Legal eagles not flying so high

 

PROFESSIONAL FEES:Some professions don’t seem to realise that we’re living in deflationary times and a report by the National Competitiveness Council has found that legal costs remain high

WE ARE LIVING in an era of deflation which is unprecedented in modern times but while the prices of most goods and services have fallen precipitously in the last two years, the fees charged by many among the professional classes would – on the surface at any rate – appear to be holding firm.

When it has come to criticism of fees, it has been doctors and dentists who have taken most of the flack in recent months largely because of a woeful lack of price transparency, massive differences in the fees charged by practitioners operating around the country and the impossibility of avoiding their fees.

You can do without an accountant or an architect if you absolutely have to – by doing your books yourself or not going ahead with a proposed extension – but it is much harder to dispense with the services of your doctor or dentist because when you’re sick, you’re sick.

Another reason doctors in particular have come in for criticism stems from concerns over the high wages earned by many GPs. A GP with an established practice in this country can expect to earn in excess of €200,000 while his French counterpart earns half that amount.

But what about solicitors? Are prices falling in the legal profession in line with what is happening elsewhere? Not according to a report published by the National Competitiveness Council (NCC). It found that legal costs have remained stubbornly high over the last two or three years and fees were still 18.4 per cent above the average 2006 price at the end of last year.

The Minister for Enterprise Batt O’Keeffe has said fees in both the medical and legal sectors are too high. He says reductions in fees have been small compared to other sectors, and in some cases, there have been increases.

“It’s important that the legal profession is aware of the difficulties for business and that everybody is now required to play a role,” he said.

“Everybody’s pay and social welfare is being affected and these people in the professional sectors are increasing their costs and not reducing them and not taking account of those who are very often less well off in society.”

That is not to say solicitors are on easy street, not by a long shot.

Claims of negligence are a problem area, for one thing. According to some sources, up to 40 per cent of solicitors are currently facing claims of negligence by disgruntled clients and facing increased insurance premiums as a result.

The legal profession was one of the main beneficiaries of the property boom and for most of the good years, solicitors teased out the legal intricacies of a house purchase and charged a percentage of the sale price – anywhere between half and three quarters of a per cent of the value of a house sold.

With the collapse in property sales and a 40 per cent drop in house prices, there has been a commensurate decline in solicitors’ income.

With revenue from property deals disappearing and many in the legal profession owed huge sums by developers and speculators who can’t afford to pay, solicitors are being forced to compete harder for a smaller pool of clients.

While there is absence of hard data, there is plenty of anecdotal evidence suggesting that general fees have fallen considerably.

Many smaller firms across the county are charging less than €1,000 for conveyancing any property while there are many Dublin solicitors who will do the job for no more than €1,500, less than half of what they were charging at the height of the boom.

The fees for arranging commercial leases have also fallen dramatically. In the past, no solicitor would have done one of any kind for less than €5,000, with most charging well in excess of that. Now some are arranging leases on office spaces for under €2,000.

Separations and divorces are being done for between €2,000 and €3,000, a drop of at least 25 per cent on the fees charged at the height of the boom. A deed of separation, which would have cost a couple at least €4,000, can now be done for half that amount.

It is now consumers and not the legal eagles who are in the driving seat when it comes to prices and the days of a solicitor telling people how much something was going to cost and that fee being accepted without a murmur have disappeared. People should be prepared to go to a legal firm ready to haggle and to completely disregard the initial quote.

The area of probate is one where a lot of people find themselves caught out. Families of the deceased are often grieving and go to the family solicitor to sort out the will. Often times, the document can be very straightforward but the fees charged are anything but. We have heard of people who have been quoted €6,000 for sorting out the probate on the will. When one reader questioned a bill of this size, the solicitor hastily knocked more than €3,000 off the quote.

Pat Igoe is a Dublin-based solicitor and while he makes it clear he not an apologist for the profession, he offers a robust defence of the fees charged by solicitors and makes valid arguments about the dangers of seeking the cheapest practice on the market.

He accepts there are certainly some in his profession who are coining it at the expense of consumers, but insists that the majority of solicitors are “not wealthy and do a reasonable job for a reasonable wage”.

He says he has not found much downward pressure on fees in his practice, but knows it is happening across the sector “and it is perfectly reasonable”. He stresses that there is a price point below which solicitors can’t go and still perform to an acceptable standard.

Privately, solicitors admit that it is not uncommon for members of their profession to overcharge when it comes to probate fees in particular because their fees come out of an estate and as such, will not be unduly missed by the beneficiaries.

When it comes to probate consumers should remember they are not tied to a particular solicitor. It is also worth bearing in mind that it is not difficult to handle simple cases of probate without any legal training. The Revenue and Courts Service are more than willing to talk people through the complexities of the process.

Igoe says “a wise client focuses on the work being done properly” and does not obsess about fees.

“When you buy a pair of shoes you can tell what you’re getting immediately but when you go to a solicitor you often don’t know what you’re gotten for many years. There are a lot of people offering cut-price conveyancing but you will not know what kind of job has been done until it comes to selling your house,” he says.