The headline 'A legal extortion racket' was on the front page of the Independent last Friday. The article detailed how city/magic circle partners charged £1,100/hour and how the hourly rate system and unit billing system is a 'racket'. It absolutely is.
The profession needs to change. However unfortunately the reality is, if clients continue to pay the same or increased rates and do not demand change this status will remain. The current system will not only harm the justice system it clearly is not in the best interests of shareholders. How can GCs continue to justify this spend? I do not think they can and they must demand change.
I recently had drinks with a GC of a FTSE 250 company (I of course did not charge her), and she strongly believes that change will only happen if she and other GCs demand it from their law firms. Such change is not just on pricing of course, it also relates to diversity. She is a brilliant forward thinking GC and there are many like her reshaping the market.
Delivering a public lecture last week, Lord Justice Jackson warned that firms could be tempted to create unnecessary work and prolong litigation in order to boost their profits. He said: “Remuneration on a time basis rewards inefficiency. Unrestrained costs-shifting drives parties to leave no stone unturned: the more costs mount up, the more determined each party becomes to ensure that the other party pays them. The result is inevitable – a civil justice system which is exorbitantly expensive.”