"but I would be interested to hear someone like a solicitor put up a stronger defence of the practice."
Hi Rd;
I think you will find that most of the solicitors who post on AAM would not put up too strong a defence of percentage charging. The reality is that there is a change of outlook in the legal profession- I would say the dividing line in the profession is somewhere in the mid 40's. Those older than this are more inclined to bill mainly by reference to the value of a transaction (that being what was relatively normal when they started out). Those younger are more inclined to analyse profitability on all transactions - potentially competing on price in some areas but declining work in others, or charging what seems like an awful lot relative to the value of the transaction
I give a standard example of this to clients of mine when we have detailed fee discussions: I once bought a field for €2,000,000.00 and charged €1,200 plus V.A.T. because it was the most straightforward transaction I had all year. For the same client, I had an employment appeal case a few months later. On the second day of hearing we settled for €1,000 and I charged €6,000.00 plus V.A.T. (the client acknowledged that I had earned every penny, and I had). Now, the older partners in my firm would have been shocked at my failure to properly charge (as they would see it) on the land transaction BUT (and this is what people often forget) the same "old fogies" would have been even more shocked at what they would have considered blatant overcharging on the E.A.T. case.
The same client will soon be paying me in excess of €10k (possibly in excess of €20k) for a transaction which never went ahead (and I will have earned every cent). An older solicitor would possibly waive such a fee on the basis that he would charge when the client did buy something (but would then charge a percentage).
The percentage\value based method of charging is certainly less transparent and less efficient, but it is not necessarily true that it always works out dearer for the client - it is a common characteristic of such billing practices that there is very heavy cross subsidisation, with some work being done at a large fee, while other jobs are not properly charged for.
I will say, however, that even with all things otherwise being equal, any solicitor asked to give an estimate for administering a €1m estate is unlikely to give exactly the same estimate as he would give for administering a €300k estate. That is the free market at work. Long live the free market.
