There is no end to the creativity that hourly pricing has spawned.
The Lawyer recently published an entertaining article entitled Financial year-end: The myths and legends of billing on the loo.
Which got me thinking about some of the interesting and esoteric justifications for charging clients that have not withstood scrutiny. I recall an example from my days as a Law Society cost assessor in New Zealand, having to disallow a charge made by the solicitor for a deceased estate, for attending the client’s funeral for no other reason than idle curiosity.
To avoid any allegations some years later of hypocrisy, I made no charge for attending a client’s funeral in circumstances where they were so elderly and so bereft of surviving family and friends, that I ended up being roped in by the undertaker as a pallbearer. A very sad situation.
And then there was the solicitor who thought they would have a bit of a laugh at the client’s expense and sent them an invoice which read, “To: my fee for crossing the road to engage you in constructive conversation about your current transaction - $500. Discount given upon realising that it wasn’t you - $100. Balance - $400”.
Some days you just find the joy where you can.
On a more serious note, I thought it worth touching on an issue that comes up perennially in our pricing master classes and that is whether it is permissible to make a charge for preparing the pricing proposal.
Now here of course, old habits die hard. Nothing in this article should be construed as giving legal advice and you should discuss this with and act upon the advice of the appropriate people in your firm.
Taking a narrow interpretation of most Western legal jurisdiction’s codes of conduct, it is not generally permissible to make a charge to a client for the preparation of a pricing proposal or for invoicing activity, unless it is specifically provided for in the retainer and/or the firms normal trading terms and conditions.
Whenever I ask a group of partners how they record their time for the preparation of a pricing proposal, 90% will typically respond with answers like “I don’t make any charge, I just ignore it”, or “it goes down as ‘client care’ or some other non-chargeable code”.
I think that there is a more nuanced view that can be taken of this and indeed I gave expert evidence in High Court cost proceedings many years ago to this effect…
To prepare a pricing proposal and depending on the size of the fee and the nature and complexity of the work and the instructions, the lawyer will typically have to devote some serious time, thought and effort to strategising the job.
They begin by developing a high-level workflow – who are the other parties involved, who are their legal representatives, what third parties are involved and what is their role, what documentation will be required, what is the timeline, what are the potential roadblocks, how will we resource the job, how are we going to project manage and coordinate all the moving parts?
In short, the lawyer is like the battlefield general planning the deployment of troops and equipment, all of which is a critically important precursor to any consideration of what the cost might be. Indeed, to do otherwise is putting the cart before the horse. How can you possibly price a job without first making at least some preliminary decisions on the strategy and tactics required.
It Is hard to imagine anyone plausibly arguing that all this preliminary planning and strategizing isn’t chargeable. I have difficulty conceiving of a situation where it wouldn’t be. Once that is done, it is at least arguable that a pricing proposal is simply an incidental by-product of the larger piece of work that has preceded it.
Now, if one accepts the premise underpinning this argument, it follows that if 90% of all lawyers are recording all of this time as non-chargeable, it is not difficult to extrapolate that into tens of thousands of £/$/€ in lost revenue.
Richard Burcher, Managing Director