Why Legal Fees are so Expensive

This has been a question for which there have been a plethora of answers, yet many keep asking, wondering why it costs a couple of hundred dollars just to get a simple contract done up, or why contested divorce proceedings can run into tens of thousands.

Here’s an excerpt from another article answering this same exact question :

Have you heard the story about the patient who complained to his heart surgeon because the surgeon charged $20,000.00 for an open heart surgery that took two hours to perform? The patient took his bill to his next doctor’s appointment and asked the surgeon how he could sleep at night after charging him $20,000.00 for two hours of work. The patient complained, “at that rate you’re making $10,000.00 per hour.” The doctor replied “I didn’t charge you $10,000.00 per hour, I charged $250.00 per hour for my time and $19,500.00 for knowing where to cut.”

Like Lawyers, other professional service providers have all invested a lot of time and money in “knowing where to cut.”

It’s not cheap to go to law school. The financial investment in education required to enter a profession like law can be enormous (SUSS’s Bachelor of Law Degree costs about $46,000 for Singaporeans, after government grants. For foreigners, it can cost nearly $200,000).

Once a lawyer passes the bar exam and becomes admitted to practice, they still have to stay current with the ever-changing laws. Just like any other profession or occupation, the longer you do something and the more experience you get, the better you become at it.

But that doesn’t fully explain why legal fees are so expensive. Legal Fees are expensive due to a number of factors, that we will look at below.

Personalized Service

Have you ever gone into a Lawyer’s office only to find it equivalent to a seminar, with people sitting around listening to the Lawyer give advice to everyone, at the same time?

Legal Advice is usually personal and tailored to your situation. You make an appointment to see the Lawyer one to one. They listen to you, and give you possible solutions to your legal problem.

Does the lawyer profit 70%, or even 50% from the fees? Most likely, no.

An hour with a lawyer includes paying for premises, professional indemnity insurance, telephone support, administrative support, use of technology (i.e lawnet), among others.

All of the above are included in the hourly rate you are charged.

Similarly, why is it that group tuitions are usually cheaper than one to one tuition? Because the cost of resources are shared.

So to lower legal fees, the Lawyer’s overheads has to be reduced. Moving into cheaper office space, booking meeting rooms only when needed, emailing where possible, outsourcing and automating tasks by using tools like Zapier all help to reduce overheads, thereby translating into lower costs which can then be passed on to clients.

Obligations

Lawyers in Singapore are bounded by the Legal Profession Act. Meaning there is a level of obligation from the Lawyer to their clients.

What you are getting for the legal fees you are paying is that high level of obligation, hence the fees can only drop so much.

To reduce the cost of legal services, you probably have to reduce the lawyer’s obligations to the client.

You might then ask : “Why not lower the obligations? Then legal fees would be more affordable.”

Easy to say, hard to practice. Lawyers’ obligations flow from their rules of professional conduct which I mentioned above, most of which they cannot ask a client to waive.

But what they can do is to limit the scope of representation — generally called unbundled legal services.

Unbundling can be useful in certain situations, but it is not a panacea for lowering the cost of legal services.

When we talk about lowering the cost of legal services by reducing obligations, what we are really discussing about is changing fundamentally what it means for a lawyer to represent a client.

Experience

Oftentimes, Legal fees reflect the experience level of the professional you are dealing with. You wouldn’t hire a heart surgeon who didn’t know where to cut, would you?

Experience correlates strongly to higher cost. In certain cases, it is well worth it (e.g fighting for custody of children). Other times, not so much (filing of court documents).

You are a Lawyer with 30 years of experience in family law. Would you charge the same legal fees as a fresh law graduate with no experience? Definitely not, because you believe your prices are justified. Your experience, connections, knowledge all make up part of your legal fees.

Think of the time you needed a Lawyer, or the event whereby you need one. Chances are, a lot is at stake. These are serious situations that can mean a world of difference depending on the outcome.

Thus, prices are justified because they are needed during very important legal situations. One wrong move could mean losing your assets in a divorce.

And this might not be known to many, and might come as a surprise, but lawyers are not being paid half the time they are working. Going to court to file documents, taking time to provide legal advice, providing pro-bono legal services, doing research to prove their case, consulting other professionals and a whole lot more. It’s all part of the job that they are not getting paid for. And mind you, these tasks take up a lot of time. So much so that law firms can have junior lawyers help with the research.

Even paralegals (persons trained in legal matters but not fully qualified as a Lawyer) are not spared from the mountains of work required to fight a case.

Lastly, experienced lawyers are also more likely to have more connections they can tap into should they need help for or opinions on a case. This is what you’re paying for. Years of hard work built from the ground up, to provide their clientele with a well-rounded service that helps the clients achieve their goals.

Market Inefficiency

Ask most lawyers and they’d probably agree — the cost of acquiring a new client is pretty high. Some clients prefer talking on the phone, some over email. But no matter which way they communicate, it’s unlikely that Lawyers can give the same piece of advice to 2 people. Variations in circumstances require different advice.

There’s no one size fits all template, meaning for every new enquiry the Lawyer receives, they have to spend time to assess the client’s situation, and again when giving prompt and accurate advice.

Add to that, Law firms are not efficient enough at marketing, acquiring new customers, bringing them in the door, serving them, getting paid, and sending them on their way. There are efficiency breakdowns in every step of this process, but the area that suffers most from inefficiency is probably in client acquisition. Most Lawyers are too busy being Lawyers (i.e working on their cases), they don’t have time for marketing and other promotional activities.

It’s a vicious cycle: lawyers charge high prices > people can’t find an affordable lawyer > people turn to alternatives (i.e LawyerSearch) > lawyers lose clients > costs to acquire new clients increase > lawyers raise their prices to compensate…and on and on.

To break this cycle, you need efficiency. And this is where technology can step in.

Automating processes, giving legal advice online, leveraging law platforms, using collaboration tools (google docs, trello) and other time saving ways to streamline the legal process, cut down on in-person hours and helps Lawyers focus and work on more unique, personal cases.

However, there are some costs which are difficult to reduce, such as the filing fee for certain court documents. Lawyers have to charge a high price for some of them because they themselves are charged a fee for filing.

On the whole however, with the oversupply of lawyers in singapore, i would say things are looking up.

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