Developing a model for a fixed litigation fee structure for implementation in a small to medium sized law firm

Groot, Dawid Benjamin (2014-12)

Thesis (MBA)--Stellenbosch University, 2014.


ENGLISH ABSTRACT: Legal costs in South Africa are generally regarded as being too high. This leads to numerous problems. For example, a person with a valid dispute who cannot afford to have the dispute resolved in court, has limited access to justice, which is a constitutional right. The two methods that are most commonly used by attorneys engaged in litigation in South Africa to account to their clients are: Hourly billing, where clients are billed for the time spent on a matter or for the volume and number of documents created, and contingency fees, also known as “no win no fee” arrangements. Both these billing systems have disadvantages, including the incidence of risk during the litigation process and the incentive to the attorney to act in the client’s best interest. It is submitted that a fixed fee structure would resolve many of the problems experienced by the traditional billing methods. The challenge is to arrive at a fixed fee structure which is based on a proper analysis of the amount of work involved in the legal process. In order to calculate such a fixed fee structure, the legal process has to be broken into a number of steps and sub-steps, and each of these steps should then be analysed to ascertain how much work it entails. The aim of this study is to arrive at a model for a fixed fee structure which can be implemented at other law firms that are also engaged in litigation work. Primary billing data obtained from the author’s law firm was analysed to ascertain the various steps in the legal process, and to calculate the expected amount of work involved in each step. This data was then used to develop a fixed fee structure model which can be adopted by any litigation law firm, by merely multiplying its own current hourly billing fee structure with the values provided in the model. Certain practical problems which may be encountered during the implementation of the fixed fee structure are also discussed and possible alternative solutions are provided.

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