Modi govt should think of a regulatory system

The first thing we do,” said the character in Shakespeare’s Henry VI, is “kill all the lawyers”.  Justice has become counter cultural value in legal profession. Lawyers are routinely criticised as amoral guns for hire.

The legal profession was, in fact, abolished in Prussia in 1780 and in France in 1789, though both countries eventually realised that their judicial systems could not function efficiently without lawyers. A law was enacted   by Romans as early in 204 BC to  prohibit lawyers from taking fees.

India has the largest number of legal professionals in the world (1.3 million). The corporate legal market in India is worth a billion dollars, half of which is shared by foreign law firms. The top 100 Indian companies spent approximately $600 million  last year by way of legal fees. 

Today law is the most lucrative profession and lawyers’ fee is the greatest impediment to access to justice. An American Bar Association (ABA) study revealed that as many as 77 per cent of Americans feel that lawyers’ fees are  high and range from $200 to $1,000 per hour when billed hourly.

In India, star Supreme Court lawyers charge between Rs 5 lakh to Rs 8 lakh for a five-minute appearance and can manage up to 15 such appearances per day. For outstation cases, the rate is even higher: from Rs 20 lakh to Rs 30 lakh plus other expenses such as chartered flights, food and five star hotel accommodation for the lawyer, juniors and assistants.

If it is a high profile case involving corporate houses,  a case involving a big politician etc lawyers  make bigger fortunes. Not every case comes with a high premium, but it is not unusual for top 20-30 lawyers to earn in the range of Rs 60 crore  to Rs  80 crore per annum by way of legal fees alone.

The silver lining is most of them accept money through drafts/cheques and pay tax on their income. Leading lawyers, in fact, make advance income tax payments. Few years back, Attorney General Mukul Rohtagi paid Rs 4.45 crore as advance income tax; Fali Nariman paid Rs 1.80 crore implying income of Rs 16 crore; Zia Modi paid Rs 3 crore implying an income of Rs 27 crore.

There is no ceiling on the fee a lawyer can charge. There is no law which regulates it. It is between client and lawyers and no one can do anything about it. Recently, Abhishek Manu Singhvi was in news because Income Tax Settlement Commissioner  added Rs.91.95 crore to his professional income over a period of three years.

Double fees

For leading lawyers, business also happens beyond the portals of courts. Then these elitist lawyers routinely overbook their schedules.  They do charge what is termed “Double fee”— one fee to argue a case, another fee to guarantee they will actually show up. Most lawyers do charge clients for written and oral opinions and conferences besides taking on ‘retainership’.

A retainer is a fixed amount that a client pays in advance to secure the services of the litigator - and in some cases, also to ensure that he or she does not appear for the other side.  As a matter of fact, in high profile cases, the names of the lawyers who did not appear are often more intriguing than those who did.

The Advocate’s Fee Rules which govern the fee payable as “costs” by any party in respect of the fee of his adversary’s advocate are extremely low but the same may be modified to give us a fair idea of ‘reasonable fee’ which a lawyer may charge. In the ‘taxation of costs’, Supreme Court Rules-2013 also give some opportunity to know the fee charged by the lawyers. If these provisions are put to proper use, it would have a positive impact on the fee charged. Similarly, an amendment to the Advocates Act may make written fee agreement mandatory if the fee is more than Rs 5 lakh.

In 2010,  the UPA government drafted a Bill to overhaul the regulatory structure of the legal profession on the pattern of  the British law of 2007 and proposed establishment of Legal Services Board, Ombudsman and Consumer Panel. The new government may think of reviving it with some provision on the reasonableness of lawyers’ fee.

Similarly, on the pattern of ABA, Bar Council of India(BCI) in specifying duties of the lawyers, may mention duty  ‘to charge a reasonable fee’. ‘Protection of best interest of clients’ may also include not charging excessive fee. Strangely, BCI Rules do not define even ‘misconduct’. Through an amendment, ‘misconduct’ should be defined to cover the case of taking excessive fee.

The BCI should learn from United States where ABC monitors the fee issue. Thus, in New York an attorney who spent just hours in obtaining $100,000 life insurance proceeds for widow of insured who died of gunshot wounds and who withheld $33,350 of the proceeds as his fee was suspended for one year. History has taught us that institutions that do not respond to changed circumstances face obsolescence. Hope the BCI is listening.

(The writer is Vice-Chancellor of NALSAR University of Law, Hyderabad)