By Hedley Thomas
A leading lawyer has launched an attack on the profession over the ``gross and obvious overcharging'' by law firms that use secretaries as paralegals, and whose mundane work is billed at up to $300 an hour despite their salaries being less than $20 an hour.
Brian Bartley, chairman of the Queensland Law Society's ethics committee, has called on lawyers to take action to end such abuses before external controls and greater regulation have an impact on the entire profession rather than ``just those whose misconduct brings it about''.
One of the richest revenue streams for some law firms, particularly those involved in personal injury litigation, comes from work done by staff whose lack of legal qualifications means they earn about $40,000 a year, yet their actual value to a law firm could be up to $500,000. Their work includes secretarial tasks such as booking appointments for clients who need to see doctors and specialists, collecting and collating medical reports, and bundling documents for review by a barrister.
Mr Bartley told The Australian it was a matter of great concern that such staff were highly lucrative ``profit centres'' whose actual value to law firms was many times greater than their annual salaries.
He said the charge-out rates of up to $300 an hour for these staff made it possible for them to earn their weekly wage before 11am on a Monday, meaning the remaining 35 hours of the week for each secretary was immensely profitable for the law firm.
Some law firms also charge a ``blended rate'' that ``adds a layer of sophistication in order to make it less obvious that secretaries are being charged as lawyers'', while the use of the term ``paralegals'' was a marketing device but not as accurate as saying ``non-legally qualified''.
``I've been around long enough to have seen a lot of files and I have a pretty fair idea of what's happening,'' Mr Bartley said.
``The firms that do this enter into client agreements which stipulate the charges - and the rates for the paralegals will be in accordance with that - but the agreements are often entered into by unsophisticated clients.
``It is more likely to happen in personal injury firms because of the repetitive work - like booking doctors and getting the medical reports -- that lends itself to using non-qualified people.''
Mr Bartley's outspokenness about a practice that has been going on quietly for years with little dissent - despite some seeing it as a legalised rort -- comes after his own involvement in prosecuting solicitors for unprofessional conduct.
One of the few cases prosecuted for gross overcharging led to the senior partner of law firm Shine Roche McGowan (now Shine Lawyers) being suspended for 12 months for ripping off a vulnerable client who was billed $300 an hour for work done by secretaries. The tasks included arranging to buy and wrap a ``box of chocolates and a thank you card'' for the secretary of a doctor whose medical report was needed.
The then Solicitors' Complaints Tribunal ruled: ``No fair-minded practitioner would be justified in charging his or her client at what the tribunal regards as an unusually high rate across the large number of hours involved including the significant time on the mundane matters of the kind described.''
Mr Bartley, who said $50 an hour would be a fair charge-out rate for the work of secretaries, opened the debate with an article this month in the legal journal Proctor. ``Secretaries should be a practice overhead, not a profit centre,'' he writes. ``Where else in the community is it considered acceptable for employees to earn their weekly wage by morning tea time on Monday?
``There are tasks a newly qualified solicitor can do very competently. . . They involve no legal skill and so do not require a law degree to be able to perform them. The problem arises when those tasks are then charged to the client as if they did involve some legal skill and as if they were performed by a lawyer.
``Instead of criticising time billing, we need to deal with the abuses of time billing practised by some within the profession.''
Mr Bartley said his firm did not charge for the work done by its secretaries and the majority of solicitors charged ethically. He said clients paying $300 an hour for work done by secretaries described as paralegals were probably unaware the term ``covers a broad range from the experienced, long-serving clerk who never got around to qualifying . . . down to the secretary who left school last week''.
The profit margin at top-tier law fi rms
||What they earn
|Charge-out rates per hour
||$35,000 to $40,000
||$100 to $300
||$64,500 to $75,000
||$200 to $230
||$155,000 to $310,000
||$350 to $550
||$1.2 million to $2m
||$480 to $700
Article from The Australian, September 16, 2010.