Plane speaking

By | 20th March 2013

Sitting on a plane recently, I was passing the time between one gin and tonic and the next by reading The Daily Telegraph. With thoughts about today’s Budget filling the columns I was bemused to learn from an article by Ian Cowie that we paid a truly mind boggling £437.6 billion in taxes in the fiscal year ended April 2012.

I find that if I explain to a lawyer that the USB stick in her hand might contain a certain number of gigabytes of data, she is likely to be more bewildered than if I explain what that means in terms she understands, for example, if I say that the data might run to a number of yards or even miles of lever arch files. At least she can visualise the line of files stretching into the distance because it is a measurement she understands and can see.

The same is true of figures for tax receipts. If I tell you, as Mr Cowie did, that that tax take is £55 billion, or more than £1 billion per week, MORE than the last Government raised in its final year in office, you may be truly astonished particularly when all we hear about is the Coalition’s cuts!!

What is even more staggering is that more than half, or 56%, of all tax is paid by people earning over £50,000 a year, who make up just 10% of taxpayers.

Last year, it was generally accepted that Republican candidate Mitt Romney had shot himself in the foot by declaring that it was wrong that 46% of Americans paid no tax.

Mr Cowie continues with one of my favourite explanations of how we got into this mess in the first place!

He said: “If all that sounds rather dry, then – with apologies to regular readers – here’s an anecdote from Max King, global asset allocation strategist at Investec, which sets out to explain the macroeconomics of tax and benefits in terms we can all understand.

Suppose that once a month, ten men go out for beer and the bill for all of them comes to £100 – it could just as easily be $100 but I will stick to sterling for now. If they paid their bill the way we pay our taxes and claim State benefits, it would go something like this;

The first four men (the poorest) would pay nothing. The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.
So, that’s what they decided to do. The ten men drank in the bar every month and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men; the paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realised that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.

So the bar owner suggested a different system. The fifth man, like the first four, now paid nothing.
The sixth man paid £2 instead of £3 .
The seventh paid £5 instead of £7.
The eighth paid £9 instead of £12.
The ninth paid £14 instead of £18.
And the tenth man now paid £49 instead of £59. 
Each of the last six was better off than before with the first four continuing to drink for free.

But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10!”

“Yes, that’s right,” exclaimed the fifth man. “I only saved a £1 too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get £10 back, when I only got £2? The rich get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

So, the nine men surrounded the tenth and beat him up. Funnily enough, the next month the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him.

But when it came to pay for their drinks, they discovered something important – they didn’t have enough money between all of them to pay for even half the bill.

That’s how non-contributory democracy led to the credit crisis in a nutshell. Or a joke, on the basis that you don’t need to be solemn to make a serious point…..”

Now you may laugh at all that or possibly cry or just get irritated but the good point here is that you do not have to be solemn to make a serious point.

My serious point (in an intentionally light hearted way) is that if lawyers are to feel comfortable using technology to assist in e-discovery, it must be explained to them in terms which relate to the experiences they have had. If we in the litigation suport industry continue to blather about technical terms to our prospective clients we cannot expect those clients to be happy.

Just as Max King’s beer drinking scenario illustrates much of what is wrong with the tax and benefits system in this country, because it seeks to explain complicated issues in a way which ordinary mortals can understand and to which they can relate, in the same way those who explain to their clients the sometimes complicated issues around e-discovery in language which lawyers can understand, will prosper at the expense of those who just cannot be bothered.