirement to either charge by time or record time.
In fact, the Uniform Law provides that a fee agreed upfront with a client is prima facie fair and reasonable.
The Legal Profession Law requires me to give an itemised bill and therefore I can’t charge an agreed fee.
Yes, the LPA and LPUL require you to provide itemised bills, but this does not mean that you need to set out the time you spend on particular tasks.
In Victoria, both the Supreme Court Costs Court and the Legal Services Commissioner have said that, where the lawyer is charging an agreed fee, an itemised bill will simply set out the specific work which was undertaken, but again, there is no requirement to detail the time spent on each task.
I can’t predict what will happen
Be honest - if you think about it, much of the time you can predict what will happen, or at least predict how risky the matter is. It is a matter of putting more work into scoping the matter at the outset and identifying risk. And when I talk about scoping, that includes an assessment of your client and his or her expectations, as well as assessing the likely risk of the out-of-the ordinary occurring due to factors like the nature of your client/their former partner/their current partner/the opposing solicitor/the other stakeholder/unusual facts in the case.
Careful scoping enable you to vary scope and price if something unexpected occurs.
I can’t predict how the other side will react
See the answer to the previous objection!
Look around at your competitors! Family Law is one of the practice areas where we are seeing increased adoption of aligned and agreed prices. This is largely because it is a practice area where clients are often particularly price sensitive, with a high level of consumer complaints to the Legal Services Commissioner. So Aligned pricing works particularly well.