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Fixed-fee for divorce should be tailored to circumstances

Fixed-fee packages for divorce should be tailored to clients’ individual circumstances, family lawyers have said as a new initiative launched this week offering legal advice at a guaranteed flat rate.

10 May 2012

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The new service, launched by LawVest’s Riverview Law, offers a flat-fee divorce for couples with assets over £500,000, with prices starting at £1,000 for an initial conference with a junior barrister (see box below).

Adam Shutkever, chief operating officer at Riverview Law, said the teams would be led by barristers, but that solicitors would be involved too, ensuring the scheme is SRA-compliant.

“Barristers provide the strategic approach but solicitors are involved, not just because of regulatory requirements but also because we want to ensure that we allocate the best person for each job in each case,” he said.

Law firms have been experimenting with fixed fees for divorce but many solicitors remain sceptical about the viability of the approach for contentious proceedings.

Mills and Reeve, which started providing a fixed-fee service via its earlier this year, has kept away from the flat-fee approach, preferring instead a set bespoke fee in cases not involving complex arrangements.

“We can offer a fixed-fee service but this has to be a bespoke package on a case-specific basis,” said David Salter, the firm’s joint head of family law. “What’s right for client A may not be right for client B; it depends on each client’s specific circumstances.”

While questioning the sustainability of a one-size-fits-all fixed-fee package, Salter said the fixed-fee route was generally “the right approach”, in tune with clients’ expectations.

Salter said clients now wanted a different type of relationship with their lawyers and that solicitors had to adapt their pricing models.

“Some clients may come for initial advice only and perhaps handle the case themselves,” Salter said. “We shouldn’t assume on seeing a client for the first time that they will instruct to act through the whole case, which is why a bespoke service can be an attractive proposition.”

“Will that involve preparing the bundles, corresponding with the other lawyer? All this can take up a lot of time even before you add barristers’ fees.”

He went on: “Clients want the certainty and protection fixed fees offer but the work needs to be scoped before a fixed fee can be set.”

Simon Bruce, partner in the family team at Farrer and Co, agreed that fixed-fee divorces were “an attractive idea” but presented a number of challenges for lawyers. “I am in favour of transparent pricing but determining the level at which fixed fees for divorce should be pitched is a particularly complex exercise,” he said.

“Solicitors provide a service, and clients should know the basis on which they enter a contractual arrangement of this kind,” he continued, “but there are lots of unknown factors that can influence the cost of running a case, some of which may only emerge later on in the course of proceedings.”

One particular question was the cost of initial investigations and preparatory work solicitors carry out when taking on a new client, including initial correspondence with lawyers on the other side.

“Solicitors play an essential part in winnowing the issues,” Bruce continued. “Who is going to do this as part of a fixed-fee offering?” he asked.

Bruce also said barristers already offered fixed costs for their services, whether it was an initial assessment conference, a refresher fee for an extra day’s hearing, or a full financial dispute resolution hearing. The new service, he suggested, appeared no different from current arrangements at the Bar.

Whether the new scheme will represent value for money will depend on what is covered up to the financial dispute resolution hearing, said Gillian Bishop, partner at Family Law in Partnership.

“Will that involve preparing the bundles, corresponding with the other lawyer? All this can take up a lot of time even before you add barristers’ fees from that point onwards,” she said.

“Fixed fees are the future,” she added, “but before you can offer a fixed-fee service you need to have done a lot of analysis about the likely cost of a case and you need to define very clearly what is included in the fees or not – and make clear, for instance, that fees can increase if such and such event occurs.”

Riverview divorce - the cost

Riverview Law, the trading name of LawVest, will offer a fixed-fee divorce starting at £1,000 for an initial conference with a junior barrister looking at the merits of the case and map out an overall strategy. Involving a QC at this stage will cost £2,000.

Riverview Law’s COO Adam Shutkever said solicitors would be involved as necessary to manage case preparation, including correspondence with the other party if required.

But deciding on whether a solicitor or a barrister should carry out a particular task “would depend on who is the right person for the job”, he told Solicitors Journal.

For a further £5,000 a client will be able to take the case to a case management hearing (£7,500 for a QC).

FDR hearings will cost £17,500 for a junior barrister and £25,000 for a QC.

If the case continues to a contested trial a bespoke fee will be discussed.

LawVest is a private equity firm whose minority shareholders include DLA Piper and AdviserPlus.

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