Senior judge says hourly billing for legal fees must end

The UK’s second most senior judge, Lord Neuberger, has said that the practice of huge hourly rates charged by solicitors should end because they reward inefficiency.
According to Lord Neuberger who is Master of the Rolls, there is an urgent need for an alternative to hourly charges for legal work. Fixed charges for legal work is one of the viable alternatives being proposed by Lord Neuberger.
Lord Neuberger made his comments during a speech he made recently to the Association of Costs Lawyers, saying: “Hourly billing at best leads to inefficient practices, at worst it rewards and incentivises inefficiency.”
He also added that those who are able to bring cases to a close quickly often end up being penalised: “It also penalises the able, those with greater professional knowledge and skill, as they tend to work at a more efficient rate.
“In other words, hourly billing fails to reward the diligent, the efficient and the able: its focus on the cost of time, a truly movable feast, simply does not reflect the value of the work.
“In practical terms, any business which bases its charges simply on costs does not deserve to succeed, or even, some might say, to survive.
“One of the main reasons for the decline of British industry between 1880 and 1980, and especially in the first half of the 20th century, was its charging system – that of cost plus – compared with its German and US competitors, who charged market value.”
Lord Neuberger also said: “That no one has suggested a viable alternative is something which needs to be remedied, and the sooner the better.
“An approach to litigation costs based on value-pricing rather than hourly-billing is one which urgently needs to be worked out and applied.
“Rather than treating time as the commodity which is being sold, we should be adopting an approach where skill and experience are the commodities which are sold.”

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