Six golden rules for charging probate by fixed fee
This is a copy of a post which I wrote for The Law Wizard blog,
dated 5 March 2014.
In 2013, one survey suggested that fixed fee is now the most common charging method for probate. Over the last 3 years, we’ve notice a significant shift in attitude towards fixed fees in probate cases. Are all solicitors charging fixed fees for probate, and what’s the best approach?
The most common charging method
In 2013 the Legal Services Consumer Panel surveyed over 3,000 consumers on legal services. Of consumers that had used probate services, 30% paid a fixed fee. Only around 24% paid by hourly rate, around 5% paid a percentage-based fee, and around 18% paid a combination of hourly rate and percentage.
Depending on how you interpret these figures, it seems fixed fee is now the most common charging method for probate. Indisputable is the huge and rapid increase in fixed fee probate work, up from 12% in 2012.
As our clients and other law firms tell us, it’s a symptom of a roughly-10-year shift in attitudes. Since the early 2000s, most solicitors are seeing a steady rise in clients asking for fixed fees.
The reasons are as you might expect:
- Consumers empowered and educated by the Internet, with greater insight into the probate process and the mechanics of a law firm, and therefore more demanding of their lawyer;
- The rise of fixed fee competition from volume probate providers and household names, such as Co-op; and
- The emergence of free or fixed fee self-help guidance and tools online.
Multiple sources tell us that fixed fee is not only the most common charging method, it is by far consumers’ preferred charging method. It is also the second-most important issue for consumers choosing a legal provider, behind quality.
Research also shows that those consumers that shop around for probate services (currently around 22% and increasing) are much more likely to choose fixed fee.
Do any solicitors NOT charge fixed fees?
Fixed fee is one area in which I feel solicitors should be given credit: by-and-large, they have recognised the trend and most (or all?) now offer fixed fee options.
From our point of view, in the last three years, ‘fixed fee’ has gone from a selling-point for our services to something that solicitors take as read.
It has been a long time since we spoke to a law firm or probate specialist that doesn’t charge fixed fee for some of their work.
Typically, our clients and other law firms we speak to have, at the very least, a fixed fee grant extraction service for exempt estates.
Examples of fixed fee grant extraction services from law firms we’ve spoken to recently include:
- £700 + VAT, West Midlands law firm;
- £900 + VAT, South East law firm;
- £495 + VAT, North West law firm;
- £475 + VAT, South West law firm.
Costs tend to vary by region, with higher prices in London and the south east. Anything below £400 + VAT or above £900 + VAT is unusual. (Disappointingly, almost all firms still express prices as plus – rather than including – VAT and disbursements.)
Some firms offer other fixed fee options, such as grant extraction for non-exempt estates, typically ranging from £1,500 to £3,000.
Fixed fee for a full administration remains uncommon, though it is increasing. We know of firms moving towards charging fixed fee for all probate work. Many already cap costs, which is a good start.
Golden rules for charging fixed fees for probate
Here they are, our six golden rules for charging fixed fees:
- Be clear and don’t over-complicate. Two or three fixed fee options are plenty.
- Don’t hedge your bets. Fixed fees should represent the norm, not the maximum. In other words, expect to lose money on some cases, but gain in others. If you price too high, you’ll lose out.
- It’s not just about changing the way you charge, but also the way you work. If you can complete fixed fee tasks more efficiently, you will (clearly) enjoy greater margins.
- Be upfront with your choices. With more consumers shopping around, you risk losing out if you push a full administration service too hard to clients who would prefer a fixed fee grant extraction.
- Consider charging up-front, if you don’t already. Consumers are more open to paying fixed fees at the start of a matter. It’s good for cash flow.
- Collect data and adapt. Continuously monitoring your fees, profits and client feedback is the best and only way to successfully adjust and hit sweet spots for customer satisfaction and margins.
With 47% consumers preferring fixed fees, and only around 30% of probate cases charged as a fixed fee, lawyers could still do better. However, the rapid rise in fixed fee probate work is staggering, and it shows that solicitors are responding.
If you’re reviewing your fixed fee options, all the best. We hope our golden rules will help.