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Limited retainer Practice Briefing

04 February 2016

The New Zealand Law Society has released a Practice Briefing intended to encourage lawyers to consider undertaking limited retainers as a way to reduce legal costs for clients who can't afford full representation.

Better enabling of access to justice, particularly for individuals with low incomes and limited or no eligibility for legal aid, has become a significant challenge for the legal profession and wider New Zealand justice system. 

What has been described as a "justice gap" is emerging between those who can afford to pay for traditional legal services and those who cannot. One suggested means by which lawyers can address this growing justice gap is through the provision of limited or "unbundled" legal services. This has potential to reduce the financial costs commonly associated with full service legal representation, making legal services more accessible to those with limited financial means.

Some lawyers have expressed hesitation about undertaking limited retainers. This is for a variety of reasons, perhaps primarily because of a perception that offering unbundled services carries a greater risk of attracting professional negligence or misconduct claims. 

Other lawyers may consider themselves too busy with full service work to consider offering unbundled services, or may be content with their existing client base and business model. And still others believe that the reputation of the profession may be compromised by the offering of limited legal services in a "commoditised" or discrete fashion. 

While the practice of offering limited retainers is still developing across common law jurisdictions, early indications suggest that lawyers' fears that unbundled services will increase the likelihood of negligence claims may be unfounded. There is no empirical evidence from overseas jurisdictions about professional risk, though early US research suggests that limited retainers may attract fewer complaints against lawyers as client satisfaction is typically increased due to lower overall fees.

Undertaking limited retainers can be a part of the normal work of a law firm and, as demand for innovation in the delivery of legal services increases, may yet prove to be the norm for lawyers and legal service delivery in the future.

"Unbundling" may also advance the rule of law, in that it makes legal services more affordable and thus more accessible. 

The vast majority of the public have limited resources with which to engage lawyers. Limited retainers, particularly for the many who are ineligible for legal aid, can be the difference between resolution of a legal issue or a party's decision not to defend or exercise their legal rights because of the justice system's inhibiting costs.

Read the Practice Briefing: "Guidance to lawyers considering acting under a limited retainer".

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Last updated on the 4th February 2016