Tan Kin Lian's Blog: A new society (7)

Wednesday, September 09, 2009

A new society (7) - a fair price

In a market economy, a fair price is obtained when there are many sellers and buyers of the product and all parties have the relevant and accurate information to make their decision. The fair price is likely to be based on the cost of producing and distributing the product, plus a fair margin of profit to the parties involved.

Usually, the buyer does not have the accurate information about the product and may be misled into paying an inflated price. This can occur under the following situations:

a) When the seller mis-represent the cost or value of the product
b) When the seller is unethical in profiteering, i.e. making an excessive profit at the expense of the buyer
c) When the seller has superior information that is not available to the buyer and use this information to an unfair advantage

Consumers may be misled or cheated into paying an inflated price for many types of investment products and for medical, legal services, legal and other professional services.

For investment products, it is easy to mislead the investor by making unjustified projections of the future profits from the investments. They pay a high price and do not get the value from the investment product.

For professional services, it is difficult for the consumer to judge the value and price of the professional service and may be easily over-charged.

It is important to have a system of tranparent and fair pricing for these financial products and professional services. This requires guidelines of prices to be established in a consultative manner, involving sellers and buyers, and easy access to relevant information by all parties.

Fair pricing is for the benefit of all parties and promotes honest and ethical dealings.

Tan Kin Lian

6 comments:

Anonymous said...: Well if the same good sold in rm5 and
whenit's sell in S5 .is it OK; September 09, 2009 2:10 PM
C H Yak said...: After the GST hike from 5% to 7%, many felt that the prices of goods sold in our supermarkets; including NTUC Fairprice, have increased disportionately by a very significant percentage.

If the rate of inflation is so low as claimed by the MTI, why is the price increase of basic necessities so significant?; September 09, 2009 2:26 PM
Tan Kin Lian said...: In the past, the medical association set guidelines for the fees charged by doctors. These guidelines are important to tell the patients what are the expected fees, and also to identify doctors who are over-charging.

Now that the guidelines are removed, consumers are placed at a disadvantage. They can be over-charged for some treatment, and may not be aware about it.

It is useful to have guidelines for the protection of consumers. Doctors can still compete to charge below the guideline, or above the guideline (if they feel that they have higher standards of competence).

The publication of the guidelines is a way to improve transparency, and benefit the consumers.; September 09, 2009 6:35 PM
C H Yak said...: Overcharging in legal fees is a serious but sensitive and complex issue.

The complexity is compounded as it involves the legal process, system and sometime even the Public Trustee Office.

I encountered a case like this. There was an appeal against an AR's judgment on his assessment of damages i.e. an appeal before a High Court Judge in Chamber; not the Court of Appeal. The hearing was on the 4th day of Chinese New Year. Initially, the fees advised was $6,000.00 for the appeal, excluding disbursements.

The crafty defence lawyer filed a "eleven-hour" cross appeal without laying out the full details of the cross-appeal, by simply asking for the damages awarded by the AR to be reduced in a single line statement. The appeal was accepted electronically after the normal working hour just before Chinese New Year Eve. The plaintiff's lawyer had no chance to accept instructions but filed his own affidavit in a last minute reply before the Judge's hearing.

At the end of the hearing when the bill came. The charges was more than $15,000.00. The Judge had accepted the Plaintiff's appeal partially while refusing to accept new evidence filed way ahead by the Plaintiff. The Judge also disallowed the Defendant's appeal.

The reasons by the Plaintiff's lawyer were there were 2 appeals, so costs of $6,000 x 2 = $12,000.00. As 2 affidavits were filed prior to the appeal hearing there was cost of another $3,000.00, and excluding disbursements.

At the end, even though the Plaintiff won the appeal partially on one of the points and was awarded a small sum and costs, the Plaintiff still had to fork out several thousands out of pocket to pay his lawyer.

I was also wondering how much the Defendant lawyer charge his client (an Insurer) for filing a one liner cross appeal, especially when the appeal was disallowed by the High Court Judge on the 4th day of Chinese New Year.

When a request was made for a copy of the Judgement from the High Court, it was claimed that the Judge does not normally issue Judgment for such appeal against assessment of damages as it does not involve "any points of interest in law".

The case involved an accident and compensation & legal costs involved the Public Trustee Office.

As the case involved some documents to be notarised overseas and all these were done by the Plaintiff's family and supplied to the Plaintiff's lawyer, is he still entitled to the full costs of the appeal and cross appeal which he listed in full detail to the Public Trustee Office in his justification of legal costs? Is it fair to pay this way especially that the Public Trustee Office is not able to know the detailed administration of the case.

I wonder if the Defendant's lawyer is also overcharging his corporate client,an Insurer.

Any disagreement in legal costs would involve asking the Court to decide on costs (i.e. asking for taxation of bill). This involves more time and more legal costs. If not a complaint has to be lodged with the Law Society.

The abitrary process of going through the Public Trustee Office does solve the issue or prevent any overcharging either, but confuse the public.

And Singapore's legal system does not allow legal fees to be charged on a "contingency fee" basis which mean clients will only need to pay their lawyers if they win the case.

Is it fair for claimants to pay such high hidden legal costs? There are also duplication in costs such as the cross-appeal scenario mentioned above.

The legal profession is supposed to be an honourable profession.; September 10, 2009 12:03 PM
C H Yak said...: My earlier post should read

"The abitrary process of going through the Public Trustee Office does not solve the issue or prevent any overcharging either, but confuse the public."; September 10, 2009 4:16 PM
Anonymous said...: I recently encoutered a case that I needed to engage lawyer to assist. From this experience, I believe lawyers are overcharging their fees. As a normal residents, it is really difficult to understand a simple consultation can lead to paying couple thousand dollars. From the listing of the bills, I am amazed that couple short email exchanging to clarify matters, and two phone calls (less than 15 minutes) to request for feedback will end up paying close to two thousands. This does not include any preparation of letters, or act on the case. The lawyer assocation should help the public in providing guidelines on the lawyer charges. There are far too many cases that the legal cost involve is more than what you are claiming back. It seems engaging a lawyer is for the super rich. Even a middle class citizen in Singapore will have problem to engage a lawyer. In many cases, justice can not be done due to this high cost of the legal fees. Is this the type of society we are embracing?; October 27, 2009 2:36 PM