10 practical points for fee earners to increase profitability (and avoid losing fees!)
Mar 13, 2023 | admin
In the current civil litigation climate and, in particular, the imminent increase in Fixed Recoverable Costs for all cases valued at up to £100,000, it is more important than ever to maximise your return from work done and to avoid wasting time and losing costs. The intention of this article is to give you some practical (and hopefully simple) ways to achieve and / or avoid this.
1. Time recording
I know this is boring and time consuming but hear me out! Let’s assume you work on 10 files a month. On each one you fail to record 12 minutes each month. Overall, that is 2 hours per month or 24 hours a year which = £3,024 as a Grade D fee earner based on the Guideline Hourly Rates. If your Grade A fee earner does the same that is at least £6,120. Missing 12 minutes on each file every week changes these figures to £13,104 and £26,520! In other words, you are probably losing yourself and your firm a fortune!
2. Clerks / Secretaries / Assistants
Think they are not fee earning? Think again! Most of the time they won’t be BUT it is the nature of the work that makes it chargeable / recoverable, not who does it. Many conveyancing secretaries are actually conveyancing assistants and whilst you’re working on a fixed fee for conveyancing work, what if you have a civil litigation assistant that you trust to produce, send and check letters of authority (for example) or to collate documents for a brief to Counsel? [More about ‘collating below’] This is Grade D fee earning work and you’re probably missing capturing it – see above for how much this could generate for you / your firm.
3. Collating / Sorting / Paginating / Copying
Think none of this is chargeable? Once more, think again! The first two are – only the second two aren’t – and there is a precedent supporting this (see Ahmed v Aventis Pharma).
This leads to the more general point that it is important to use the correct words to describe the work done as some work is not recoverable Inter Partes and some is. A good example is ‘research’; if you’re researching CPR or established precedents, then it is not (you are expected to know this, and it is built into your hourly rate) BUT if you are looking to find and then read a recent case which is relevant to the matter you are dealing with then it is. Likewise, reviewing a document is more likely to be recoverable than checking it.
Following on from the last two points, if you read the Ahmed judgment (it is fairly short and it also references another interesting case of Crane v Canons Leisure) you will see that if the work done by agents is fee earning work it can be recovered at your relevant hourly rate as profit costs. So, if your agent is charging you £50ph, you make a profit of at least £76ph (Grade D Guideline Hourly Rates) without ‘breaking sweat’! This is particularly important where you are paying a medical agency to sort and paginate medical records: the sorting / collating is fee earning, the paginating / copying isn’t so do ask them to split their invoice or at least give you a breakdown. Also, consider using paralegal agents more!
5. Duplication / Reading In / Inter Fee Earner Discussions
These are standard objections in most Points of Dispute and are often justified! In a ‘standard’ case, such ‘duplication’ of work cannot be justified as recoverable Inter Partes, the acid test being, was it necessary to progress the case or is it something you should know / know how to do anyway i.e., it is subsumed within your hourly rate. If it was necessary, then record the reason for it. For instance, why did two fee earners have to attend the client? There may well be a good reason – or there was one at the time – but unless you have recorded the reason, you are going to struggle to recover the additional fee earner’s time. Likewise, on a handover of fee earner; was this also a perfect / necessary time to review the matter to progress it? If so the time (or at least some of it) may be recoverable but you need to have recorded this in the file.
6. Annual Fee Reviews
EVERY client care letter contains the ability to review and increase the rates agreed with the client – usually annually. In my experience (35 years of it), less than 25% of the client firms I have worked with have actually done this or, rather, have failed to notify existing clients of any rises. For example, a case starts in 2018 with rates of, say, £250 / £200 / £175 / £125. The case finishes in 2022 by which time retainers for new clients are £300 / £250 / £200 / £135. You though are ‘stuck’ with the original rates and can only claim probably about 85%-95% of what you would have been able to charge / claim if you had simply let your clients know. Across the firm, that 5%-15% could represent thousands (or tens of thousands) of pounds of potentially lost revenue.
The conducting fee earner will recover time for considering and creating a bundle index or deciding on the enclosures to be sent to Counsel with instructions or a brief. However, they are unlikely to recover at their rate the collation of the bundle / documents. This is regarded as Grade D fee earning work. Likewise, sorting through and summarising medical records (where this is done in-house). Therefore, delegate this to a lower grade fee earner (ideally a D grade one) and if you don’t have one then consider training an admin assistant to do this task – see Clerks / Secretaries / Assistants section above. To avoid losing costs, instead spend those extra hours doing work that is recoverable at your Grade.
8. Use of Counsel
In the thousands of cases I have dealt with over my career, this is an issue which ‘divides the critics’. It is true that paying Counsel to draft pleadings is almost always cost-effective – they will usually charge less than it would cost out at if you did it yourself (and, arguably, they may make a better job of it!). However, if you spend too long drafting the instructions, checking the draft pleadings and maybe amending them then you cannot always expect to recover all of that AND Counsel’s fee Inter Partes. Over-reliance on Counsel (e.g., instructing them at every turn to advise on or draft offers and responses) will have a knock-on effect on your hourly rate and / or grade of fee earner allowed by a Court. Use Counsel judiciously.
9. Counsel’s Fees
This is an altogether different point. You should always get a fee-estimate for any work you wish to instruct Counsel to do and whilst we all have our ‘preferred’ Counsel, it is often wise to shop around. Furthermore, the initial fee estimate will probably be like a hotel’s ‘rack rent’; reductions can almost always be negotiated! When it comes to paying Counsel, please do pay Counsel some of your payment on account when received but do not pay Counsel’s fee(s) in full. If you get a 50% payment on account, then pay them 50% at the same time. If you’ve paid them in full then your costs representative cannot later negotiate a reduction in his / her fee(s). Paying their fees in full will mean a corresponding reduction in your net profit costs recoverability.
10. Use your Costs Specialists!
A shameless plug but we / they are almost always cost-effective and most of our work can be included in a claim for costs Inter Partes so we / they are costs neutral. This can help avoid you losing income by:
Advising on retainers to ensure that you can recover your fees against your client and therefore Inter Partes where there is an order
Drafting your budgets so that they accurately record your incurred work (thus avoiding recovery problems on assessment)
Working with you on forecast costs to avoid under-budgeting
Helping you avoid that worst of budgeting nightmares – exceeding it! In a recent case the client had to accept a net loss of £120,000 for going over-budget without any application to vary and with no good reason to depart other than ‘over-working’ the case.
They can help you maximise income by:
Drafting realistic and recoverable N260’s and Schedules of Costs for interlocutory hearings or Joint Settlement Meetings
Drafting accurate Schedules and Bills of Costs that maximise your recoverable costs
Ensuring that early payments on account are received
Drafting Part 8 costs-only proceeding
Negotiating fee-reductions with Counsel
Negotiating costs settlements
They can also advise on any / all costs queries or issues you may have throughout the life of a case.
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