Legal bill may go up by 68pc for losers

Law Society makes the case for a hefty increase in hourly rates of solicitors when it comes to calculating costs to be paid by the losing party

PUBLISHED : Friday, 12 April, 2013, 12:00am
UPDATED : Friday, 12 April, 2013, 4:41am

Losing parties in lawsuits may soon have to pay more, after the Law Society proposed raising solicitors' hourly rates by 40 to 68 per cent, for the purposes of calculating repayment of legal costs.

Society president Dieter Yih Lai-tak said the rates for calculating legal costs to be paid by losing parties were last revised in 1997. He said the levels were so "out of date" and "unfair" that successful litigants in some cases forked out half of their solicitors' fees although they won their case.

Under the society's plan, a losing party would have to pay an hourly rate of HK$4,900 to HK$5,700 for the winner's solicitors, who would have nine to 14 years' experience in High Court cases. Now, the rate is HK$3,200 to HK$4,000 for solicitors with more than 10 years' experience.

Lawmaker and senior counsel Ronny Tong Ka-wah agreed that the rates should keep pace with inflation. But he said such a drastic increase in legal costs would deter people from taking their grievances to court.

"I would say many top solicitors and barristers have overcharged. The best solution would be to lower the legal costs. That would encourage parties to pursue justice in court," Tong said.

I would say many top solicitors and barristers have overcharged. The best solution would be to lower the legal costs. That would encourage parties to pursue justice in court

But fellow lawmaker Dennis Kwok Wing-hang, who is deputy chairman of the administration of justice and legal services panel in the Legislative Council, backed the proposal and said he would follow up on the issue in Legco.

Writing in the latest issue of Hong Kong Lawyer, the society's official monthly journal, Yih notes that the gap between the legal fees paid by the winning party and the costs they can recover from the losing party can range from 15 to 50 per cent. That, he says, means the successful litigant could be up for as much as 50 per cent of their legal fees even though they have won the case. This is based on guidelines for hourly rates to calculate legal costs paid to winning parties.

The society's proposed revision was based on a review it commissioned that was conducted by KPMG, which surveyed solicitors' fees.

"Economic changes and the development in the legal service market over the past 16 years have led to a significant gap between the scale rates and the solicitors' and own-client rates," Yih wrote in the journal. "The substantial gap only works to hurt the court users. Invariably, in each case, the rates actually paid by the court users will be much higher than the scale rates.

"The current system of maintaining such out-of-date scale rates is clearly unfair to successful litigants as it erodes the principle of 'loser pays'."

Among KPMG's recommendations was an annual adjustment to the rates "according to an inflation-linked index", Yih wrote. More periodic reviews were also recommended.

Yih told the South China Morning Post yesterday that the extra costs would not go into solicitors' pockets but would cover winning parties' legal costs. He said the revised rates would make potential litigants think more carefully before pursuing claims - and perhaps encourage alternative methods of dispute resolution, such as mediation.