10 practical points for fee earners to increase profitability (and avoid losing fees)

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10 practical points for fee earners to increase profitability (and avoid losing fees)

In the current civil litigation climate and, in particular, the imminent increase in Fixed Recoverable Costs for all cases valued at up to £100,000, it is more important than ever to maximise your return from work done and to avoid wasting time and losing costs. The intention of this article is to give you some practical (and hopefully simple) ways to achieve and / or avoid this.

1. Time recording

I know this is boring and time consuming but hear me out! Let’s assume you work on 10 files a month. On each one you fail to record 12 minutes each month. Overall, that is 2 hours per month or 24 hours a year which = £3,024.00 as a Grade D fee earner on Guideline Hourly Rates. If your Grade A fee earner does the same that is at least £6,120. 00. Missing 12 minutes on each file every week changes these figures to £13,104.00 and £26,520.00! In other words, you are probably losing yourself and your firm a fortune!

2. Clerks / Secretaries / Assistants

Think they are not fee earning? Think again! Most of the time they won’t be, but it is the nature of the work that makes it chargeable / recoverable, not who does it. Many conveyancing secretaries are actually conveyancing assistants and whilst you are working on a fixed fee for conveyancing work, what if you have a civil litigation assistant that you trust to produce, send and check letters of authority (for example) or to collate documents for a brief to Counsel? [More about ‘collating’ below]. This is Grade D fee earning work and you are probably missing capturing it – see above for how much this could generate for you / your firm.

3. Collating / Sorting / Paginating / Copying

Think none of this is chargeable? Once more, think again! The first two are – only the second two are not – and there is a precedent supporting this (Ahmed v Aventis Pharma Ltd (Rev 1) [2009] EWHC 90152 (Costs) (19 November 2009)).

This leads to the more general point that it is important to use the correct words to describe the work done as some work is not recoverable Inter Partes and some is. A good example is ‘research’; if you are researching CPR or established precedents, then it is not (you are expected to know this, and it is built into your hourly rate) but if you are looking to find and then read a recent case which is relevant to the matter you are dealing with then it is. Likewise, reviewing a document is more likely to be recoverable than checking it.

4. Agents

Following on from the last two points, if you read the Ahmed judgment you will see that if the work done by agents is fee earning work it can be recovered at your relevant hourly rate as profit costs. So, if your agent is charging you £50.00 per hour, you make a profit of at least £76.00 per hour (Grade D Guideline Hourly Rates) without ‘breaking sweat’! This is particularly important where you are paying a medical agency to sort and paginate medical records: the sorting / collating is fee earning, the paginating / copying is not so do ask them to split their invoice or at least give you a breakdown. Also, consider using Paralegal agents more!

5. Duplication / Reading in / Inter-fee earner discussions

These are standard objections in most Points of Dispute and are often justified! In a ‘standard’ case, such ‘duplication’ of work cannot be justified as recoverable Inter Partes, the acid test being, was it necessary to progress the case or is it something you should know / know how to do anyway i.e., it is subsumed within your hourly rate. If it was necessary, then record the reason for it. For instance, why did two fee earners have to attend the client? There may well be a good reason (or there was one at the time) but unless you have recorded the reason you are going to struggle to recover the additional fee earner’s time. Likewise, on a handover of fee-earner; was this also a perfect / necessary time to review the matter to progress it? If so, the time (or at least some of it) may be recoverable but you need to have recorded this on the file.

6. Annual fee reviews

Every client care letter contains the ability to review and increase the rates agreed with the client, usually annually. In my experience (35 years of it), less than 25% of the client firms I have worked with have actually done this or, rather, have failed to notify existing clients of any rises. For example, a case starts in 2018 with rates of, say, £250 / £200 / £175 / £125. The case finishes in 2022 by which time retainers for new clients are £300 / £250 / £200 / £135. You though are ‘stuck’ with the original rates and can only claim probably about 85%-95% of what you would have been able to charge / claim if you had simply let your clients know. Across the firm, that 5%-15% could represent thousands (or tens of thousands) of pounds of potentially lost revenue.

7. Delegation

The conducting fee earner will recover time for considering and creating a bundle index or deciding on the enclosures to be sent to Counsel with instructions or a brief. However, they are unlikely to recover at their rate the collation of the bundle / documents. This is regarded as Grade D fee earning work. Likewise, sorting through and summarising medical records (where this is done in-house). Therefore, delegate this to a lower grade fee earner (ideally a D grade one) and if you do not have one then consider training an admin assistant to do this task. To avoid losing costs, instead spend those extra hours doing work that is recoverable at your grade.

8. Use of Counsel

In the thousands of cases I have dealt with over my career, this is an issue which ‘divides the critics’. It is true that paying Counsel to draft pleadings is almost always cost effective – they will usually charge less than it would cost out at if you did it yourself (and, arguably, they may make a better job of it!). However, if you spend too long drafting the instructions, checking the draft pleadings and maybe amending them then you cannot always expect to recover all of that plus Counsel’s fee Inter Partes. Over reliance on Counsel (e.g. instructing them at every turn to advise on or draft offers and responses) will have a knock-on effect on your hourly rate and / or grade of fee earner allowed by a Court. Use Counsel judiciously.

9. Counsel’s fees

This is an altogether different point. You should always get a fee estimate for any work you wish to instruct Counsel to do and whilst we all have our preferred Counsel, it is often wise to ‘shop around’. Furthermore, the initial fee estimate will probably be like a hotel’s ‘rack rent’; reductions can almost always be negotiated! When it comes to paying Counsel, please do pay Counsel some of your payment on account when received but do not pay Counsel’s fee(s) in full. If you get a 50% payment on account, then pay them 50% at the same time. If you have paid them in full, then your costs representative cannot later negotiate a reduction in his / her fee(s). Paying their fees in full will mean a corresponding reduction in your net profit costs recoverability.

10. Use your Costs Specialists!

A shameless plug but we / they are almost always cost effective and most of our work can be included in a claim for costs Inter Partes so we / they are costs neutral. This can help avoid you losing income by:

Advising on retainers to ensure that you can recover your fees against your client and therefore Inter Partes where there is an order

Drafting your budgets so that they accurately record your incurred work (thus avoiding recovery problems on assessment)

Working with you on forecast costs to avoid under budgeting

Helping you avoid that worst of budgeting nightmares – exceeding it! In a recent case the client had to accept a net loss of £120,000.00 for going over budget without any application to vary and with no good reason to depart other than ‘over-working’ the case.

They can help you maximise income by:

Drafting realistic and recoverable N260’s and Schedules of Costs for interlocutory hearings or Joint Settlement Meetings

Drafting accurate Schedules and Bills of Costs that maximise your recoverable costs E

nsuring that early payments on account are received

Drafting Part 8 costs only proceedings

Negotiating fee reductions with Counsel

Negotiating costs settlements

They can also advise on any / all costs queries or issues you may have throughout the life of a case.

Sue Nash

Sue Nash has been practicing in legal costs for over 30 years and is well known for her specialist experience in group litigation as well as costs budgeting. She is a former chairman of the Association of Costs Lawyers and a leading authority on costs. As a result, she writes regularly for the legal press on costs related issues.

Sue is a Senior Costs Consultant at Elite Law Solicitors and can provide specialist advice in relation to all aspects of legal costs. If you require advice or assistance on legal costs related issues, please get in touch with Sue by calling 0800 086 2929 or emailing info@elitelawsolicitors.co.uk.