mandatory fixed fees in family law?

The Legal Services Consumer Panel has responded to the Competition and Markets Authority's interim report into the legal services market with a call to make fixed fees in family law mandatory.

In a letter from Elisabeth Davies, current chair of the Panel, she sets out their position on page 8:

Fixed fee is the optimum solution especially in areas like family law, where consumers are often at their most vulnerable. In May 2016 the Panel published a report identifying three areas of law for the oversight regulator to prioritise in order to enable the market to best meet the demand for legal services. Family law was identified as one such area. Our report highlighted research carried out for the Ministry of Justice on litigants in person, which found that where reasons for self-representation were known, approximately half were due to cost alone. Also over a quarter of all the complaints about family law services to the Legal Ombudsman in 2014-15, related to costs being excessive, or cost information being deficient. Consequently the Panel asked Approved Regulators to consider how price transparency could be further encouraged in family law to ensure certainty and ease the burden on potentially vulnerable consumers. This is one area where the Panel advises that Approved Regulators should now consider mandating fixed fees, or at the very least there should be an obligation on providers to display their average prices on their respective websites or make these available on request where they do not have a website.

The CMA will publish a final report by 12 January 2017, though they stopped short of undertaking a full investigation.

Thoughts on fixed fees?

Average prices really aren't possible as cases do not pass though the same stages.

In the case of a financial case, a client may come in and say that they have reached an agreement and want the agreement turned into a Consent Order. This site will provide that service from £159. However, another client might have a nightmare spouse who insists on bucking the system, evades service of an application, fails to provide disclosure which leads to penal applications, tries to dissipate assets leading to a Section 37 application, fails to allow access to funds leadings to a MPS application, fails to turn up to the final hearing leading to an adjourned final hearing etc.

Does one take an average of those two cases? Does the average include court fees, counsel's fees, expert fees etc.?

What if a respondent who lives in Liverpool finds themselves served with proceedings in the principle registry and instructs a local solicitor? Does that solicitor have to accept a fixed fee even though there are many hours of travel to the distant court or must they instruct an agent who is local to the court (who the respondent has never met)?

As for fixed prices being mandated - no lawyer can be forced to work at an uneconomical rate. I know solicitors who charge £250 + VAT per hour or more but I know of no solicitor who takes home £250 per hour or anywhere close to that amount.

This site highlights that there is no standard case in family law as there are too many factors to take into consideration.

In the civil court where the proceedings are usually costs-bearing (the loser pays the winner's fees), costs budgeting was introduced for cases that were not straightforward. The process has been an utter disaster. Without boring you too much the process was meant to control the level of expenditure on legal fees and deter parties from spending money which they were guaranteed not to recover.

The procedure was and is confusing and lack of training for the judiciary has led to unpredictable results. When the scheme was introduced everyone was told that if they stuck to their budget, they would recover 90% of their costs without a bun fight over costs at the end. It turns out that the bun fight is more ferocious, there is no guarantee of recovery, the court changed the rules on proportionality (which means that even if a judge says that the budget is eminently reasonable, another judge can reduce the costs at the end because 'they look high').

And, to cap it all - 1% of the approved budget was permitted to prepare the first budget but the court does not have to order budgets so parties are compelled to spend money on the process only for the court to say "nah, not on this one" which is costly particularly if there are several parties involved as they have to prepare budgets prior to the hearing and spend time trying to agree those budgets before the judge makes the decision.

Fixed fees are a great idea but the implementation is problematic. Why not start with a less challenging data set such as plumbing. Why do plumbers get to charge a tidy sum for a fairly formulaic piece of work and why does it cost more if that work is urgent? Most of their income is profit as a plumber's professional indemnity insurance is miniscule in comparison to that of a solicitor. Do plumbers have to have a practising certificate (around £350) to conduct their trade? Do they have to charge fixed fees?

Whilst we are looking at solicitor’s fees, let’s take a look at court fees. The court makes a profit from the fee for a divorce petition.

Also, in civil cases if someone owes you £500- and you take them to court, you have to pay £455, around 9% of the amount owed, to issue the claim. The percentage reduces as the claim increases and there is a cap of £10,000 on the court issue fee.

Can you imagine being a medium sized business where you extend credit to a client whose account gets to £200k and you decide to sue them for recovery? You are fretting as your VAT quarter is approaching and you have to pay your employees but you have cashflow difficulties due to the unpaid account. Yet you have to find £10,000 to issue the claim. There is nothing complex about the claim, the money is owed but the client is not paying despite being solvent. The court will not issue the claim until £10,000 is paid. Once the claim is issued, the court fee is non-refundable.

There are lots of problems with the system and curbing costs is brilliant but with legal services, as with any service, the cheapest option is seldom the best.

Charles

I can't see fixed fee's for financial settlements working either (as much as I would love to be able to get a completely fixed fee divorce!).

I do think solicitors should provide a best and worst case scenario though so that the client gets a fair idea of costs.

I do not begrudge solicitors and barristers charging what they do, but I do feel that where costs are incurred by the client due to the other party's actions or a court error, the innocent client shouldn't be the one to suffer the additional costs. More needs to be done to ensure that non-compliance is treated with zero tolerance and the offending party should always pay with no excuse or second chance. This would speed up the process and save costs for many. And less people would try and abuse the court system.

I also feel that there should be a clear complaints procedure for third parties so that they can take issue with the other sides solicitor rather than only be able to complain about their own.

That's my laypersons view for what it's worth... now I'm off to go and sign up for a plumbing course!

Lol,

In NI you can't appoint a barrister direct, you can't complain against a solicitor unless you have instructed them.

This surely has to change, her solicitor has dragged this out for 2 years, we could have settled this over a coffee! it was only a question of a percentage, she was persuaded into an actuaries report which I worked out the same figures on my phone in 5 mins!

Hopefully someone will see sense!

Mick

Hopefully someone will see sense!

Mick, it will never happen!

Law firms are already cutting back on support staff and predicting lawyer redundancies - the loss of a legal aid work in family law is really beginning to bite. So why would law firms kill the golden goose?

It takes very little effort to inflame an already emotionally charged situation so a few words suggesting a specific course of action can bring in extra and unnecessary 10s of £1000s in a single divorce.

If my experience as a LiP dealing with the Exs "Resolution" registered lawyer is typical then I would be surprised if any divorce cases end cheaply and amicably - he basically refused to discuss anything and when he did he simply tried to intimidate me and his correspondence was inflammatory to say the least . Glad to say in the FH the judge had both his and her Barristers measure and things went quite well for me.

There is no doubt the system has to change but I think making solicitors more accountable for their actions and allowing the "other" side to make complaints against the non-instructed lawyer. This may focus their attention more on keeping costs down and not dragging the case out.

Hmmm...
This has got me thinking. There needs to be a type of divorce cost insurance policy that you can take out at the beginning of your divorce with an excess being the limit you are prepared to spend and anything that is over that should be covered by the policy. Premiums could be based on the complexity of your case.

It would be interesting to know how much people budget for their divorce and the actual end cost in legal fees. One of the problems with placing a limit on costs is that the parties would be less motivated to settle/negotiate and I suspect more cases would end in a final hearing.

(No doubt someone will come along and burst my innovative bubble lol)

joem wrote:

Law firms are already cutting back on support staff and predicting lawyer redundancies - the loss of a legal aid work in family law is really beginning to bite. So why would law firms kill the golden goose?

Legal Aid has been dwindling for 20 years. The most significant cutbacks were more than 5 years ago. The Legal Aid Agency has been banging on about not being a lower level of service but the amount they pay is so poor that corners are inevitably cut. Any lawyer who has paid for their own training is unlikely to stay in a job which pays less than a self-employed plumber.

It takes very little effort to inflame an already emotionally charged situation so a few words suggesting a specific course of action can bring in extra and unnecessary 10s of £1000s in a single divorce.

If my experience as a LiP dealing with the Exs "Resolution" registered lawyer is typical then I would be surprised if any divorce cases end cheaply and amicably - he basically refused to discuss anything and when he did he simply tried to intimidate me and his correspondence was inflammatory to say the least . Glad to say in the FH the judge had both his and her Barristers measure and things went quite well for me.

If it was so easy why would your ex go to the trouble of instructing a solicitor (quite a contentious move in itself) to act in her stead rather than deal with you direct?

A solicitor evaluates the position without emotion and recommends a course of action to their client. The client can accept or reject the advice. The client makes the decision.

You have to bear in mind that very few cases go to court and even fewer go to final hearing. All lawyers that I work with will militate against a final hearing as the results can be very unpredictable. It is better to settle the matter than allow the court to force an order upon the parties which often ends with neither party being happy.

There is no doubt the system has to change but I think making solicitors more accountable for their actions and allowing the "other" side to make complaints against the non-instructed lawyer. This may focus their attention more on keeping costs down and not dragging the case out.

People do make complaints about their ex’s solicitor, usually because they don’t like the outcome or they feel personally hurt or insulted whereas the solicitor is not emotionally invested in the outcome.

The last thing you want is for a client and their solicitor to make decisions based upon emotions – this is the same principle as a surgeon who is not permitted to operate on a family member.

As for accountability, solicitors are very accountable. The Solicitors Code of Conduct prevents a solicitor from taking advantage of a litigant in person due to ignorance of the law, there are various codes that need to be followed to ensure levels of service, rules to ensure monies are held responsibly, rules to ensure that solicitors receive ongoing training which is targeted at their area of law, responsibility to ensure that money-laundering does not take place and a duty to report (including in relation to their own clients) with prison sentences if there is a failure to report, and a duty primarily to the court so there is no chance of collusion with their client to misrepresent etc.

If you can draw up a proposal to make solicitors more accountable (and for what as you have note specified) I can point you to the appropriate code or rule which already covers that accountability. Most of it you will find in the Solicitor Code of Conduct www.sra.org.uk/solicitors/handbook/code/content.page

Charles