Wednesday, January 27, 2010

Does Charon have a point, or is he just making mischief?

In a post a couple of days ago in which he contemplated the divorce laws of Britain Charon QC pondered why lawyers who deal with the fantastically rich are so rich themselves. "I can only presume that these lawyers charge rich people more for exactly the same advice as lawyers dealing with ‘ordinary people’", he says, and poses the question: "The law for rich and poor must be ‘roughly’ the same, surely?"

Unfortunately, I am not fantastically rich. I spent most of my career working at the coal-face, acting for those 'ordinary people' with their ordinary means, or even, dare I say it, doing legal aid work. If I were still practising, my hourly private charging rate would now be about £190 - typical for someone of my experience working in an average provincial high-street practice. I do not know how much the lawyers for the rich and famous charge these days, but I do recall a few years back hearing of one who charged £600 an hour. Was the work that he did more than three times more complex than the work that I did?

I can only speak for the divorce laws of England and Wales, but there may actually be something in the argument that the law is more complicated for the rich (although even if it is, whether it is more than three times more complex is a moot point). In recent years there have been a string of high-money cases reaching the upper courts (which are beyond the means of the hoi-polloi) where the judgments that have been handed down seem to have little or no relevance to those of more modest means. It sounds like a good question for a law student, but one could ask: Is it a fiction that we have one set of ancillary relief rules applicable to all divorcing couples, irrespective of their means?

Charon goes on, in his inimitable style: "The rich lawyers may argue that the financial affairs of the maniacally rich are ‘far more complex’… there are tax issues, off-shore laws to consider…blah blah blah… but, I would have thought that less well paid lawyers who deal with normal people (who do not have an account at the RichBastardsBank) still have complex issues to sort?"

I think there are two issues here: cases that are more difficult because of their complex issues (Charon's point), and cases that are more voluminous, because of the large number of assets. The latter can be dealt with quite quickly: more assets may mean more paperwork to deal with, and therefore more time spent on the case (=higher legal costs) but, on the face of it, that should not equate to higher charging rates - lawyers dealing with cases involving modest assets could earn the same, simply by having a higher volume of clients.

The first issue is more difficult to deal with: are the tax issues, offshore trusts etc. that arise when acting for the super-rich more complicated to deal with than, for example, the problems that arise when trying to provide for two separate families out of the means of one? I suppose that it could be argued that knowledge of such things as offshore trusts is rarer, simply because there is less need for such expertise, and therefore that knowledge should come at a premium, but I am not entirely convinced. In any event, I'm sure that most high-street practitioners would be quite capable of dealing with such matters, were there the need.

The last point I want to make is this: Charon singles out divorce law, but could not a similar argument be made for other areas of law? Is it not the case that all (or at least most) lawyers who act for wealthy clients charge over the odds? Are the legal issues involved in, for example, corporate mergers and acquisitions that much more complex than in other areas of law? Discuss...

2 comments:

  1. But don't forget, the pita premium. The more money the client has, the more of a pain in the arse the client will be. I am convinced that, somewhere, there is a secret school that you have to attend when you amass your first few millions. There, you receive special lessons on how to be ill mannered, ignorant and convinced that whatever opinion you hold must be the correct one.

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  2. You may just have a point. I didn't act for many wealthy people during my career, but your comment has brought back some horrific memories...

    ReplyDelete

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