Considerations on GHRs

Whatever comes of the Civil Justice Council and Lord Dyson’s deliberations, it must be remembered by both the profession and the judiciary that the guideline hourly rates are an exercise in averaging. They are predicated on the assumption that all lawyers are equal, or at least all lawyers with the same level of experience are equal, which is unvarnished nonsense.

Quite rightly therefore, Lord Dyson has once again reiterated that the GHRs are, as it says on the tin, only guidelines.

Justification for charging more than the GHRs may be practitioner specific or job/instruction specific. But in either case, the ‘eight pillars of wisdom’ (referred to in Sue Nash’s recent article on this site) are woefully inadequate and long overdue to be updated and expanded.

My recent attempt to synthesise the approach taken by a number of jurisdictions produced the following:

England: Civil Procedure Rule 44.4 – Factors to be taken into account in deciding the amount of costs and The Solicitors (Non-Contentious Business) Remuneration Order 2009

US: American Bar Association Model Rule 1.5 – Fees

Australia: New South Wales Legal Profession Act 2004 – Section 363 - Criteria for costs assessment

New Zealand: Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 Chapter 9 – Reasonable Fee Factors.

What they have in common is a clear articulation of the need to take a granular and nuanced approach to pricing legal work. If I were to précis the opening stanzas of each of these regulatory guidelines and the extensive multi-jurisdictional body of common law surrounding them, it would look like this:

(a) In determining what constitutes a fair and reasonable fee from the point of view of both the practitioner and the client, the practitioner shall take into account all relevant considerations including but not limited to the following….

(b) The foregoing list is not exhaustive, merely illustrative.

(c) The relative importance of each of the factors will vary according to the particular circumstances of each engagement. The practitioner will need to apply a considered weighting to each of the factors.

(d) Irrespective of the methodology used to arrive at the fee, the practitioner must stand back and consider the overall reasonableness of the fee, ‘in the round’.

Many jurisdictions’ lists of considerations are limited to four or five items and others have up to 13. I have pulled together those I think are some of the most useful and which provide the greatest guidance. In no particular order:

(1) the time and labour expended;

(2) the skill, specialised knowledge, and responsibility required to perform the services properly;

(3) the importance of the matter to the client;

(4) the results achieved;

(5) the urgency and circumstances in which the matter is undertaken and any time limitations imposed, including those imposed by the client;

(6) the degree of risk assumed by the lawyer in undertaking the services, attributable to amongst other things, the amount or value of any property or money involved;

(7) the complexity of the matter and the difficulty or novelty of the questions involved;

(8) the experience, reputation, and ability of the lawyer(s) and the firm performing the work;

(9) the possibility that the acceptance of the particular retainer will preclude engagement of the lawyer by other clients;

(10) whether the fee is fixed, conditional or contingent (whether in contentious or non-contentious work);

(11) any quote or estimate of fees given by the lawyer;

(12) any fee agreement entered into between the lawyer and client;

(13) the reasonable costs of running a practice;

(14) the fee customarily charged in the market in the locality for similar legal services;

(15) whether the fee was proportionately and reasonably incurred;

(16) whether the fee is proportionate and reasonable in amount;

(17) the conduct of the parties;

(18) the conduct of the lawyers;

(19) the quality of the work undertaken;

(20) the nature and length of the professional relationship with the client;

(21) the relative price risk to the practitioner and the client arising out of the detail of the pricing arrangement between them.

It is, I suggest, worth keeping in mind the (still cited with approval) admonishment of Donaldson J in Property and Reversionary Investment Corporation Limited v Secretary of State for the Environment [1975] 2 All ER 436 at 441, that the business of determining a fair and reasonable fee ‘…is an exercise in assessment, an exercise in balanced judgment – not an arithmetical calculation …’.

Richard Burcher is an internationally recognised expert on pricing legal services. He is managing director of London-based Validatum and chairman of pricing and costs consultants Burcher Jennings, twice shortlisted for the 2014 UK Modern Law Awards