Law Firms Coming Under Financial Pressure From Fixed Fee Service Demands

Law firms, especially those within the personal injury sector, have indicated that they are afraid of the potential negative effects that an increase in demand for fixed fee services is causing. 48% of directors have said that the increases are putting additional financial pressure on their companies, and that they are afraid of the long term effects that it will have. The number was just 29% two years ago, pointing to the massive increase in the number of people that are now demanding fixed fees.

Most legal firms have traditionally operated by offering hourly rates, whereby the firm receives recompense for the total amount of work that they have to put in. However, the introduction of new firms and new services that offer fixed fees has increase, and this has put increased pressure on the rest of the legal companies to follow suit.

Consumers are becoming better educated, and they recognise the stability that is offered by fixed fees. They are also aware of the number of online companies, and newer companies, that offer fixed fee services for virtually all types of legal work. While the practice may have initially been reserved for personal injury firms, it is being adopted for services including family law cases and other types of legal service.

Individuals are not only aware of the existence of fixed fee services, but the pulling of legal aid for many types of case, means that clients have to pay closer attention to the amount that they are paying. Fixed fees do ensure that legal clients know exactly how much they will have to pay, but it has put financial pressure on legal services that are already feeling the strain of government cuts.

A survey by Thomson-Reuters shows that 48% of finance directors are concerned that the increase in the number of fixed fee requests will impact their profits. Just two years ago, a similar survey revealed that 29% had similar fears. Approximately three quarters of respondents said that they saw lower fees as a risk to their business and 48% thought that increased price competition would have a detrimental effect.

Access To Justice General PI NewsFeb 14th, 20140 comments