Report on £1,000 an hour lawyers doesn't give the full picture

Everyone wants to say that they hate lawyers and their fees, yet I have never met a parent who didn't want their kid to be a lawyer.

The hourly rate for a partner at a top City firm, according to a report by the Centre of Policy Studies, now exceeds £1,000, the highest level ever recorded. The trouble is the report's authors have obviously not gone out into the market to test their findings.

A lack of transparency has been blamed for spiralling costs, though firms have always been clever at creating a sort of mystique surrounding their fees that makes prospective clients feel awkward about even raising the subject. As a result, lawyers are actually very poor negotiators of fees because they are not accustomed to being required to justify their price, and their arrogance is such that they just assume that if you have approached them to act for you, you will pay whatever you are told. Confident as they may appear to be, firms tend to be reduced to jelly by a simple 'no'. There is something in the lawyer's psyche that makes it incredibly difficult for them to turn business away on price and they are intensely competitive - just the whiff of another firm being asked to get involved will often turn the fee negotiation your way.

The truth is that ever since the economic downturn of 2007/08 there have been too many lawyers for the work available in most sectors, resulting in a buyer's market for most services.

The report also cites the lack of competition between firms. However, litigation - an area with a high price tag - is akin to the jousting competitions of yore, so choosing your champion to carry your colours is important. It is still an intensely personal activity, with the lawyer having to manage both the case and the client's expectations. Often, it is important to avoid a mismatch of law firms, so that you don't get a Championship team competing against the Premier League; if it's Magic Circle versus Magic Circle, price will often lose to reputation.

In addition, the report is deeply flawed because it assumes that the billable hour is alive and kicking. It's not. The billable hour is dead and gone, outdated and unsustainable.

Why would you pay more for a service the longer it took to deliver it? In any case, a bill based on the hourly rate for a partner is too easily manipulated: think of the smart young lawyer who was crossing the street on his way to court to begin a complex legal case when he suddenly found himself at the gates of heaven. St Peter started to escort him inside when he began to protest that his untimely death had to be some sort of mistake. 'I'm much too young to die! I'm only 35.' St Peter agreed that 35 did seem to be a bit young to be entering the pearly gates and agreed to check on his case. When St Peter returned, he told the lawyer: 'I'm afraid that the mistake must be yours, my son. We verified your age on the basis of the number of hours you've billed to your clients and you're at least 108'.

The other factor in time-based billing is the level at which the work is done. Nowadays, much of the work is passed down the line to cheaper,more junior lawyers and even paralegals; the trick is to ensure that the expensive partner is only used for the really tricky stuff.

My other beef is with firms seeking to charge for trainees' time. Most trainees know nothing of the commercial world and therefore add little or nothing to the quality of the advice being delivered. To those firms that look to charge for their trainees, I say: it is for you and not your clients to pay for the training of the next generation.

The best way to manage legal costs is to fix the fees for each stage of the work up front. Often, though, I have been challenged by squeezed lawyers who complain that you can't always anticipate the known unknowns and the unknown knowns. This is true, but who is best placed to take an informed view of these? The client who does one transaction like this every few years or the law firm which does them every day of the week (which is why you are instructing them in the first place)? Remember, as a client, you are looking to buy confidence, which comes from experience.

The legal services market
can be intimidating but it operates in an open and transparent way - you just have to have the courage to knock on the door and ask the obvious questions.

Christopher Digby-Bell is due to retire as a Law Society council member for the City of London. He is a past managing partner of two City law firms