Shakespeare had something of a way with words: a talent to amuse, abuse, beguile and bewitch through his unparalleled mastery of language. Any attempt to define such genius is superfluous: much better to study his work instead. Better still, just watch his plays. On the subject of lawyers, the Bard crafted a pithy and oft-repeated one-liner: “The first thing we do, let’s kill all the lawyers”. It comes from Henry VI, Part 2, Act IV, Scene 2, and in context is ambiguous, working both as a joke and serious criticism. Either way, its lasting impact says much about how the legal profession was seen as far back as the 1590s.
Today, there is an abundance of legal jokes to be found, and even more criticisms. Which leads to the overwhelming question of why do we need to have lawyers at all – particularly the smart, blue-suited corporate ones, whose fabulous facility with legal terminology can serve to bludgeon the rest of us into submission when it comes to arguing a point over the dinner table or even casually discussing the merits of a novel.
For those involved in the upper reaches of big business, the use of such lawyers is something of a routine occurrence. The bigger the business, the more lawyers are needed and more often. The intrinsic value of some external advisers is obvious. Almost as much maligned as their professional legal brethren, accountants and auditors can nevertheless be manifestly recognised in serving their purpose: accounts and financial statements are fully transparent. Or at least they should be.
But trying to see as clearly how and where lawyers fit into the corporate equation is less obvious.
In fathoming through those vaguely itemised bills, hundreds of legal hours can easily stacked up without the recipient being any the wiser about exactly what the lawyers who have produced them are being paid to do.
One thing is certain, however: the fee rates. But according to a recent report by tech company BigHand, a significant number of big law firms are denting their profitability by under-pricing themselves. In a survey of 257 finance executives at law firms with over 100 lawyers in both the UK and US, it found that 37% of UK firms had under-priced their services.
I am sure that they must exist, but in meeting and interviewing a good number of general counsel and heads of legal departments at multinational companies, they have never once commented to me on how cheap their legal service providers are, or that they really should be charging more for what they do. Maybe I wasn’t listening.
Instead, what I have heard about is frequent puzzlement at the total legal bill, sometimes confusion about the lack of transparency, and occasional anger at the realisation that they are not receiving value for money. The anecdotal norm is that general counsel invariably consider law firms to be expensive, which they do not mind if they perceive value, but which they clearly do if they cannot properly understand everything for which they are paying by the hour – usually hundreds of them.
Like their fees, the visible benefits of business lawyers can seem all too opaque. That an original Shakespeare folio might be worth several million comes as no surprise, but for a book bought on Amazon £25-£30 is pretty much top whack for anything other than a specialist or academic work. A legal document of similar length to a best-selling novel typically comes somewhere in-between, perhaps starting at £15-£20,000 and then moving upwards for documents that begin to dwarf War & Peace or A La Recherche du Temps Perdu.
Whatever the cost, such documents do not make for nearly as good a read. Nor are they scarce. Should you have limitless resources, lawyers will gratefully produce hundreds of semi-bespoke documents – mostly lifted directly from pre-existing templates with specific clauses and details inserted where appropriate. That is the bread and butter of what most commercial lawyers do: create, check, re-check, re-work, and re-check documents, swapping with the other side, and then repeating the process (perhaps several times), before finally agreeing and bundling them for inspection and signature, or for filing in a court.
Go to a specialist QC for an expert commercial opinion and the rate per word can begin to reach telephone number proportions. Advice comprising only as many paragraphs as a neatly fashioned short story might cost you as much as a smart new car or a luxury holiday for the entire family in a faraway place. Enter a courtroom to litigate for a few weeks or months and businesses can end up paying legal fees that match the Lotto jackpot prize.
Unless the sum at stake is very large, commercial litigation costs can soon end up becoming disproportionate. It’s not just businesses who might find themselves in this situation: high legal costs can reach into the lives of ordinary people too. In 2014, a divorcing couple spent £920,000, a third of their total wealth, on lawyers and experts – described by the judge hearing the case, Mr Justice Mostyn, as “an eye-watering total”. And it took them only eight months to burn through the money without having made one inch of progress in their divorce.
But to assess legal advice based purely on cost is wrong. What really matters in using any lawyer is value, notably the perception by the client of receiving value for the advice and service that they receive. Notably, the most valuable legal advice can sometimes be the most succinct: you have a bad case, don’t sue, don’t bring this legal action, or just settle this dispute. Likewise, the most effective legal letter can be a single page. Worded in the right way, from the right law firm, its impact can be devastating for the other side.
What businesses are really paying for is judgment, based on experience. A great lawyer is not one who knows all the relevant law, but one who can apply the law to match the client’s situation and deliver clear, sound advice in language that the client understands. That can be priceless.
Meanwhile businesses want to be able to manage and mitigate risk. Effective management of legal costs, racked up by the hour, is sometimes necessary and sometimes not. At other times, it may even be essential: in litigation, for example, the number of hours billed forms the basis of cost recovery by the winning side against the losing one.
Sadly, the billable hour does not work for the benefit of the client most of the time; it simply benefits the law firm issuing the invoice. Experienced lawyers should be able to quote a fixed fee for most of the work they do, most of the time. But they rarely do. Remember: lawyers can make more money from ambiguous and unclear instructions, and often do. So businesses need to ask their lawyers, unambiguously, exactly what they want from them and demand complete transparency over how much it will cost up front. Don’t take no for an answer. If the law firm refuses, then go elsewhere: after all, there’s plenty to choose from.
And if all else fails, then you can always take Shakespeare’s advice.
Dominic Carman, journalist, writer and legal commentator. www.dominiccarman.com