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* |
The litigant may be
unwilling or unable to pay them and may either write off a claim or settle it on
unfavourable terms rather than engage in litigation. |
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|
|
|
* |
The litigant may end up
unrepresented in the litigation, nursing a sense of grievance (especially where the other
side is represented). |
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|
|
|
* |
The business litigant
who has a choice of how to deal with the dispute may opt for arbitration or litigation in
another country chosen for the economy of its legal services. Here, the market operates in
the form of competition between systems (rather than among lawyers within a single
system), with Hong Kong (and the legal profession here) losing out. |
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|
* |
The business litigant
may object to the fees but may have no alternative but to pay them although he may, for
future purposes, take steps to avoid litigating here, for example by stipulating for
arbitration or for compulsory foreign jurisdiction in his contracts. If litigation is an
important recurring overhead, he may even move his business to a different jurisdiction. |
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| 214. |
It is obvious that
consequences such as these are highly detrimental to the litigants, to the reputation and
attractiveness of Hong Kong as a place to do business and also to the interests of the
local legal profession. However, some legal practitioners do not acknowledge the existence
or importance of these issues. It is tempting for the practitioner who secures agreement
to fees at the levels presently charged to conclude that there is no market resistance to
his fees. That is, however, to ignore the fact that market resistance is in fact leading
to a loss of work in favour of lawyers in or from other jurisdictions. Some practitioners
may have secured slices of the cake but the profession as a whole ought to recognize that
the overall size of the cake is shrinking because of what the market perceives to be
unacceptable litigation costs. |
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| 215. |
Those practitioners who
are securing work at rates which routinely attract criticism are doing so in a market that
works inefficiently. Market information is in particular lacking since it is in practice
very difficult to get reliable information about legal fees, particularly in respect of
barristers. |
|
|
| 215.1 |
The legal profession
has certain monopolies relating to the civil justice system. Good reasons exist for this,
including the need for close regulation of a profession which often assumes a fiduciary
position in relation to clients, the need for competent advocacy in court and also the
need to nurture a profession which performs constitutionally important functions as an
independent body committed to upholding the rule of law. |
|
|
| 215.2 |
However, the monopolies
also mean that the available pool of qualified professionals, and hence the size of the
professional market, is limited by law. This must be approached with responsibility if the
benefits justifying the market restriction are not to be undermined by the unrestrained
pursuit of self-interest in the form of fees perceived by users to be unaffordable or even
exorbitant. |
|
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| 215.3 |
In the case of the Bar
Association, despite repeated initiatives by the Bar Council, the membership has resisted
any change to professional etiquette rules which restrict dissemination of such
information. This distorts and limits the market so far as clients who wish to "shop
around" are concerned. |
|
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| 215.4 |
Large repeat users,
such as insurance companies and banks may be better supplied with information. Some will
take steps to promote competition by undertaking what are sometimes called "beauty
contests" in which different firms are asked to bid for litigation instructions,
tendering information about counsel that they intend to use. |
|
|
| 215.5 |
Most other litigants
lack the sophistication or ability to do anything comparable. They will generally be
unable to judge for themselves whether they are being charged reasonable fees and unable
to monitor the justification for incurring particular charges as the case progresses. They
may indeed have little idea as to the overall exposure to fees and costs that they face in
the litigation. In itself, such uncertainty may well dissuade potential litigants from
suing. |
|
|
| 215.6 |
While many clients will
receive helpful guidance from solicitors when instructing counsel, some solicitors are
themselves ill-informed as to comparative expertise and fees amongst barristers,
contenting themselves with loyally instructing someone from the same handful of counsel
every time a barrister is needed. |
|
|
| 215.7 |
The practice also makes
it difficult for an individual barrister who wishes to position himself competitively in
the market to judge what fees to charge. He generally has a very imperfect knowledge of
what other counsel with comparable credentials are charging. Work is not infrequently lost
without the barrister knowing it. A solicitor may quote the anticipated charging rate for
a particular barrister to the client who then decides to go elsewhere because the fee is
thought too high, without the barrister ever being told that this has occurred and without
anyone knowing whether the quoted estimate of his fees was accurate or might not have been
subject to downward negotiation. |
|
|
| 215.8 |
While solicitors will
obviously know how much the barrister is being paid, the barrister is usually ignorant of
the amount charged by the solicitor. He therefore usually does not know the overall fees
being charged for the case, what percentage his fees represent or what the client's
reaction is to such fees. He may be pricing himself out of the market without knowing it. |
|
|
| 215.9 |
Such lack of
transparency has occasionally lent itself to being exploited by a small minority of
unscrupulous solicitors or solicitors' clerks. Some such solicitors will charge far more
than the barrister while leaving the real work to him and acting as no more than a post
office. Other such solicitors or their clerks may even indulge in serious malpractice and
misrepresent the position as to fees both to the client and to the barrister, with a view
to making secret profits as middle man. In short, resistance to openness about fees and
skills may not only make it difficult for the client to shop around for value, it may also
be quite contrary to the interests of individual barristers . |
|
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| 216. |
In some
jurisdictions, the approach has been to fix lawyers' fees by legislation or to permit the
court to intervene where fees are unreasonable. Consideration is given below to rules
allowing the court to intervene. However, the primary approach which the Working Party
adopts in relation to high litigation costs is to propose reforms aimed (i) at simplifying
procedures and eliminating procedural requirements likely to add unnecessarily to costs;
(ii) at arming the court with effective case management powers aimed at deterring the
wasting of costs or the incurring of disproportionate expense by the parties and their
lawyers; (iii) at giving to clients more information about their own lawyers' and the
other side's fees in order to help them assess the justification for certain charges and
their overall exposure to costs; and (iv) at encouraging earlier settlements so that
ultimately unneeded trial preparation costs may be avoided. Such an approach should be
accompanied by changes to professional rules to introduce greater transparency enabling
clients to make a more informed choice of legal representatives. Possible specific reforms
in this context are discussed later in this Report. |
