Blended rates

Upon instructing any law firm there is often suspicion as to how the law firm will charge the client, who will do the work and how guaranteed the outcome is.

With contentious work, such as litigation, it is impossible to predict with complete certainty the outcome of any case. The evidence to be presented by the other side is not yet fully known, there may be information out there which could alter either side’s perception of their case and, quite often, evidence not previously available or known to the solicitor (which may or may not be seen as important to the client) arises and materially impacts on the client’s claim or defence.

As a result, costs can escalate beyond that originally envisaged. To manage such costs, and with a view to balancing the client needs against the cost of legal services, it may be beneficial to agree a single rate for all fees earners on a matter to provide certainty against such risks.

This single rate is often referred to as a “blended rate” with the effect that senior fee earners may be less expensive and junior fee earners may be slightly more expensive.

Client needs

A client’s needs are often that s/he obtains high quality legal advice, a good in-depth strategical approach to their matter and an adequate control over their legal costs. By using a blended rate, your solicitor may be able to satisfy all of these needs across a team of variously experienced or skilled solicitors all charging their time at a single rate.

• as with all professionals, solicitors with experience are usually far more skilled to make the right decisions or provide the correct advice in any given scenario;
• however, experienced solicitors are also the most expensive to employ (and indeed are more in demand) and their regular use will materially escalate legal costs – a problem which will be limited by their time being charged on the basis of a blended rate.

This is not to say that trainee solicitors and newly qualified solicitors do not have their role. Such individuals are less expensive and have already undergone anywhere between 4-6 years of academic and vocational training and can deal with a majority of legal issues at a much lower cost. It may be appropriate for a junior or trainee solicitor to deal with a majority of the more procedural aspects of an instruction and the more experienced solicitor can deal with the final advice or recommendations to the client, relative to their circumstances.

Accordingly, where a client requires a team of solicitors (or maybe even only 1-2 solicitors) which can deal with all aspects of the instruction the most efficient way possible, minimising legal costs but maximising the skills applied, then having a single rate comprising a blend of these skills/availability and expertise is the ideal solution.

Certainty of cost

The requirement for a combination of skills whilst keeping control over the associated legal costs may be obtained through a blended rate, which all solicitors are charged out at.

• the blended rate will be above that of the junior solicitor but below that of the more experienced solicitor, and thus is beneficial in certain circumstances with the added benefit of providing certainty as to the hourly charges applied;
• the blended rate will comfort a client that the high rates of an experienced Partner or Senior Associate will not be spent on a majority of the file, thus escalating legal costs beyond that originally envisaged, as all the time spent on the matter will be at a rate which the client finds acceptable (whether it is a Trainee Solicitor or a Partner)
• thus there is the added comfort of not worrying about costs when speaking to or employing more experienced individuals.

This is not to say that, in the absence of any fixed fee, there will be a cap on the time spent (which could undermine the blended rate arrangement where more junior fee earners, who may take more time on certain matters, are involved) as all solicitors have a professional obligation to keep a client aware of such legal costs and not to permit such costs to escalate beyond control.

Risks to clients and law firm

There are of course risks with agreeing a blended rate, and it is not a formula that suits all clients. The risk associated to blended rates will in most scenarios be one which the law firm bears.

For example,

• if an instruction is particular complicated, a lot of meetings are required or there is a considerable degree of complex advice to be given or strategy to be discussed, then there may be a high demand for more experienced solicitors to be involved.
• if a blended rate has been agreed, then under such an agreement the more senior solicitors will provide their legal services at a substantial discount to the client, which could provide the client with high quality low cost legal service, although this is unlikely to be a model which will make the instruction particularly profitable to a law firm.
• equally, where an instruction is relatively straight forward and procedural, or a barrister is conducting a majority of the technical legal work with the law firm merely providing instructions and support, then it is likely that a majority of the work will be performed by a more junior solicitor, who’s time will be charged at the uplifted blended rate which is likely to be able their normal hourly rate. This is a situation which will be welcome by the law firm but makes such legal services more expensive to the client.

These risks will always exist where a blended rate exists and, at the end of the instruction, either the client or the law firm will likely have done better out of the blended rate agreement when compared to the conventional time cost (with different rates) retainer arrangement.

Without proper consideration of such risks, and an acceptance of them, it is not advisable to enter into a Blended Rate retainer agreement with your solicitor.

So why agree a Blended Rate?

As with all legal services, the cost of your solicitor is one of the most difficult aspects to quantify yet is also one of the most significant concerns to a client. The reason for engagement of a solicitor is quite often connected to a business need, financial loss or risk to the client, and ever increasing legal fees will only serve to exacerbate the situation.

• a blended rate is appropriate where a fixed fee agreement cannot be agreed, either because the fixed fee amounts cannot be agreed, there is too much ambiguity in what the fixed fee would cover and the extent of such work or perhaps the solicitor and client are unable to agree how complicated the instruction is.
• a blended rate will, from the client’s point of view, prevent legal costs escalating out of control by way of the amount of the time spent by experienced solicitors yet will enable the provision of continuous legal services, including a solicitor being always available, to deal with the matter.
• in addition the use of a blended rate will mean that the client has certainty over such costs against the background that a solicitor must always provide adequate legal services appropriate to the complexity of the work and in accordance with all instructions provided by a client.

How we can help

At Francis Wilks & Jones we work on instructions with a blended rate agreement, subject to a review of your proposal and the scope of any instructions, and we will always discuss these arrangements and any other funding arrangements appropriate to the nature of any legal services you seek and your financial circumstances.

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Please call any member of our commercial litigation team for your consultation now. Alternatively e mail us with your enquiry and we will call you back at a time convenient to you.