I read this article in the FT aghast.
The cost of legal opinion is not exclusive to those who pay the £1,000 per hour legal bills ($2,000 an hour for some US firms “over here”). The cost trickles down to the consumer who gets its diluted impact in the price of goods and services it buys.
We are entitled to ask whether the increased cost of legal fees is linked to a commensurate increase in value or whether it is simply unwarranted profit extraction from a sector that has the long arm of the law on its side.
The reasons given by the PWC survey on which the FT article is written do not suggest that increased costs are benefiting many other than those in the legal sector. The argument for price inflation is principally down to wage inflation
- Top American law firms break into the London market by offering huge salaries
- UK firms put up salaries (£150,000 for a first year qualified lawyer)
- Salary increases generally 20% last year
- Hourly rates increase by 40%
There are a few other things quoted (cost of cyber security), initial costs of employing AI and general increases in the cost of living. However, even the FT has to call-out the wage spiral.
It goes without saying that where the magic circle leads, others follow and while not all newly qualifieds are getting £150,000, this is where the bar is set.
It is time for the Law Society to look at this and if it doesn’t then the CMA should be called in.
We are not getting 20% better service from junior lawyers and should not be paying 40% higher bills than we were 5 years ago.
But we are meeting the bills, through the cost of goods and services to which ultimately these bills are passed on.