The broken legal services model and the page count myth

The current legal services model is fundamentally flawed. At least certain common perceptions of the legal services model are. In my modest experience, clients, and a great many lawyers, see the legal services business as essentially being about two things: production of documents and/or time based attendances. Those perceptions do both clients and the legal services industry a disservice.

Milton C. Elliott (LOC)

Perceptions of the value in legal services are skewed either in favour of time or documents. Both miss the real value of legal services even as they typically benefit law firms and warp client perceptions of where the value in legal services lies. Clients tend to instruct their attorneys to prepare agreements for some or other transaction with the expectation of paying either for the document they requested (the documents clients sometimes believe they need are not necessarily the correct documents) or the time it takes to create documents supporting the transaction. In the case of time, fees are indeterminate and increasingly a cause for concern for clients who are growing wary of paying exhorbitant fees based on a billing model that rewards inefficiency.

In the case of payment for a contract, clients balk at paying thousands and tens of thousands of Rands for agreements, as if a 20 to 30 page document can’t possibly cost that much. Part of the reason for this, I think, appears to be a sense of a document’s value based on its length. A one page agreement must cost less than a 20 to 30 page document and if a client wants to keep legal costs low, it makes sense to request a one or two page agreement instead. Unfortunately, this approach to legal services is fraught with difficulty. Contracts are increasingly complex as the legal landscape becomes more complex. Reducing page counts may be a way to simplify a document but its a bit like removing supporting pillars from a building because it makes it look cluttered rather than appreciating that the pillars keep the building up.

Hauran, East Jordan.

Time based fees are usually very lucrative for lawyers but one of the complaints about the billable hour is that they are indeterminate. Time based fees are practically synonymous with the rhetorical question, how long is a piece of string? They have also become synonymous with legal billing for legal services. No matter what you need done, the classic charge for legal services is the hourly rate. Clients pay whatever the lawyer’s time is worth and lawyers are rewarded for being inefficient with their time. Lawyers in most firms have their performance measured by reference to how much they bill, relative to budgets. When a billable hour is divided into ten units of six minutes as a unit is logged for every six minutes, or part thereof, the billable hour becomes a very profitable proposition for clients. That said, it is also the standard way to charge for legal services and as expensive as it may be, a lot of clients are used to it and even expect it.

The value of legal services is more about the skill and knowledge that are employed to create and manipulate legal frameworks which may seem abstract but they govern almost every aspect of our daily lives, including those commercial aspects that clients concern themselves with. Legal services should not be valued by reference to page counts or the time involved in rendering them. When clients have a commercial legal challenge to overcome, that is usually best achieved by developing a better legal framework for what they intend doing (for example, structuring a transaction or some other contractual framework) or help understanding the parameters of the legal frameworks they operate within (for example, legislative requirements).

The billable hour is a convenient way to charge for legal services but it has little relation to value. Similarly, a document’s page count is as much a measure of the framework’s value as software code is a measure of the completed application’s value (what is worth more to you: the reams of text comprising Microsoft Word’s underlying code or Microsoft Word, the application itself?). Contracts are not the embodiment of the legal framework, their purpose is to describe it in sufficient detail, including both explicit instructions as well as the legal mechanics required to help achieve the parties’ objectives and to satisfy legislative and regulatory requirements.

The current legal services model is broken and perceptions about it detract from the value of legal services from clients’ perspective. These perceptions also place lawyers under pressure to perform according to the wrong metrics and that undermines their ability to deliver real value as opposed to artificial, perceived value.

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