Editor's blog | Fixed fees for divorce: predicting the unpredictable

Riverview’s enthusiasm as they launched a fixed-price service for divorce last week was only matched by the coolness of the response from the family law fraternity.

Fixed costs is the way the sector is going and Riverview is one of a growing number of providers going down this route. Numerous traditional firms have been offering flat-fee services for divorce for a while. Somehow it’s not really fired up the imagination, so why would new entrants build up momentum around their brands on this basis?

While most law firms promote quality of service to justify hourly rates, new entrants talk in terms of fixed price first. They give their clients instant clarity and cost transparency. Competence and service are part of the picture but they should be taken as a given. What matters to clients is value for money.

Unencumbered by the hourly rate baggage and offering similar quality of service, new entrants are able to walk onto traditional firms’ patch and start picking up clients.

It’s a compelling approach but it is flawed. Riverview is not offering anything radically new. Clients know how much each component of the overall service costs: £1,000 for an initial scoping meeting, £5,000 to take the case to a case management hearing and £17,500 for an FDR hearing. A divorce lawyer preparing a case would be able to reel out similar figures in the first meeting. In neither case, however, is there any way of truly guaranteeing how the case will progress, let alone what the final, overall, bill will be. If the case goes to a contested trial, a bespoke fee will be discussed.

There’s nothing inherently wrong with this price structure. It is clear but it is not as fixed as it suggests. Where a process can be reduced to a sequence of events that need to take place in a particular order and are not conditional on other events taking place, its costs are usually predictable. It can be commoditised and there shouldn’t be any reason why it shouldn’t be offered at a flat rate. So much for the divorce process, which some firms – large and small – are selling in this way.

Unsurprisingly the complications start with financial disputes. Some of the costs may be averaged, as they are for the early stages of the Riverview scheme, but the duration and costs of full contested hearings are impossible to predict. Thus the bespoke approach which kicks in under the Riverview scheme if the case goes to a full contested hearing. This seems to be the only innovative feature of the scheme, with Riverview COO Adam Shutkever confirming that the bespoke fee agreed at this stage would be fixed, even if the matter ran over the estimated costs. However, this is by no means original. Mills & Reeve has adopted just this approach with its own bespoke divorce service catering for various levels of complexity – providing evidence that new entrants don’t have the monopoly over innovation.

Riverview is not breaking as much new ground as they would like us to believe but they nonetheless mark an important stage. In the same way that Cooperative Legal Services is setting a new benchmark for fixed-price family advice on the high street, Riverview is challenging law firms with high-net-worth clients to question the way they do business. They’ve set the reference price for tailored divorce litigation and the only question now is whether they get the clients and convert their efforts into cash.

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Jean-Yves Gilg is editor of Solicitors Journal

jean-yves.gilg@solicitorsjournal.co.uk