How law lost its soul – the epidemic of over-charging clients by City law firms
Over-charging by major City law firms could be as high as £5bn over the last five years. I estimate that the flawed system that lawyers continue to use to produce bills has led to charges that are, on average, 5%-10% higher than they should have been across the board. And I believe that when the fundamentally flawed system finally unravels, it will make the MPs expenses scandal look like children taken a few loose sweets from a corner shop. The background to these comments comes as a result of having compiled what is considered the definitive survey of hourly rates charged by the profession for the last 13 years.
September 21, 2011 at 07:03 PM
3 minute read
Costs lawyer Jim Diamond (pictured) argues major law firms have over-charged their clients by £5bn in the last five years
Over-charging by major City law firms could be as high as £5bn over the last five years. I estimate that the flawed system that lawyers continue to use to produce bills has led to charges that are, on average, 5%-10% higher than they should have been across the board. And I believe that when the fundamentally flawed system finally unravels, it will make the MPs expenses scandal look like children taken a few loose sweets from a corner shop.
The background to these comments comes as a result of having compiled what is considered the definitive survey of hourly rates charged by the profession for the last 13 years.
Legal Week editor Alex Novarese wrote a blog on 1 August about the law being a profession. My view, gained over 25 years working in this industry, is that law is a business – and I would go as far as saying it sold its soul a long time ago.
In 1998, I created an hourly rate survey for top City law firms. In the article, I graphically illustrated the defective billing practices used by the majority of top City law firms. Centuries of case law, rules and regulations governing the quantification of legal costs had suddenly been ignored by the 90s generation of corporate law firms.
In January I provided an update in an article for Legal Week. The article, 'Hourly rates on borrowed time', looked at billing practices over the previous decade and came to the conclusion that billing "irregularities" had become far worse than the previous decade. Therefore, I remain convinced of the accuracy of the statement that "this had been the decade of illegal billing". And I continue to be prepared to debate this statement face to face with any member of the Law Society, judiciary or any other professional. No-one, as yet, has taken the challenge.
Following the 2010 survey, a legal magazine carried an editorial comment piece. It stated: "Today's astonishing findings from costs lawyer Jim Diamond shed an entirely new, and in some quarters probably not entirely welcome, light on the past couple of years' trading environment for the UK's leading lawyers.
"The fact that not one magic circle partner was willing to go on the record for a story about a
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