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The jury is out: How viable is fixed fee litigation in New Zealand?

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NZ Lawyer | 27 Aug 2014, 10:01 a.m. Agree 0
An international firm recently announced its plan to become one of the first in the UK to embrace fixed-fee litigation: But if the trend spread here, how would it go down Down Under?
  • Ron Pol, | 27 Aug 2014, 02:53 p.m. Agree 0
    Great to see firms embracing fixed fees in litigation, although many examples here are still just hourly rates by a different name. And which NZ's quaintly archaic paternalistic rules tend to reinforce.

    The best results I have seen are when the hourly rate link is broken completely, the client's legal costs are cut, and outcome and the firm's profitability both improved.

    Win-win isn't just a slogan, but it does takes a different kind of thinking, a genuinely collaborative approach (without the old zero-sum game in which either firm or client dictates price), and structuring it to align interests.

    This has been hugely successful for clients and firms in the context of some big budget litigation and transactional work, and across the board pricing including litigation, with sophisticated firms and sophisticated clients prepared to invest in better outcomes.

    It may take more time to filter to one-off transactions; but a few firms are working on this too, and some have been quietly (for now) very successful at improving profitability and revenues at the same time as bullet-proofing clients delighted by demonstrable cost savings and better results.

    The new thinking behind these schemes isn't hard, but in my experience only ever seems to work properly when firms and clients both ditch the zero-sum thinking and craft solutions that genuinely benefit both. It's possible. It's working. But it's far from widespread.
  • Shaun Plant | 27 Aug 2014, 04:39 p.m. Agree 0
    Well said Ron.
  • Steven Zindel | 27 Aug 2014, 08:44 p.m. Agree 0
    Just make sure the fixed fee litigation is not on legal aid terms.
  • Ron Pol | 28 Aug 2014, 11:57 a.m. Agree 0
    True enough Steven, at least under the current system, and thanks Shaun.

    I have often wondered why some of the best value outcomes (for both client and lawyer) happen in corporates.

    I've seen first hand many Govt processes in NZ and Australia in which much better value could be delivered, but time and again Govt forces it to a zero-sum game. Cementing in hourly rates and a race to the bottom actually hurts Govt far more than firms. Govt has all the capacity to be a leader, securing huge value beyond the current nickel and diming with illusory 'savings' measuring the wrong things entirely; and 'safety' guarantees only mediocrity.

    So, for now, all the fun is with corporates, free to create better outcomes for the client and firm; but the tragedy with private sector individual players is that 'best practice' remains hidden a lot longer, and 'common practice' persists.

    Another reason Govt would be a great leader is that agencies are actually getting much better at working together, so creating a better paradigm in a few agencies would spread best practice much more quickly. But as you imply Steven, legal aid terms, hourly rate mind sets, the AOG straightjacket, etc, are hardly conducive to real value, for anyone.
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