Scrutator: Sue, grab it and charge

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The Independent Online
SOMEBODY of my acquaintance was recently charged pounds 400,000 by a leading City law firm to pursue a pounds 200,000 debt through the courts. If that was not bad enough, he was told that if he wanted the firm to enforce the judgment - the debtor had moved overseas - that would be extra.

Somebody else I know, who is at the sharp end of the recession, being an expert in tracing assets and debt recovery, tells me he is doing very nicely, thank you, from the nation's current plight. But, he adds, not half as well as his clients, the big City law firms.

It would be foolish to pretend that all City lawyers are prospering. Those that specialise in mergers and acquisitions and conveyancing are undoubtedly having a hard time. Some have even lost their jobs - an unthinkable prospect a few years ago.

The effect of their suffering, though, has been to switch the search for profit and growth elsewhere. While other departments are wilting, litigation is booming. Clients who previously would have been told they probably did not have a case are now being advised to sue. The practical difficulty of enforcing the judgment, if they are successful, is being conveniently left until later.

The leading City firms have other tricks up their sleeve. The current hourly rate of a senior partner is at least pounds 350. But when did a client last check that it was the partner who did all the work claimed and not a junior, or, even worse, an articled clerk straight out of university, or a legal executive?

Within firms these days, said a partner friend, 'everything is regarded as a potential profit centre'. Photocopying, word-processing, faxing documents, delivering documents by hand - they all have mark-up value.

As for phone calls, they are a veritable gold mine. His firm charges in minimum units of a tenth of an hour, or six minutes. So, a two-minute phone call - just to obtain a straight answer to a simple query, say - is billed as having lasted six minutes.

Potential profit centres do not stop there. American Lawyer magazine recently revealed how four lawyers at a distinguished New York firm met for a breakfast brain- storming session.

The client was not present. They ordered coffee, juice and Danish from the firm's cafeteria. They provided the cafeteria with a number, so the food could be charged to the client. On the slip filled out by the cafeteria - and sent to the client - the order was first listed at dollars 23.80. After it was rounded up to dollars 24, a 40 per cent charge was then added, to bring the cost to the client to dollars 33.60.

But when it comes to keeping lawyers in check, the Americans are also able to teach us a thing or two. Over there, clients are now sending accountants into law offices to audit their legal bills. Over here, clients are more polite and trusting - or stupid - and so only have themselves to blame when costs spiral.

My acquaintance has just been to see another lawyer about the problem in recovering his pounds 200,000. The new lawyer's advice? Sue the first lawyer. And so it goes on, and on and . . .