Page 17 - Law Society of Hong Kong MPMC Manual v8 - With checklists (1 March 2018)

Practice Management Course | Unit 2
Financial Management

working on the file by each fee earner involved in the matter multiplied by
the intended charge out rate for each fee earner.
• Cost Estimate = base cost per hour x estimated number of hours to be
spent working on the file (whether recoverable or not) by each fee earner
involved in the matter.

38. In addition to calculating the fee estimate, it is important for the practice to
determine the base cost per hour of the fee earner. As discussed in the above
section, cost management is a ‘vital part of the puzzle’.

Scoping
39. Different levels of scoping can be used to calculate the fee estimate.

Low-detail scoping
40. With low-detail scoping, the estimate is based on the average fee for similar
matters, and typically does not consider the individual client’s particular
circumstances or the lawyer. Indeed, you do not incur as much non-chargeable
time (time you spent working out what to charge the client is non-chargeable).
However, low-detail scoping runs the risk of cost overruns and client disputes due
to inaccurate cost estimates.

41. Low-detail scoping is particularly appropriate where the matters are very simple
and uniform, such as low-value conveyancing transactions and other commoditised
matters. It may also be the only available option if fine-grained data is not
available.

Mid-level detail scoping
42. With mid-level detail scoping, the work involved in the matter is broken up into
smaller chunks with key milestones and the number of hours it will take to get to
each milestone is taken into account. It is more detailed than low-detail scoping,
but it is not focused on individual client or lawyer considerations. As such, the
practice is still exposed to financial risks and non-financial risks such as client
satisfaction.

High-level detail scoping
43. With high-level detail scoping, a comprehensive Scope of Work (SOW) is created
through discussions between the client and the lawyer, and includes:

• A description of each task.
• Its purpose and expected outcomes.
• Related activities, such as status reporting and communicating with
relevant parties.
• Potential disruptions to the agreed scope and budget highlighted with
contingency options noted.

44. In addition, what is out of scope may be explicitly expressed.

45. There are significant benefits to undertaking this process with clients. The process
allows the lawyer to get a better understanding of what the client needs and deliver
a service that leaves them ‘super-satisfied’. The client becomes very educated
about the process and what is involved, and may be easier to deal with and more

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