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Article in Brief Feb 2012 - 'the Benefits of Fixed Fee Pricing'-1

Article in Brief Feb 2012 - 'the Benefits of Fixed Fee Pricing'-1

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Published by: Jessica Hadley on Feb 10, 2012
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Volume 39 Number 1 February 2012
nef
<•••>
OF WESTERN AUSTRALIA
The voice of the legal profession in Western Australia
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4 | EDITORIAL
Editorial
Rebecca
J Lee
Editor, Brief Journal
W
elcome to a new year of
Brief.
This year sees a changewhich has not occurred for nine years - a new Editor.
I
can only add my thanks to those written by President,Dr Christopher Kendall and Gregory Boyle in the letter pages forthe outstanding contribution of Ronald Bower, my predecessor,to the continuing success of
Brief.
This was done whilst conveningenjoyable as well as efficient committee meetings. Fortunately forus,Ronald will continue to serve on the Editorial Committee. And
I
believe
I
have become 'a
first'-the
first female Editor of
Brief.
Whoknew there were such bastions left to be conquered?Our cover article this month is written by Mr David Vilensky aboutthe use of fixed fee pricing by hisfirm.MrVilensky expressly refersto the speech given by the Chief Justice of Western Australia on
17
May 2010, at the Perth Press Club Law Week Launch, availableon the website of the Supreme Court of Western Australia. Thisis a must-read for all practitioners, because in it the Chief Justicesuggests that the profession should enthusiastically embrace thepressure for change and generally adopt alternative methodsof charging for services to time billing. Mr Vilensky's article isabout the benefits he has perceived to his clients and his firmby introducing fixed fee pricing and as such is an importantcontribution to the debate. You read it and you can almost feelsome of the stress of legal practice evaporating.And all hail the
Family Provision Act
1972, as it is now called,given assent in October last year to the
Inheritance (Family andDependants Provision) Amendment Act
2011.
Mr John Hockleyprovides a comprehensive and interesting article on the significantand welcome amendments made to the Act. In another areawhich has and will affect a number of people, Mr de Villiers in hisarticle on strata title highlights some of the interesting challengeswhich lie ahead in this field to ensure it remains sustainable,affordable, manageable and capable of accommodating theneeds of a changing society.
I
can only conclude this, my first editorial, by repeating a call madeby Mr Bower previously. Society members, this is your Society'spublication. Your suggestions, ideas, criticism and letters to theEditor are always welcome. As always,
Brief
also welcomes theopportunity to consider for publication your articles about issuesof legal relevance that are on your mind.
Letter to the
Editor
Dear Editor,
Big
Shoes
To
Fill
Thank you to Ronald Bower for his nine years in the role of editor of our esteemed magazine.During his editorship, the magazine has gone from strength to strength and, at the same time, maintained its reputation for legalauthority and, most importantly, informative readability.All who have served on the editorial committee greatly appreciate your whimsical sense of humour which masks a resolute dedication tomaintaining and improving the standard of
Brief.
I
am sure that you will be comforted by the steady pair of hands to which the editorship is passing, belonging to Rebecca Lee who, to myancient memory, is the first female editor of
Brief.
Yours sincerely,
Gregory Boyle
Brief | February 2012
 
12 | FEATURE
The
Benefits
of
Fixed
Fee Pricing
David
Vilensky
Managing Director,
Bowen
BuchbinderVilensky
HOW ABANDONING TIME
BILLING
HAS
CHANGEDOUR
LIVES
F
or most of my professional life
I
have billed my clients insix-minute units. From the time
I
started out as a solicitorin the early 1980s, time billing was such an assumed partof the landscape that it barely merited discussion. Expressingreservations about it were regarded, if not as heretical, thencertainly as futile. Time billing was the way it had always been. Ifthe system was to be abandoned, what possible alternative wasthere?
I
had firsthand experience of the increasing commercialisation oflegal practice during the early part of my career. How the role ofthe time sheet moved from being a method of cost accounting,to the very inventory that lawyers
sold.
How the legal professionitself grew in scale, sophistication and profitability.No doubt time billing contributed to the ascendency of the legalprofession in general, and more particularly to the fortunes of myfirm Bowen Buchbinder Vilensky (BBV).But our concerns about the system continued to deepen for agreat many reasons. These were captured by the Chief Justiceof Western Australia, The Honourable Wayne Martin, during hisgroundbreaking if somewhat provocative address to the PerthPress Club at the launch of Law Week in2010.
I
quote just aselection of the compelling reasons he gave, in no particular order:
DISADVANTAGES
OF TIME
BILLING
Conflictof interest
- Time billing creates an inherent andirreconcilable conflict between the interest of the client to achievean expeditious resolution and the interest of the lawyer to billtime.
Client
bears
all the
risk
- Time billing transfers all risk to theclient. The firm takes no risk whatever for unforseen circumstancesresulting in more time being spent, inefficiency or duplication ofwork.
No
upfront
price
- Most people would find it unacceptable for aplumber or electrician working on a house extension to bill by thehour, rather than for a fixed fee agreed upfront. Why should legalservices be any different?
High
levels
of complaint
- When 80% of complaints received bythe Legal Practice Complaints Committee relate to charges andthe
charging
method, this is surely a sign of a systemic problem.
Focuses
on
hours,
not value
- Time billing rewards efforts, notresults; quantity, not quality; repetition not creativity and hoursexpended,not value to the client.
Encourages
overservicing
- Four lawyers might attend a meetingwhere one would do. Teams of lawyers go to court, some justsitting and watching.
Penalises
technological
advances
- There is little incentive forlaw firms to embrace technological developments because theirutilisation reduces profits by reducing time spent on tasks.
Prices
by the
service,
not the customer
- Unless hourly rates arediscounted, the biggest corporation is charged the same price asthe smallest business.
Creates
random
cost subsidisation
amongst
clients
- Whennew legislation is introduced, the first client requiring serviceswill pay for the firm's acquisition of knowledge in that area, whilesubsequent clients will get the same benefit at no cost.
Discourages
communication between lawyer and client -
There is a natural disinclination to communicate with your lawyerwhen clients are aware that the cost increases every time they do.
Encourages
time
sheet
padding
- There is an incentive forlawyers to pad time sheets. Short telephone calls may be recordedas having taken six minutes. Clients may be charged for the lawyerthinking about the case while driving to work or while showeringor shaving.
Discourages
professionalism
-Time billing discourages activitieswhich are not billable time, but which are important, such ascontinuing professional development and education, communityprojects, professional organisations and the active and detailedsupervision of junior staff.
Encourages
the hoarding of
hours
- High-level practitionerswithin a
firm,
ambitious to fulfil their quota of targeted hours, canundertake low-level work, which is inefficient and costly to theclient.
Reduces
quality of
life
- The emphasis on the production ofbillable hours creates a working environment which discouragesprofessionalism and reduces work satisfaction to unacceptablelevels. Clever young lawyers are leaving the profession in drovesand high levels of depression and substance abuse have beendetected among lawyers.Brief | February 2012

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