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Schmitz, Cristin, ^ The Lawyers Weekly, 25 August 2006, pp. 1, 7.
Lawyers should rethink their fees in order to help quell "the epidemic lack of representation" in civil courts that is denying justice to average Canadians, advises the Chief Justice of Canada.
"People seeking justice need not only judges, they need lawyers – competent, independent, affordable lawyers," Supreme Court of Canada Chief Justice Beverley McLachlin told the Canadian Bar Association's annual council meeting Aug 12.
"I think we need to consider the long-term implications on the development of the law in the civil context if fewer matters go to trial – if only criminal, family and large commercial cases make it into court," she said.
She queried, "Does the typical law firm's fee structure have anything to do with this? Can more creative ways be found to bill clients proportionately to the complexity and value of the proceedings? Can junior lawyers get needed trial experience by being permitted to take on files at reduced rates?"
Chief Justice McLachlin suggested those questions are worth thinking about as the profession and governments work together in the coming months to try to devise and implement reforms to make the civil justice system more responsive and understandable to the public.
Reacting to her remarks, CBA president Brian Tabor told The Lawyers Weekly the legal profession has already done much to enhance access to justice, but that governments must step in to pick up the slack. "Society has said we are going to have a publicly funded medicare system, but where we are at now is that we have got a legal system that requires some public investment," he said. "Lawyers have adopted a number of strategies to try to respond to the access to justice issue – fees are just one part of that. We brought a CBA legal aid test case forward to compel governments to ensure an adequately funded legal aid system. Our lawyers now provide pro bono service across the country – some of our studies say approximately 50 hours a year [per lawyer] are being done. Alternate delivery models, legal clinics ... are an expression of support by lawyers to try to improve access to the justice system. We have alternative billing models, like contingency fees, now to improve access. We have been involved in efforts to streamline the court process, to reduce costs associated with that."
But he noted that legal fees reflect the increased costs of providing legal services in a day and age where lawyers are held to a very high standard. "There is a need for immediate services so law firms are maintaining computer systems and online research tools and all of these things cost money," Tabor said. "And if we are going to provide the level of service that our clients expect from us, we need to invest. And to be able to invest, we need to be compensated."
"It's a challenging question that the chief justice raised," added Ontario Bar Association president James Morton, who practises civil litigation with Steinberg Morton Hope & Israel in Toronto.
"My personal view is that it is difficult for lawyers to cut back their fees," Morton explained in an interview. "Law is a business. Lawyers have been squeezed on a number of fronts. The median income for a lawyer in Ontario is $60,000, which shows that there isn't a lot of fat to cut, particularly with some of the smaller firms and the solo practitioners. Our view is that the best way to make justice more accessible is to speed up the court process, which means appointing more judges, providing more legal aid and generally resources to the legal system, because most of the cost comes in because of delay."
“^ Looking beyond the billable hour”
Faguy, Yves, National Magazine’s Addendum [Solo and Small Firm Edition], cba.org, November 2006
In most law firms, more toil means more money. And while that may suit lawyers anxious about meeting their annual billing targets, many small firms and solo practitioners are finding that clients want something different: a solution to their problems at a cost they can budget.
Catering to more consumer-oriented clients—and unburdened by bureaucracy and high overhead—these small practices are embracing alternative fee structures as a way to gain an advantage over competitors still beholden to the billable hour.
That structure—whether involving flat fees, capped fees, blended fees, or success fess—usually depends on the nature of the file and the client’s needs.
Bill MacQuarrie, a partner at MacQuarrie Whyte Killoran, a small firm in Gloucester, Ont., says 90 per cent of his firm’s billing is now on a fixed-fee basis.
“Clients today are shopping around on the Internet and comparing prices,” he says. “To attract and maintain those clients, you have to offer a reasonably competitive fixed price.”
But the billable hour—so attractive in its simplicity and lucrative in its flexibility—is a hard habit to kick. The temptation to hike rates in the face of dwindling profits can be hard for many firms to resist.
Although adopting new methods makes good business sense, embracing alternative billing involves close examination of a lawyer’s past habits and how to organize a legal practice more efficiently.
To successfully introduce new fee structures requires organizing your practice and improving your project planning skills. This benefits not just the client, but also the firm, because the system encourages and rewards efficiency. A specific matter may appear to be worth, say, 10 hours of work. But by fine-tuning and improving the system, a lawyer may discover he can significantly reduce time spent on the file.
“We’re always looking at ways in our office to improve the efficiency of our workflow,” says Cory Furman, a partner at Regina intellectual property law firm Furman & Kallio. The four-lawyer firm does a lot of fixed-fee billing for routine, predictable work. “Those who leverage their system properly can do far better than by billing hourly,” he says.
Flat fees—for specific services, such as wills, patents, or the incorporation of businesses—are the most common type of alternative fee. But they’re not always appropriate, particularly as the firm has to assume cost overruns if the file drags on.
There is also a danger that the lawyer will be tempted to rush through a file. “There are problems with block fees,” says Eric Polten, a partner at the Toronto firm Polten & Hodder. “It can lead to slipshod work.”
And the list goes on: capped fees, project billing, and ongoing retainers all represent different approaches to managing a firm and keeping its clients happy, by emphasizing value and timeliness.
Polten, however, warns that lawyers must nevertheless keep an eye on the money coming into the firm, particularly with contingency fees in matters involving complex litigation. Indeed, services provided on a contingency-fee basis often cost clients more than those billed hourly. "The real possibility of a lawyer incurring losses must be offset by bigger gains in another case," he says. "In many ways, the certainty sought by clients is not always the fairest."
According to Polten, some hybrid fee structures at least have the merit of forcing both the client and the lawyer to share the risk of unforeseen developments. Examples of these include a reduced hourly fee combined with a success premium, or contingency fees where the client pays disbursements, no matter the outcome of litigation.
"If the lawyer assumes alone all the risk, it can lead to excesses on his part," Polten cautions. "The more contentious the work is, the more difficult it is to fix a fee and do a proper job."
"How To Enter Time So That Clients Will Pay For It"
Herrmann, Mark, The Curmudgeon's Guide To Practicing Law (Chicago: American Bar Association, 2006), pp. 95-99. ______________________________________________________________________________
[Law firm partner to junior lawyer in the firm:]
I’m not just stopping by to see how things are going. I spent the afternoon finalizing this month’s bill in the case that you and I are working on.
We have to talk.
It took nearly an hour to revise your time entries into an acceptable form. I don’t blame you for this. Lawyers are taught to write persuasive briefs and letters. No one teaches them how to write persuasive bills.
But when a client sees a bill, the client will either want to pay it or want to dispute it. As a general matter, a client is more likely to pay a bill that is written persuasively—a self-justifying bill. A self-justifying bill consists of a series of self-justifying daily time entries.
A self-justifying bill is not a dishonest bill. It is a bill that accurately describes work performed in a meaningful way.
In addition to being honest, the bill must show that lawyers have been doing appropriate work. If senior partners are doing basic legal research, and junior associates are running photocopies, there is no way to draft a bill that justifies that expense.
But a bill must do more than reflect appropriate work. The bill should describe tasks in a way that helps the reader understand why the work was necessary. You recorded your time for five consecutive days last month with a single, recurring description: “Work on summary judgment papers.” When a client sees five eight-hour entries for “work on summary judgment papers,” the client naturally thinks that forty hours is an awfully long time to spend working on a single brief.
You could have made that bill self-justifying simply by breaking down the tasks involved. For example, your first day working on the brief might have involved:
If you had broken down every day’s work into bite-sized pieces, each of which corresponded to a time entry that seemed to fit the work that was performed, then your time entries, and the resulting bill, would begin to justify themselves.
When recording those bite-size pieces, record them all. If you researched six separate issues, identify all six. That detail conveys the effort that you spent working on the client’s behalf and thus encourages payment.
There are a very few times when you will affirmatively want your time entries to be vague. When we’re working on a bankruptcy case, for example, we’ll ultimately submit our time records for court approval, and our litigation opponents can review our records. A clever opponent might gain an advantage if your time entries were too detailed. In those situations, where you must conceal what you’ve done, do so. If not, meticulously detailed time entries best reveal the true value of your work.
While we’re talking about bills, let’s talk about some other ideas. First, block billing—“did X,Y, and Z tasks in a combined total of four hours.” Billing for blocks of time may occasionally be entirely appropriate (unless the client’s billing policies forbid it) and persuasive. For example, a bill that records two hours for a series of ten telephone calls to multiple parties relating to settling a complex case may be a self-justifying entry. The same time records may actually be less persuasive if broken down into a series of twelve-minute time entries, one for each phone call. If our client’s guidelines for drafting bills give us the choice, we should record our time in the way that most naturally justifies itself.
Second, word choice. Think carefully about the words that you use to describe your work. Generally use verbs: “Summary judgment brief” is not persuasive; “Researched, wrote, and revised summary judgment brief” is persuasive. Moreover, use effective verbs. Recording that you spent 1.5 hours “attending to brief” is non-persuasive, Record instead that you spent the same ninety minutes “researching and revising brief.”
So, too, with entries for time spent “reading” the other side’s brief. If you are simply passing your eyes over the piece of paper for no reason whatsoever, then you might record your time as simply reading a brief. If, on the other hand, you were actually “analyzing” the brief, then use that more persuasive verb.
Similarly, a time entry recording that you “talked to” or “conferred with” another lawyer at the firm suggests that two lawyers are charging for having chatted about last night’s ball game. At a minimum, any time entry for “conferring with” another lawyer should reflect the topic of the conversation. “Confer with J. Smith re tactical choices in appellate brief” persuades more effectively than “confer with J. Smith.” Better still, if you were not merely “conferring with” the other lawyer, but were in fact “working with” him or her on a particular task, then use that description, again identifying the nature of the work.
Time entries are also an appropriate way to remind clients of your successes. Fifteen minutes spent “reviewing decision” may well have been wasted. The same fifteen minutes, however, were invested wisely if spent “analyzing decision granting summary judgment and considering plaintiff’s possible appellate remedies.” When you have achieved a good result, let your time entries echo your deeds.
You should also organize and record your time to avoid inflicting on the client death by a thousand cuts. Almost no one makes headway on a project by spending six minutes on the task on Monday, six minutes on Tuesday, twelve minutes on Wednesday, eighteen minutes on Thursday, and six minutes on Friday. Almost everyone, however, can make progress on a task by sitting down on a Wednesday afternoon, closing the door and not answering the telephone or reading e-mails, and working intensively for an uninterrupted hour. If you organize your work schedule to create concentrated blocks of time, you will be far more efficient. And when you then record the time that you spent, the time entry will naturally be self-justifying: It will show that you gave serious attention to a task.
Finally, record your time promptly. You are more likely to remember what you did, and to remember the details required to draft persuasive time entries, if you record your time on the day you worked it. Moreover, clients are naturally reluctant to pay for time that does not appear on a bill until months after the fact, when the memory of your effort is long lost.
In a sense, it is foolish to worry about how we record our time; I’m sorry to have burdened you with this conversation. Recording time is, after all, just an administrative task that permits us to be paid. But, by pausing only briefly to think about how we record time, we can generate bills that increase the likelihood both that we will be paid and that our clients will be satisfied. That matters to us, so you should think about it.
Next month, I expect to spend much less time finalizing this bill.
"Costs awarded against law firm personally"
Jaffey, John, The Lawyers Weekly, 30 March 2007, p. 1
The Thunder Bay firm of Carrel & Partners LLP has been ordered to pay costs of $63,150 (including disbursements and GST) pursuant to Ontario’s Rule 57.07, which gives a court jurisdiction to require solicitors to personally pay costs when the solicitor “has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default.”
The authority to make such an order does not require a finding that the solicitor acted in bad faith.
Ontario Superior Court Justice John McGarry found that Carrel qualified for the “rare circumstances warranting an order pursuant to Rule 57.07”.
Justice McGarry wrote: “On an ongoing basis, Carrel engaged in a pattern of inappropriate conduct including:
“I find that the ongoing unprofessional conduct of Carrel resulted in the Applicants incurring wasted legal costs. I have reviewed costs submissions of both parties as well as individual memoranda of costs for the Applicants’ solicitor to determine the costs attributable to the misconduct of Carrel. In the circumstances, I find that it is appropriate to award costs on a substantial indemnity basis to address the costs thrown away by the Applicants as a result of the misconduct of Carrel.”
Dan Newton of Carrel of Carrel & Partners spoke to ^ The Lawyers Weekly on behalf of the firm. He said, “All counsel who act for parties who become bankrupt have to be concerned. In essence the court made the solicitors responsible for the bankrupt’s prior costs orders. The firm intends to seek leave to appeal the decision.” Newton will be handling the appeal.
"Judge rejects $243,314 claim for half day"
Makin, Kirk, The Globe And Mail, 28 June 2007, p. A15
Even when he wins, Conrad Black loses.
An Ontario Superior Court judge has taken a poleaxe to the $243,314 the media magnate requested recently in legal costs after winning a half-day legal motion.
The motion involved a summons that Sun-Times Media Group Inc. had served on Lord Black and his wife, Barbara Amiel Black, in an attempt to compel them to testify at an injunction proceeding.
In his costs ruling, Mr. Justice Colin Campbell said the discrepancy between what Lord Black had asked for and, what the Sun-Times proposed was nothing less than "astounding."
Leaning heavily toward the Sun-Times's estimate of between $15,000 and $30,000, Judge Campbell awarded Lord Black a total of $65,000.
Examining the specifics, Judge Campbell was particularly critical of a claim by Lord Black's lawyers for $32,433.63 for expert fees. He said that experts had been neither authorized, necessary, nor helpful in the proceeding.
Judge Campbell also looked askance at an "excessive" request for $9,616.96 to cover photocopying costs, in an era when, he said, evidence can be easily submitted on CDs.
"I find it astounding that our cost regime could give rise to a 'reasonable' expectation on the part of two sides, in a motion that took less than half a day to argue, which would differ by over a quarter of a million dollars," Judge Campbell observed.
He said the dispute "illustrates acutely the problems associated with the disposition of costs in our civil justice system."
The motion was an offshoot of Lord Black's continuing troubles within his financial empire. Lawyers for the Sun-Times were seeking a rarely granted injunction under which a defendant's assets are frozen to prevent his moving them out of reach prior to the conclusion of larger legal proceeding.
To further its case, the Sun-Times had served a summons on Lord Black and Lady Black. Judge Campbell quashed both the summons and the entire application for the injunction.
In their written submission on costs, lawyers for the Sun-Times described Lord Black's quarter-million-dollar request as being out of proportion, "incredible" and the equivalent of 92 days of full-time preparation.
"If our system is to respond in a formulaic way such that a half-day motion can result in a cost award of $243,314, then there is little doubt that the critics who claim the civil justice system fails to meet the needs of the vast majority of citizens are correct," Judge Campbell said.
Burry v. Healey
(2007), 15 Newfoundland and Labrador Case Digest, No. 22, p. 5,
28 May 2007, Cook U.F.C.J.
The parties are the parents of a six year old son. The mother sought sole custody of the child and the father sought joint custody. They also disagreed on how the child should be parented when the father (who worked in the North West Territories) returned to Newfoundland for 10 days monthly, as well as on other ancillary parenting issues. At trial, the father was the more successful party.
Counsel for the father filed two offers to settle. Counsel for the mother filed one offer to settle five days prior to trial. Neither offer to settle was accepted. Counsel for the father submitted that because her client was substantially successful on his application, the Rules of Court supported costs being awarded to her client on a party and party basis prior to the day of the last offer to settle and on a solicitor and client basis following the date of the offer. Cook J. agreed with this submission and awarded costs on this basis.
Cook J. compared the final result at trial to the settlement offers of the parties and found that the father had obtained results at trial that were clearly more favourable than his final unaccepted offer to settle. While agreeing with counsel for the mother that the court should not “micro analyze every aspect of custody and access decision”, Cook J. did state as follows at paragraph 23:
…[W] here specific access arrangements have not been agreed to by the parties, I have concluded that it is incumbent on me to analyze what I consider to be the most relevant components of the parties’ positions, in conjunction with the resulting findings, as part of a ‘costs’ application. This is especially so if there are comprehensive offers to settle. Not to do so would, in my view, be abrogating my responsibility to exercise my discretion judicially.
Debora v. Debora