How legal fees are charged by lawyers across the world

A few weeks ago, a story was circulated on Kenya’s mainstream and social media about an assessment that had been made in favour of a firm of advocates for services rendered to a county government.

Most of the public seemed to take umbrage at the fee assessment by a Judicial officer in the sum of over Sh1 billion, saying it was inordinately high and unfair.

The background of the matter is that the firm in question had been instructed to represent the county government in some litigation involving high-value real estate in and around Nairobi.

The assessment was then made by a judicial officer when the client county government and the law firm failed to agree on the fees for the services.

The law firm went to court for a determination of its fees, known in law as taxation of costs, by a judicial officer.

This process involves the firm providing details of the services it rendered such as reviewing, composing and responding to correspondence and other documents in relation to the case, making court appearances and other services so that the assessor (known as the tax master) may determine the appropriate amount that should be paid for the services. 

Surprised many

In making this determination, the tax master checks the services against what the Advocates Guidelines for these services, known as the Advocates Remuneration Order prescribes for the category of services.

It is against this background that the figure that surprised many Kenyans was arrived at.

But the unease based on the cost of legal services is not limited to Kenya.

In 2017, social media in India was equally animated by a letter that a lawyer sent to his client, the Chief Minister of Delhi in a case in court.

The advocate had indicated in that letter his charges for representation, which included a retainer, that is the instruction fee of 10 million rupees and a further sum of 2.2 million rupees for each court appearance.

Most citizens of India were upset by this, especially since they believed that this was to be paid from the coffers of the state of New Delhi.

To his credit, however, the advocate graciously indicated that he was prepared to offer the services at no cost if the client could not afford them.

Concerns about high fees were shared by the Constitutional Court of South Africa in 2012, which said that it was no loose metaphor that legal fees could skyrocket beyond the availability of the ordinary citizen to pay.

In both the Kenyan and the Indian cases, part of the issue was that this was money being paid from the public purse.

There perhaps would have been less concern if the fees were being paid by private individuals.

The question both in India at the time and in Kenya a fortnight ago is how lawyers’ fees for representing clients are arrived at.

At the basic part, it must be noted that the issue of fees is private between a client and the lawyer they may instruct to represent them.

Most jurisdictions treat legal services as private services for which the client as a customer and the lawyer agree privately.

In England, for example, barristers have various methods of charging fees. They can charge on a time expended basis.

This means that they will bill the client for the length of time it takes to work on the client’s case at a specified rate.

This sum is not fixed and will depend on the seniority and expertise of the lawyer and even on the complexity of the case or urgency of the matter.

It is in this respect that you may find that there are barristers in London who charge upwards of £3,000 per hour.

Using this method, the lawyer will then record the number of hours spent on the case and send a final bill based on that time. This method of charging clients applies in Kenya as well.

The other method by which lawyers charge fees is the fixed or flat fee method.

The client is charged a fixed fee, often paid upfront for the case until it is concluded.

The only variables in this kind of arrangement may be that the client will meet additional costs and expenses incurred such as travelling costs and court fees.

This method is most popular for clients, especially individuals who do not deal too often and who would want to budget with a clear idea of what the case will cost them. It is a particularly common method of charging fees in Kenya.

The third type of charge is the one that is getting increasingly popular but was originally frowned upon from an ethical perspective. It is the contingency fee method.

This applies where the client pays nothing or a very small amount upfront. The small amount is often for expenses paid to third parties such as court fees and travel costs.

But the lawyer’s fees are predicated on the success of the case so that the lawyer takes a proportion of the damages awarded if the case is won.

In the event of a loss, the lawyer gets nothing. The reason contingency fee agreements are frowned upon is that the lawyer then gets to have an investment in the outcome of the case and therefore has a somewhat conflict of interest between the advocate and the client’s best legal interests and the lawyer’s personal financial outcome from the case.

Contingency fee arrangements tend to apply in mostly personal injury, product liability and other cases where there is to be a financial award.

It has been found that in some of these contingency arrangements the lawyer takes a disproportionately high amount by taking advantage of the client who would otherwise not afford legal services to vindicate their rights. Instances have occurred where advocates took up to half of the damages for their fees. 

Jeopardised rights

That is why in India for example, the Standards of Professional Conduct and Etiquette of Advocates expressly prohibited any arrangement by which a lawyer stands to gain his fees from the results of the litigation or to take any share in the proceeds of such litigation.

The Supreme Court of India had a say on the matter when a client challenged the exorbitant contingency fees charged by an advocate by stating that such arrangements jeopardised the rights of the citizen to access justice.

The court further reiterated the legal ethics proposition that the relationship between a client and the advocate is fiduciary, with the advocate in a position of trust with the obligation to act in the best interests of the client.

Contingency fee arrangements continue to increase in popularity in most parts of the world, especially where the majority of citizens cannot afford legal fees.

In South Africa, the law clearly provides for a model of contingency fee where there is an agreed proportion by which the fees would be increased in the event of success.

The proportion of the increase is limited and may not be increased by more than 100 per cent. In other words, the contingency success fee may not be more than twice what the normal fee would have been.

Reward and risk

Whatever one thinks, contingency fee arrangements carry the high reward and risks on both sides.

One firm that came out on the right side of it is known to have made more than US$200 million in a patent claim.

But American lawyer, the late Joe Jamail of the firm bearing his name would not share the scepticism on contingency fees.

He made the best of it with a contingency fee of about US$345 million after winning for his client a jury verdict of US$10.35 billion, which was settled at US$3 billion.

But it would be far from true to say that advocates earn stratospheric amounts of money.

Just the week where this story of high fees emerged in Kenya, criminal defence barristers who mostly represent the poor in legal aid in Britain were on strike, seeking an increase in their pay.

But it is within the same profession that has contingency fees that also has brought the words “pro bono” to the world.

The lawyers and clients may also agree to have services rendered pro bono, that is, at no cost.

The writer is the head of Legal at Nation Media Group. [email protected]