Thu 29 Sep 2016

Supporting Families Through Change: Unbundled Legal Services Project Part 2

Posted by Guest.Author

In this post we will focus on lawyers’ responses to questions about financial arrangements for unbundled services and their perceptions of the benefits and concerns about unbundling.

The first post in this series described the demographics of lawyers responding to the survey about unbundling and focused on the types and frequency of unbundled services for families.  

Financial Arrangements

The vast majority of lawyers indicated that they used some variation on the hourly rate model for unbundled legal services.  Less than 40% indicated that they used a flat fee approach.  When asked how they decided which model to use, responses ranged from “Client decides – here are the options…” to firm rules prevail:  “The firm has set a flat fee for certain routine functions. Bespoke legal work is billed at an hourly rate”.  Respondents noted that flat fees were used for discrete tasks and when the “time spent on the work can be safely estimated beforehand.”

While the prevalence of the hourly rate method is not surprising (it works well for lawyers), it does not reflect the client’s needs for cost certainty or increased control over their legal matter.  There is room for creativity in the billing approach for unbundled legal services.  Lawyers in other jurisdictions are gaining experience with flat fee billing and other alternative fee arrangements which offer significant advantages to lawyers as well as their clients.

Benefits to Lawyers of Unbundling

Family lawyers were asked to identify the benefits that they or their firms experienced by providing unbundled legal services.  Responses fell into the following categories:

• Increased numbers of clients and higher turnover of clients (shorter matters)
• Increased and more stable cashflow
• Personal satisfaction for work aligning with personal values: “Helping clients with limited financial means who would otherwise be disadvantaged due to power, economic and other imbalances.”
• A business model that allows flexibility, lower overhead, affordable fees, ability to serve less affluent clients

Many lawyers who offer unbundled services do it on a “pay as you go” basis.  That is, clients pay for each task or group of tasks as they are completed.  This approach eliminates accounts receivable and the annoying, unpleasant and cumbersome processes involved in collecting unpaid accounts.

A flexible business model for unbundling can allow for part-time work and providing services virtually.  This should be an attractive feature for many lawyers, including those at either the beginning or end of their careers.  As one respondent put it:

“I am considering changing my business model to exclusively provide virtual, unbundled services at a lower cost.  Eliminating my overhead will allow me to provide this service virtually.  I am currently researching alternative business models to determine whether this is viable.”

The project is exploring the business models that work best for unbundled legal services and intends to include information about that in the lawyer toolkit.

One respondent expressed some concern about the additional “cost” to the firm of the upfront administrative work required (presumably to clarify the role and complete the detailed retainer agreement) but balanced that against the personal satisfaction derived from doing this work:

“I cannot say my firm experiences the benefit – because there are extra steps we take to ensure our relationship with the individual is clear – this costs us extra time.  However, on a personal level, it feels like the right thing to do.  If my help can make a difference to someone – help them better understand their case and the applicable law then that’s one less person lost and frustrated in our family law system.  Also, I appreciate the difference preparing someone for court or mediation will make to the adjudicator or mediator.”

Concerns about Unbundling

Lawyers (whether or not they provided unbundled services) were asked to identify concerns about offering unbundled legal services to their family clients.  Many answered that they had no concerns, or at least no greater level of concern than for the “usual” family retainer.

The most common themes from other respondents, in rough order of priority, are as follows:

1. Fear of claims, liability, and complaints from unhappy clients.

“If I could feel more at ease about being sued – if unbundled services in family law were more common and better understood by the public – then I would provide these services more.”

 “The lack of specificity as to the nature and extent of the retainer and managing client expectations and those of the other side, represented or not.”

“Ultimately, that the lack of understanding of legal issues and case law would cause them to make a claim against me in the future.  I would see this happening especially in instances where I drafted pleadings and/or affidavits, but the client self-represented during a hearing.”

Others acknowledged these concerns but noted that these risks could be managed:

“I understand that there may be a concern about being held responsible for matters beyond the retainer agreement.  But I set out the nature and limits of the arrangement in a retainer agreement, and then keep it on track in conversations, emails, and letters, so that there is no misunderstanding.  If I sense that a client could become problematic in this regard, I take whatever precautions are appropriate, including terminating the retainer.”

“I do not have too many concerns as I am careful in my treatment of clients.  Concerns could be liability, and/or having to deal with clients who make complaints to the law Society which takes time to deal with.  However, these are concerns whether services are unbundled or not.  One must take careful notes, and be clear with clients about the limitations of the service.  Signed agreements to that effect are helpful.”

“I have not advertised because of insurance concerns around providing unbundled services – I try to avoid providing these services, but also understand the great need for such services.  Now that I know the LSBC is encouraging this practice and has developed some unbundled services retainer agreement precedents I will likely advertise these services on my website.”

As Julie Macfarlane asserts in her recent post, fears of complaints or liability are unfounded and not supported by the experience of lawyers in other jurisdictions.  So long as the relationship is carefully structured and documented lawyers find that clients are good to work with and extremely grateful for the services provided.  Examples of feedback to this effect from family members who received unbundled services will be provided in a future post.

2. Preference for clients to have the full representation model; unbundling is a second rate service.

“Most people would benefit from full representation to help relieve their stress and anxiety and get better outcomes but they just cannot afford it.  So it often feels like unbundled services are second best.”

“That it is not a complete service.  The information is too limited to provide the best service.  Missing information and limitations result in risks that the client has to accept.”

“Providing ad hoc assistance is counterproductive to effective representation, which is powered by an overall strategy.  Clients are often left either more confused than ever, half way through a process or an argument they don’t fully grasp, or overly confident in their abilities and expectations of the final outcome.”

Others noted that even if full representation was best, not all clients can afford that model.  One has to ask: if the client cannot afford full representation then what is the alternative – nothing?

3. Discomfort with the possibility that the lawyer does not have all of the relevant information before providing services.

A number of respondents reported concerns about “not having all of the information to do things correctly” and “(not) getting all the information/facts (and background) to give a truly informed opinion”.

“I think there are significant risks to a lawyer – in order to satisfy our professional obligations we need to make sure we have full disclosure and that (the) client fully understands what they are giving up.  This is not a business transaction.  I do not think it is appropriate for family lawyers.”

“It’s scary for lawyers, and has the greater potential to lead to negligence or errors because contact with the client and the ability to verify and gather information is limited by the nature of the representation.  Plus, clients going to various lawyers for unbundled service is not effective.”

Lawyers are trained in the “no stone unturned” approach.  They fear criticism (by other lawyers or judges or…) if they are (later) found not to have considered some fact or evidence relevant to the client’s situation.  If this is perceived to be a risk, then isn’t the first question “how can this risk be managed”?  If the lawyer and client have addressed this issue at the outset and carefully crafted the retainer agreement, it is difficult to see how the lawyer could later be faulted if the client did not reveal a relevant fact or it was not evident with the usual level of diligence.

One respondent noted that the provision of independent legal advice (usually on a separation agreement), was perceived to involve the highest level of risk for counsel:  “We only know what we are told and while I paper over as much as I can, ILA is inherently risky.  Clients don’t know what they haven’t told us and as we don’t have a working historical relationship with the client there is huge room for miscommunication.”

Of course, the provision of independent legal advice is an unbundled service that family lawyers have been providing for many years.  Again, cannot these risks be addressed with a carefully crafted retainer agreement?

While not raised directly in the survey responses, interviews of over 25 BC family lawyers revealed another type of concern:  reputational issues.  Some lawyers worry that Judges or other lawyers would think less of them if there was some reason to criticize the lawyer’s work and the lawyer was not there to defend him or herself or that they will be called on by a Judge to provide services outside of the negotiated unbundled retainer agreement.  Support from the Judiciary for unbundled legal services will be critical to its success.  The project is in the process of liaising with all three levels of court in BC to explore these issues with the Judiciary.

In part 3 of this blog series we will describe the lawyers’ views about what needs to change in order to encourage them to provide more unbundled legal services.

Information about the BC Family Unbundled Legal Services Project can be found here.  Summaries of the responses to all three surveys are posted on that page.

Mediate BC is enormously grateful to the lawyers, mediators and members of the public who participated in these surveys – thank you!  The information was really helpful.  Stay tuned for more information from the BC Family Unbundled Legal Services Project.

Posted by Kari Boyle, Unbundled Legal Services Project Manager

Photo by Naassom Azevedo on Unsplash