Perth-based Pragma Legal, which has become a pioneer of fixed fee early mediation in Australia, expects those clients with disputes that suit a fixed fee early mediation will increasingly this method out.
Director Aaron McDonald says the main reason for this is increasing client demand for cost restraint.
“At the moment, clients of law firms are becoming increasingly concerned about legal cost,” McDonald explains. “They want to know how much they are up for before engaging a firm. They are also more willing to shop around,” he says.
The firm’s fixed fee initiative was based on the belief the ‘6-minute-increment’ billing model was losing favour and was even ‘distressing’ clients, who are seeking transparency, affordability and control.
McDonald says the courts are also driving uptake of mediation, which will lead to fixed-fee growth.
“The Courts are becoming increasingly focused through their case management principles on parties resolving their disputes on their own and without determination by a Court,” McDonald says.
This is because of reduced costs to the state and to the parties, as well as benefits within the community.
“The days of mediation being something done only before a trial are gone,” McDonald says.
“A good example of this is the relatively recent requirement for parties in the Federal Court to illustrate, before the commencement of a legal proceeding that they have taken genuine steps to resolve the issues in dispute before coming to the court for relief,” he says.
Western Australian statistics show that about 98 per cent of disputes are resolved by consensus. However, McDonald says the difficulty with that statistic is those consensuses are often reached far too late after the parties have incurred considerable financial and non-financial cost with dissatisfying outcomes.
“I believe the Courts and Tribunals, and increasingly practitioners, are looking to schedule disputes for mediation at an early stage. This is not going to change in the near future,” he says.
However, McDonald warns that not all disputes suit a fixed-fee early mediation option.
“You can do your client a disservice by seeking an early mediation when it is an inopportune time to do so,” he says. “For example, in technically complex legal disputes it is usually important to have an exchange of pleadings and expert evidence before heading to the mediation table.”
Parties in low value disputes where mounting legal fees can quickly become disproportionate to the sum in dispute are set to benefit the most from fixed fee early mediation options.
“There are rarely any ‘winners’ when this occurs. Offering a fixed-fee model has obvious benefits to the client in these circumstances by providing faster result with lower costs,” he says.
Pragma Legal’s fixed fee model quotes a maximum fee encompassing commencing or defending straightforward claims, bringing those claims to early mediation, where possible achieving a resolution of the claims, and having the resolution properly recorded in writing.
The firm says the maximum fee varies between jurisdictions, to reflect the scales and to ensure our costs remain proportionate.
Legal cost concerns are expected to drive more clients into the arms of law firms with early mediation services that can be delivered for a fixed fee, rather than through uncapped incremental billing.