Reducing legal costs

 “The container is at the core of a highly automated system for moving goods from anywhere, to anywhere, with a minimum of cost and complication on the way. The container made shipping cheap, and by doing so changed the shape of the world economy.”

 - March Levinson

Reducing shipping costs with containers increased access to trade. Similarly, reducing legal costs will increase access to the law.

How can we do this?

Lawyers charge an hourly rate. It follows that reducing costs requires fewer hours, lower rates, or both.

Reducing hours

How do we make lawyers work fewer hours?

Force

The first option is force. We force lawyers to work less with these hard caps:

·            Settling the case;

·            Holding earlier trials;

·            Setting time limits at trial.

Settling

Settling the case stops all work. A mandatory halt. It is, therefore, very effective at reducing hours, because settling a 100-hour case after 10 hours reduces legal fees by 90%.

Moreover, the parties have reached a mutually agreeable outcome, rather than having a judgement imposed, saving relationships (and appeals).

Such is settlement’s effectiveness, it is often considered the only strategy for reducing legal costs. Governments implore litigants to “Save money: settle!” But while important, it is not the only option.

Earlier trial dates

If the case doesn’t settle, we can set earlier trial dates. Lawyers always fill available preparation time. Earlier trials force lawyers to condense preparation, saving cost.

We, of course, cannot be too eager.  Impossibly tight deadlines are unfair. But equally, relaxed trial dates cause bloated preparation and unnecessarily high legal fees.

Time limits

The diet doesn’t stop at the court door. We can force lawyers to save time at trial with time limits.

The court gives each side a time budget to present their case. How they spend it is their call. But like pocket money, once it’s gone, it’s gone. Use it wisely.

Encouragement

Force is not the only diet strategy. There is also willpower. Lawyers may also voluntarily save time with these options.

Technology

Technology continues to replace human labour.

In the old days, the only way to file an urgent document at court was for the lawyer to walk it across town. Or a typing error required the whole page to be restarted.

Thankfully, these days are over. But lawyers should retain the replacement mindset, vigilantly asking: what work can technology replace?

If technology advances every day, every day you forgo this question is a lost opportunity to save time.

Planning

Planning takes time but saves more. Skipping it is a false economy. Without a map and destination, the case will burn extra petrol on the back roads.

Specialisation

Specialisation also saves time. You don’t have to ‘start from scratch’. For cases in your domain, you can leverage experience to perform the same level of quality in less time.

Some lawyers resist specialisation. They want variety. But if it comes at the cost of efficient work performance, it is an expensive indulgence.

Reducing unnecessary activities

Lawyers must also jettison unnecessary work. Litigation is not monolithic.[1] Like a building, it is the congealed result of many discrete tasks.

Some require a lawyer. Do those. Some are over-serviced. Delegate those. Some are redundant. Eliminate, eliminate, eliminate.

Real issues

Lawyers must carry a thrifty mindset to trial. Focus. Best arguments only. Each argument requires a response, and a decision, so weak arguments multiply waste through the system.

A defendant lawyer in an infamously expensive Australian case explains:

“[The plaintiff] pleaded a case with hundreds of permutations and combinations … They would say, ‘we’re entitled to run all the points we want to … and we don’t have to, at the outset, decide which are the best and which are the bad ones. The main gist of their case was probably one-tenth of the volume of the case. [But] we had all this stuff around it that we had to deal with.”[2]

‘Dealing’ this peripheral nine-tenths is a poor use of trial time. So focus.

(If not, judges must intervene, extracting the gist from the morass of arguments. Come on. What’s this really about? Really.)

What is most effective at reducing time?

Hard caps. While they are blunt instruments, they work. Lawyers must stop work.

The other options require lawyers voluntarily work less. And whether from a desire to ensure absolute quality or to generate additional revenue, lawyers struggle to stop work before they must.

In a way, voluntary options rely on lawyers’ benevolence to do the right thing. Some will, but it is no recipe for systemic change.  As Adam Smith observed ago three centuries ago:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner but from their regard for their own interest.

Only hard caps (and the consequences of non-compliance) trigger the necessary appeal to self-interest that consistently works.

Still, many feel uncomfortable with the idea of hard caps. In law, time and quality are psychologically linked. More time means weightier consideration. Better quality. Less time is rushed. And capped time is capped justice.

There are several responses.

First, there will always be a hard cap, in the form of a trial date, to be worked towards. At some point, the music must stop. Therefore, we should not be too hyperbolic.

In addition, more time may mean more quality but beware of diminishing returns. At a certain point, the value of another hour of work becomes negligible. Does capping work here really endanger quality?

Finally, a cap is necessary to drive a finished product. Without the cap, lawyers will eternally tinker with their preparation, falling victim to Di Vinci’s aphorism: “Art is never finished, only abandoned”.

Also, hard caps have secondary benefits. It makes time scarce, encouraging innovation.

Consider how you write an essay when the deadline is next semester compared to tomorrow. Or the frivolity of purchases on payday as against the 29th day of the month. And the activities of the idle youth as against those tragically diagnosed with a terminal disease.

When time is plentiful, we tend to abuse it. Conversely, limiting time forces us to use it properly.

Industrial Britain achieved a massive leap in innovation when working days were capped at 10 hours. Capital had to be smarter at getting more from people rather than just working everyone longer hours[3].

There are always calls for lawyers to be more innovative. But you don’t get this by giving us forever. Only the fire of limited time can drive the necessary creativity. After all, if we all lived forever, what impetus would there be to do anything, ever? It is only by virtue of the finite nature of life that we are compelled to produce

Rate

That’s hours. Now the rate. Demand and supply set rates, so to reduce rates, we must:

·            increase the supply of litigators; or

·            reduce demand for litigators.

Supply

To increase supply, we must first increase the willingness of potential litigators to serve the market. As in marriage, this is a problem of retention rather than attraction.

It’s easy to attract people to be litigators. Litigation seems glamorous. Dramatizations in movies, books and on stage portray litigators as knights duelling on the public stage in a noble battle for truth and justice. Protecting the downtrodden. Persecuting the guilty.

But this is a romantic view. More often, the reality of litigation is different. Long hours. Drudgerous preparation. Upset clients, unreasonable opponents and cantankerous judges. For every hour of glamour and excitement, there are ten difficult ones. It’s tiring, stressful and never-ending (unless you quit, and many do).

The problem is exacerbated by factors that should make zero difference in a modern world but continue to do so: institutional inertia imposing barriers to advancement for female, non-white and LGBTI lawyers.

Excessive quitting causes undersupply, driving up the rates of litigators who cling on. Clients ultimately pay more for mere fortitude.

What to do?

The reasons litigators quit are far too idiosyncratic to distil universal prescriptions. But we don’t have to have universal answers. Just local ones. So ask.

What makes you unhappy? Can I fix it? Can the profession? Which parts of the job do you like? Can you do more of it? Which parts do you dread? How can you give those parts away?

The better the profession is at diagnosing and curing sources of dissatisfaction, the more people are likely to stay. And as night follows day, the increased supply will reduce prices.

Capacity

Having the will is not enough. You need the way. Willing litigators must also be able to litigate.

The problem is that no one walks out of law school ready to handle cases. We need on-the-job training. Experienced lawyers are supposed to provide this, to pass on the trade secrets and tips. But it doesn’t always happen.

Why? No one pays them. They must volunteer their time. Moreover, (calling a spade a spade) their self-interest is served by keeping their knowledge scarce and not training others to compete with them. Some will do altruistically, but the masses cannot be fed by the butcher and bakers’ altruism. 

The misalignment of incentives means on-the-job training is neither rigorous nor widespread. This leaves the pool of able litigators smaller than ideal, increasing prices.

What to do?

The profession must step in. Medicine does not leave the health of society reliant on the altruism of experienced doctors sharing their knowledge (if they have time). When public health is at stake, it intervenes. Rotations. Clinics. Residency programs. Exams. Rigour and structure. Producing good young doctors.

Why? The need is pressing. If there are not enough doctors, people die – today. No such risk exists with lawyers. But long term, if an insufficient volume of people is trained to handle litigation, the resulting high prices placing law out of the reach of most people is a no less pressing concern.

Reduce demand

How do you reduce demand for litigation? There is the totalitarian option. Suppress people. Intimidate. Prohibit lawyer's advertising. Discourage seeking legal advice.

But this attacks symptoms, not causes. And, of course, this is unacceptable in an open society. It is better to reduce demand by preventing disputes from arising at all.

How can courts, society and lawyers help?

Courts

Courts can reduce disputes with a reputation for efficiency. Knowing courts will catch and punish law-breaking encourages good behaviour.

The following illustrates. My local council introduced electronic parking surveillance. When a parked car overstays the time limit, the system notifies a council officer immediately. There is no escape. A fine for parking violations was inevitable.

The council probably expected this technology would increase fine revenue. But the opposite happened. Illegal parkers soon learned they had no chance. Compliance with the law improved. Fines reduced. When there was a chance, parkers took it and flouted restrictions, whereas when refractions were reliably punished, almost overnight, parkers tripped over themselves to comply.

In the same way, courts that reliably punish bad behaviour will improve compliance with the law. Conversely, slow and ineffective courts encourage bad behaviour, multiplying disputes.

This exacerbates the problems of delay and triggers a downward spiral.

Members of society

Just because we have public hospitals does not absolve members of society of the need to look proactively after their health. And it is the same in law.

The most common type of dispute is a factual dispute. Individuals must take responsibility for avoiding them.

Factual disputes usually arise from disagreements about what was said or done during unrecorded events. This means there is a simple, immediately practicable method of avoiding factual disputes – take accurate, contemporaneous and complete notes.

A case illustrates the point.[4] Ms George underwent surgery on a tumour on an acoustic nerve's sheath. This operation carried a significant risk of facial paralysis. The paralysis eventuated. A dispute arose regarding whether Ms George was properly warned of this risk.

Unfortunately, the doctor’s notes were inconclusive:

“. . .all complications discussed / nat history / csf leaks, meningitis and sequelae. . .”

What does this mean? Did it mean the doctor advised of the risk of facial paralysis? After a trip to the NSW Court of Appeal and thousands of dollars in legal costs, the issue was resolved in the doctor’s favour. Just.

The message is clear. Invest the time to record events and conversations accurately, and reap the benefits when you can immediately halt a dispute arising in the future.

In reality, this is just good legal hygiene. Good hygiene is preventative. You reduce demand for dental surgery if everyone brushes their teeth. Conversely, it’s a bit rich for everyone in society never to brush, gargle or floss and then, when the inevitable occurs, collectively whine surgery is expensive! By not brushing, you create the very demand that drives up prices. So don’t complain, floss! (And take good notes.)

Lawyers

Confident lawyers get hired. But in their eagerness to get a job, lawyers may be guilty of inflating the likelihood of success.[5] “Hire us, and we’ll smash them for you”. “It’s a slam dunk case”. These words can encourage clients to dive in and commence litigation when a more sober (and honest) cost-benefit analysis would have suggested otherwise.

Every litigated case has one side that is inappropriately confident. It must not be us. We should not prescribe litigation simply because we own the cure. The client needs sober advice, not a razzle-dazzle sales pitch.

Conclusion

The problem of cost is not new.  The response to date has been to subsidise expensive lawyers. Legal aid. Or asking expensive lawyers to work for free. Pro bono. Or asking expensive lawyers to defer their fees. No win, no fee. Or sharing the cost of expensive lawyers. Class actions.

These are valuable options. But not exhaustive. In addition to finding ways to afford expensive lawyers, lawyers can also become cheaper.

Unfortunately, reducing costs requires the product to be made differently. And no human, lawyers least of all, willingly embrace new ways of doing things. Hard caps. New training regimes. Less trigger-happy to litigate. These are new ideas and uncomfortable. 

But the iron law of the universe says that without change, we cannot expect a different result. So the mandate is clear. The steps? Uncomfortable. The ultimate benefit is well worth it.

For laws are useless if they are too expensive to enforce. Making lawyers affordable is, therefore, as important as crafting the law in the first place.

Samuel J Woff is a commercial construction lawyer, construction litigation specialist, speaker, author and academic. Prior to launching his consulting career, he worked as a lawyer for 10 years at some of Australia’s largest firms.

Copyright 2023 Samuel J Woff

[1] With thanks to the writings of Richard Susskind

[2] https://www.lawyersweekly.com.au/news/837-excess-or-necessity-lawyers-reflect-on-c7-litigati

[3] See “50 Great Economic Classics”.

[4] Biggs v George[2016] NSWCA 113

[5] With thanks to the writings of David Maister on making unachievable promises to win the work.