My Shingle

Flat Fees Are Fine, But Lawyers Can’t Have It Both Ways

by Carolyn Elefant on July 31, 2006 · 27 comments

in Business Models, Client Service, Setting and Collecting Fees

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Like Chris Marston of Inside the Future of the Law Firm who raves about the benefits of fixed pricing, I’m also a fan of the flat fee or fixed price.  Chris focuses on how fixed pricing provides certainty to clients, but from my perspective, it makes my life much easier when I don’t have to send out piddly monthly invoices for 2.55 hours of work.

Chris notes that most lawyers’ opposition to fixed billing comes from concerns that they’ll underestimate costs and lose money on the case.  In response, Chris argues that lawyers ought to think about a budget before signing clients on and if they do that, the fixed price model should work.  And, as John Toothman, a lawyer and legal fee management consultant writes, it’s  not any more difficult for lawyers to estimate fees than construction contractors:

Compared with this array of uncertainties [that contractors face], the cost of most legal
projects is much easier to estimate ever hear of a will being rained
out? In litigation or negotiation, where adversaries or judges can
disrupt one side’s plans, there are still plenty of ways to estimate
the likelihood of such disruptions and to plan with their likely impact
in mind. Lawyers’ excuses that they have no way to predict what will
happen indicate that they are either inexperienced or evasive. If all
else fails, the lawyer can at least disclose how much similar cases
have cost. This creates a dilemma for the law firm: Do they disclose
just how expensive all those cases were or do they try to distinguish
all of them as being different, thereby proving that they have no
relevant experience?

Where I do take issue with Chris and other proponents of fixed billing
is on the question of who bears the burden when a lawyer underestimates
the fee, or where a case takes longer than expected.  Chris and many
other proponents of flat fees seem to think that the client ought to
pay the overage.  But I disagree.  When I give a flat fee estimate, I
will eat the cost unless the extra work is caused by the client (e.g.,
client lies about material issues in the case) or created by unforseen
events (e.g., change in a 50 year precedent that leads to multiple
appeals).  My feeling is that as the attorney, I am the expert on
estimating fees, so I should bear the risk of an inaccurate estimate.
Giving flat fee estimates and then charging clients for extra work puts
all of the risk of the inaccurate estimate on clients.  Maybe that’s
what’s considered good business for lawyers, but I just don’t think
it’s fair.

  • http://www.HowToMakeItRain.com RJON@HowToMakeItRain.com

    FROM A RECENT EDITION OF MY FREE WEEKLY NEWSLETTERHow To Make It Rain…This Week:
    How Successful Rainmakers Structure Flat Fees To Make Clients Happy & Earn Alot Of Money
    A 3-way e-mail discussion I recently participated in with Linda B., a litigator who also does some trust & estate planning work; and James G. who is her well-meaning friend/part-time office manager.
    Linda B. is a regular reader of my e-zine and kicked things off with an e-mail to me.
    As you’ll see, Linda cc’ed James who replied to her before I did, so my comments were an attempt to respond to both of them:
    To:rjon@howtomakeitrain.com
    CC: jamesg******@hotmail.com
    From LindaB********* @aol.com
    Date: June 12, 2006 19:50:10 EDT
    Subject: Help with fees, Please!!!!!
    Help with thinking “outside the box please!!!!!
    1. I am not able to “flat fee” all cases, especially litigation. So we are trying to come up with other retainer language which works.
    2. The issue is… if I get a retainer, the money must go in the trust account, where it is not accessible, without billing. Thus always playing “catch up”. Or loose money if I don’t get around to sending a bill every month or forget to record any of my time when things get really busy.
    3.I tried to alleviate some of that, with the language “non refundable retainer” in my retainer agreemets & Clients balked.
    4. What about if I use the word non refundable “deposit” ????
    Is there better wording, which in essence hides the fact, we are trying to protect against getting stiffed at the final bill (especially if the outcome of the litigation is negative) -or- if the client disappears and we are into the case with lots of hours – or- we are into the case with lots of hours, and the clients fire us.
    5. We are needing “working capital” to do these larger litigation cases, so we are trying to get some “usable money” up front.
    Help…and thanks Linda B.
    ———————————————————————————————————————————-
    From: “James G******”
    To: LindaB********* @aol.com
    CC: rjon@howtomakeitrain.com
    Subject: RE: Help with fees, Please!!!!!
    Date: Wed, 12 May 2006 23:29:00 -0400
    Hi,
    As I received a copy of your email and have no idea who “rjon@howtomakeirain” is, I will reply as best I know how:
    #1 Flat fees work the same as normal fee structures in terms of collection.
    #2 A Lawyer asks for a retainer or down payment on the flat fee. If he is a clever lawyer he asks for just enough to get the client into a critical position just at the time he is about to run out of retainer. This system is worked until the case is over. The lawyer stops working a on a case the minute the down payment/retainer runs out. There is no catch up. Service stops on the last dime.
    #3 Non refundable “anything” is unethical as the money is not yours until the hours are billed, as well as not a respectable way to raise capital.
    #4 If you follows the rules your life will work. “1)getting stiffed at the final bill (especially if the outcome of the litigation is negative) 2)clients die and we are into the case with lots of hours 3) we are into the case with lots of hours, and the clients fire us. They are non issues if you follow the rules.
    #5 Working Capital can not be stolen from a client in the guise of a non refundable anything. It is unethical and probably against the bar rules. Be very careful and get an “opinion in writing” from someone at the Practice Management area of the North Carolina bar if you decide to continue in this direction. A more traditional way to raise capital is to borrow it from a bank like everyone else.
    #6 If you don’t mind me saying so……..don’t try to craft your own agreement. Ask the Bar for one that is approved, get one from another North Carolina lawyer and copy it. If it doesn’t work as written, you have to ask yourself why not ?
    James
    ———————————————————————————————————————————–
    To: jamesg******@hotmail.com rjon@howtomakeitrain.com
    CC: LindaB********* @aol.com
    From rjon@howtomakeitrain.com
    Date: June 13, 2006 9:43:44
    Subject: Help with fees, Please!!!!!
    Hello Linda & James,
    I agree with some of the points made by James & disagree with others. I’ll try to address his points as well as your questions. Comments by James are underlined. My comments are not:
    His points:
    1. Flat fees work the same as normal fee structures in terms of collection. – I agree. Whether you charge by the hour or by the task or by the whole job doesn’t dictate your policy on when you require payment or deposit into your trust account. You can charge $100 per hour, estimate the job will require 10 hours and require the client to desposit $1,000 into the trust account to cover your anticipated fees – or you can just tell the client that you will do the task for $1,000 payable in advance as a flat fee. Likewise, you can charge the same $100 per hour, work the same 10 hours with no security deposit and then pull your hair-out trying to collect, and by the same token, you can agree to handle the same job for $1,000 flat fee but not get paid up-front and have the same collection problems.
    The difference between flat fee vs. hourly is the difference between the client with limited experience having to budget the case vs. the lawyer who, presumably, has much more experience, taking responsibility for budgeting the case. When presented after a Proper Sales Call in which you & the client establish a clear understanding of the value of the matter you are dealing with, and with a clear explanation of how you arrived at the fee, the vast majority of clients prefer flat fees – when’s the last time you went to a restaurant or a doctor’s office, or a shopping mall & prices were based on how long it took to cook your food/cure you disease/sew your clothing? (Rhetorical question – you get the point.)
    2. A Lawyer asks for a retainer or down payment on the flat fee. If he is a clever lawyer he asks for just enough to get the client into a critical position just at the time he is about to run out of retainer. This system is worked until the case is over. The lawyer stops working a on a case the minute the down payment/retainer runs out. There is no catch up. Service stops on the last dime.
    This is indeed how many lawyers do it. Though it’s alot of extra work to keep-up with & breeds animosity with clients who eventually figure out what is going on. To make this work, you need to bill every month, review your a/r every month and have a good handle on what’s left in the trust account every month to determine when service must cease before you get to that last dime, lest you arrrive at the eve of trial with no money left in trust & no way to get out of the case.
    Again, that’s why most clients prefer to know what something is going to cost before they buy it. “How did you like your meal? Oh well, you know that pasta took a bit longer to cook than anticpated b/c the cook wasn’t paying close-enough attention, so your bill will be 10% higher than the guy at the table next to you who ordered the same thing.” Instead, a better practice for your long-term success is to habitually invest the time up-front to budget how long a given task should take, explain to the client that your normal rate is $X, you anticipate the task or series of tasks to require Y hours & so you will do it for them for $Z dollars on a flat-fee basis. If it takes a little more time, the client gets a break…if you can manage to figure-out how to get it done more efficiently the client also gets a break b/c 99% of them prefer to get things over with more quickly, not less quickly.
    3. Non refundable “anything” is unethical as the money is not yours until the hours are billed, as well as not a respectable way to raise capital. Here I have to disagree with James in-part & agree with part. Non-refundable fees are ethical & respectable and here’s why: Basic contract law – you need to have an offer, acceptance & exchange of some kind of consideration. For example an offer to hire you, & acceptance of the engagement. But let’s say the client pours his heart out to you on Friday afternoon, you do no work at all & then on Monday morning he shows up & tells you not to proceed he’s changed his mind.
    Q. What’s the “consideration” the lawyer has given?
    A. You now owe that client a duty of confidentiality – forever.
    That means when the next client limps in the door looking to sue the previous one for running him over in his Bently & then backing-up again to make sure he was sufficiently hurt, while the whole scene took place in front of a group of Nuns with video cameras, you cannot accept that great case b/c you’ve already given-up the chance by the legally-binding “consideration” you gave when you agreed to keep everything confidential.
    I do agree however that this is a silly way to raise capital. Converting a fee deposit from refundable to non-refundable does not turn it into “working capital.” By their very definitions, fees & working capital are different things. You can’t pay your personal bills with working capital, or else you’ll end-up right back in the hole, and you can’t forego revenues for working capital, or else you’ll find yourself with too much invested in the case to be objective.
    Instead, working capital comes from only three sources: 1. The bank in the form of a line of credit; 2. The client in the form of a deposit for costs; 3. The law firm entity in the form of capital contributions by owners/partners whose successful Rainmaking efforts enable them to earn more than they need to live-on & have the extra cash available to fund larger contingency cases than clients can fund themselves. IF A CLIENT CAN’T AFFORD TO FUND THE CASE TODAY, THEN WHAT MAKES YOU THINK HE’LL BE ABLE TO PAY YOU BACK FOR IT TOMORROW? That’s why clients have credit cards & lawyers accept them. Call Tracy Griffin with Attorney Card Services to set up your credit card acceptance program. Her number is 321-953-6987.
    Three more points you didn’t ask about, but I just want to pile-on. . .
    A. You cannot “hide” anything from clients. They eventually figure everything out & hate you for it. Not a good way to build a sustainable & successful practice.
    B. As discussed in the FREE e-book Ten Rainmaking Mistakes Made By Solo Practitioners You can’t turn a kitten into a dog. If a client can’t afford your services you have three choices: Turn-down the case; Accept the case for a lower fee or pro bono; or Accept the case on contingency when the economics of the case make that a viable way to get paid. Accepting a good case from a client who can’t pay, because you think they’ll somehow come-up with the money is like buying a kitten & raising it like a dog & then wondering why “Rover” won’t fetch.
    C. You stated: “I’m NOT not able to ‘flat fee’ all cases, especially litigation.” Why not? Why not? Why not? SOMEONE has to sit down & think about how much the case is going to cost.
    What you’re really saying is that you don’t want to bother & so instead you just want to leave that responsibility to the client.
    “If you can’t say with confidence at the beginning of a litigation matter what it will cost to get from A-Z, then howabout telling me what it will cost to get me from A-B. Then we can assess what it looks like from B-C & I can decide if I want to keep going, or quit.” This is EXACTLY the conversation every single client has with themself when hiring a lawyer. You just need to decide whether or not you want to be a participant in that conversation.
    Hope this helps. Anyone who’s interested in learning more is welcome to subscribe to the free newsletter and download the free e-book.
    RJON ROBINS
    http://www.HowToMakeItRain.com
    Helping Lawyers In Small Firms Make ALOT More Money!

  • http://www.HowToMakeItRain.com RJON@HowToMakeItRain.com

    FROM A RECENT EDITION OF MY FREE WEEKLY NEWSLETTERHow To Make It Rain…This Week:
    How Successful Rainmakers Structure Flat Fees To Make Clients Happy & Earn Alot Of Money
    A 3-way e-mail discussion I recently participated in with Linda B., a litigator who also does some trust & estate planning work; and James G. who is her well-meaning friend/part-time office manager.
    Linda B. is a regular reader of my e-zine and kicked things off with an e-mail to me.
    As you’ll see, Linda cc’ed James who replied to her before I did, so my comments were an attempt to respond to both of them:
    To:rjon@howtomakeitrain.com
    CC: jamesg******@hotmail.com
    From LindaB********* @aol.com
    Date: June 12, 2006 19:50:10 EDT
    Subject: Help with fees, Please!!!!!
    Help with thinking “outside the box please!!!!!
    1. I am not able to “flat fee” all cases, especially litigation. So we are trying to come up with other retainer language which works.
    2. The issue is… if I get a retainer, the money must go in the trust account, where it is not accessible, without billing. Thus always playing “catch up”. Or loose money if I don’t get around to sending a bill every month or forget to record any of my time when things get really busy.
    3.I tried to alleviate some of that, with the language “non refundable retainer” in my retainer agreemets & Clients balked.
    4. What about if I use the word non refundable “deposit” ????
    Is there better wording, which in essence hides the fact, we are trying to protect against getting stiffed at the final bill (especially if the outcome of the litigation is negative) -or- if the client disappears and we are into the case with lots of hours – or- we are into the case with lots of hours, and the clients fire us.
    5. We are needing “working capital” to do these larger litigation cases, so we are trying to get some “usable money” up front.
    Help…and thanks Linda B.
    ———————————————————————————————————————————-
    From: “James G******”
    To: LindaB********* @aol.com
    CC: rjon@howtomakeitrain.com
    Subject: RE: Help with fees, Please!!!!!
    Date: Wed, 12 May 2006 23:29:00 -0400
    Hi,
    As I received a copy of your email and have no idea who “rjon@howtomakeirain” is, I will reply as best I know how:
    #1 Flat fees work the same as normal fee structures in terms of collection.
    #2 A Lawyer asks for a retainer or down payment on the flat fee. If he is a clever lawyer he asks for just enough to get the client into a critical position just at the time he is about to run out of retainer. This system is worked until the case is over. The lawyer stops working a on a case the minute the down payment/retainer runs out. There is no catch up. Service stops on the last dime.
    #3 Non refundable “anything” is unethical as the money is not yours until the hours are billed, as well as not a respectable way to raise capital.
    #4 If you follows the rules your life will work. “1)getting stiffed at the final bill (especially if the outcome of the litigation is negative) 2)clients die and we are into the case with lots of hours 3) we are into the case with lots of hours, and the clients fire us. They are non issues if you follow the rules.
    #5 Working Capital can not be stolen from a client in the guise of a non refundable anything. It is unethical and probably against the bar rules. Be very careful and get an “opinion in writing” from someone at the Practice Management area of the North Carolina bar if you decide to continue in this direction. A more traditional way to raise capital is to borrow it from a bank like everyone else.
    #6 If you don’t mind me saying so……..don’t try to craft your own agreement. Ask the Bar for one that is approved, get one from another North Carolina lawyer and copy it. If it doesn’t work as written, you have to ask yourself why not ?
    James
    ———————————————————————————————————————————–
    To: jamesg******@hotmail.com rjon@howtomakeitrain.com
    CC: LindaB********* @aol.com
    From rjon@howtomakeitrain.com
    Date: June 13, 2006 9:43:44
    Subject: Help with fees, Please!!!!!
    Hello Linda & James,
    I agree with some of the points made by James & disagree with others. I’ll try to address his points as well as your questions. Comments by James are underlined. My comments are not:
    His points:
    1. Flat fees work the same as normal fee structures in terms of collection. – I agree. Whether you charge by the hour or by the task or by the whole job doesn’t dictate your policy on when you require payment or deposit into your trust account. You can charge $100 per hour, estimate the job will require 10 hours and require the client to desposit $1,000 into the trust account to cover your anticipated fees – or you can just tell the client that you will do the task for $1,000 payable in advance as a flat fee. Likewise, you can charge the same $100 per hour, work the same 10 hours with no security deposit and then pull your hair-out trying to collect, and by the same token, you can agree to handle the same job for $1,000 flat fee but not get paid up-front and have the same collection problems.
    The difference between flat fee vs. hourly is the difference between the client with limited experience having to budget the case vs. the lawyer who, presumably, has much more experience, taking responsibility for budgeting the case. When presented after a Proper Sales Call in which you & the client establish a clear understanding of the value of the matter you are dealing with, and with a clear explanation of how you arrived at the fee, the vast majority of clients prefer flat fees – when’s the last time you went to a restaurant or a doctor’s office, or a shopping mall & prices were based on how long it took to cook your food/cure you disease/sew your clothing? (Rhetorical question – you get the point.)
    2. A Lawyer asks for a retainer or down payment on the flat fee. If he is a clever lawyer he asks for just enough to get the client into a critical position just at the time he is about to run out of retainer. This system is worked until the case is over. The lawyer stops working a on a case the minute the down payment/retainer runs out. There is no catch up. Service stops on the last dime.
    This is indeed how many lawyers do it. Though it’s alot of extra work to keep-up with & breeds animosity with clients who eventually figure out what is going on. To make this work, you need to bill every month, review your a/r every month and have a good handle on what’s left in the trust account every month to determine when service must cease before you get to that last dime, lest you arrrive at the eve of trial with no money left in trust & no way to get out of the case.
    Again, that’s why most clients prefer to know what something is going to cost before they buy it. “How did you like your meal? Oh well, you know that pasta took a bit longer to cook than anticpated b/c the cook wasn’t paying close-enough attention, so your bill will be 10% higher than the guy at the table next to you who ordered the same thing.” Instead, a better practice for your long-term success is to habitually invest the time up-front to budget how long a given task should take, explain to the client that your normal rate is $X, you anticipate the task or series of tasks to require Y hours & so you will do it for them for $Z dollars on a flat-fee basis. If it takes a little more time, the client gets a break…if you can manage to figure-out how to get it done more efficiently the client also gets a break b/c 99% of them prefer to get things over with more quickly, not less quickly.
    3. Non refundable “anything” is unethical as the money is not yours until the hours are billed, as well as not a respectable way to raise capital. Here I have to disagree with James in-part & agree with part. Non-refundable fees are ethical & respectable and here’s why: Basic contract law – you need to have an offer, acceptance & exchange of some kind of consideration. For example an offer to hire you, & acceptance of the engagement. But let’s say the client pours his heart out to you on Friday afternoon, you do no work at all & then on Monday morning he shows up & tells you not to proceed he’s changed his mind.
    Q. What’s the “consideration” the lawyer has given?
    A. You now owe that client a duty of confidentiality – forever.
    That means when the next client limps in the door looking to sue the previous one for running him over in his Bently & then backing-up again to make sure he was sufficiently hurt, while the whole scene took place in front of a group of Nuns with video cameras, you cannot accept that great case b/c you’ve already given-up the chance by the legally-binding “consideration” you gave when you agreed to keep everything confidential.
    I do agree however that this is a silly way to raise capital. Converting a fee deposit from refundable to non-refundable does not turn it into “working capital.” By their very definitions, fees & working capital are different things. You can’t pay your personal bills with working capital, or else you’ll end-up right back in the hole, and you can’t forego revenues for working capital, or else you’ll find yourself with too much invested in the case to be objective.
    Instead, working capital comes from only three sources: 1. The bank in the form of a line of credit; 2. The client in the form of a deposit for costs; 3. The law firm entity in the form of capital contributions by owners/partners whose successful Rainmaking efforts enable them to earn more than they need to live-on & have the extra cash available to fund larger contingency cases than clients can fund themselves. IF A CLIENT CAN’T AFFORD TO FUND THE CASE TODAY, THEN WHAT MAKES YOU THINK HE’LL BE ABLE TO PAY YOU BACK FOR IT TOMORROW? That’s why clients have credit cards & lawyers accept them. Call Tracy Griffin with Attorney Card Services to set up your credit card acceptance program. Her number is 321-953-6987.
    Three more points you didn’t ask about, but I just want to pile-on. . .
    A. You cannot “hide” anything from clients. They eventually figure everything out & hate you for it. Not a good way to build a sustainable & successful practice.
    B. As discussed in the FREE e-book Ten Rainmaking Mistakes Made By Solo Practitioners You can’t turn a kitten into a dog. If a client can’t afford your services you have three choices: Turn-down the case; Accept the case for a lower fee or pro bono; or Accept the case on contingency when the economics of the case make that a viable way to get paid. Accepting a good case from a client who can’t pay, because you think they’ll somehow come-up with the money is like buying a kitten & raising it like a dog & then wondering why “Rover” won’t fetch.
    C. You stated: “I’m NOT not able to ‘flat fee’ all cases, especially litigation.” Why not? Why not? Why not? SOMEONE has to sit down & think about how much the case is going to cost.
    What you’re really saying is that you don’t want to bother & so instead you just want to leave that responsibility to the client.
    “If you can’t say with confidence at the beginning of a litigation matter what it will cost to get from A-Z, then howabout telling me what it will cost to get me from A-B. Then we can assess what it looks like from B-C & I can decide if I want to keep going, or quit.” This is EXACTLY the conversation every single client has with themself when hiring a lawyer. You just need to decide whether or not you want to be a participant in that conversation.
    Hope this helps. Anyone who’s interested in learning more is welcome to subscribe to the free newsletter and download the free e-book.
    RJON ROBINS
    http://www.HowToMakeItRain.com
    Helping Lawyers In Small Firms Make ALOT More Money!

  • http://www.exemplarlaw.com Christopher Marston

    Dear Carolyn,
    I just wanted to mention that I agree with you about who bears the burden of underestimated fees. I think the law firm is responsible for setting fees and that an additional charge should only apply for work that is outside of clearly defined scope that the customer and firm agreed upon.

  • http://www.exemplarlaw.com Christopher Marston

    Dear Carolyn,
    I just wanted to mention that I agree with you about who bears the burden of underestimated fees. I think the law firm is responsible for setting fees and that an additional charge should only apply for work that is outside of clearly defined scope that the customer and firm agreed upon.

  • http://www.exemplarlaw.com Christopher Marston

    Dear Carolyn,
    I just wanted to mention that I agree with you about who bears the burden of underestimated fees. I think the law firm is responsible for setting fees and that an additional charge should only apply for work that is outside of clearly defined scope that the customer and firm agreed upon.

  • http://www.exemplarlaw.com Christopher Marston

    Dear Carolyn,
    I just wanted to mention that I agree with you about who bears the burden of underestimated fees. I think the law firm is responsible for setting fees and that an additional charge should only apply for work that is outside of clearly defined scope that the customer and firm agreed upon.

  • http://www.jacobson.co.za/2006/08/fixed_fees_under_discussion_ag.html Jacobson Attorneys

    Fixed fees under discussion again

    Curiously, I ask them how much time they spend at the very beginning thinking about how long it might take so they can give their clients some guidance and most say “well, none really, because then I would not have the time to get the work done and plu…

  • http://www.jacobson.co.za/2006/08/fixed_fees_under_discussion_ag.html Jacobson Attorneys

    Fixed fees under discussion again

    Curiously, I ask them how much time they spend at the very beginning thinking about how long it might take so they can give their clients some guidance and most say “well, none really, because then I would not have the time to get the work done and plu…

  • anon
  • anon
  • http://www.lawsourcing.com/blog/?p=22 LawSourcing Blog

    Flat Fee Pricing

    If youve

  • http://www.lawsourcing.com/blog/?p=22 LawSourcing Blog

    Flat Fee Pricing

    If youve

  • http://www.mercklaw.com Billy Merck

    I agree, and this is how I bill; I give an estimate that is based on my hourly rate, and then require a retainer that I quote to the client as a flat fee. Unless circumstances change substantially or the case ends up involving work far beyond the scope of the original agreement, I stick to the estimate regardless of how long it takes me. Why should the client have to pay for my inability to accurately estimate, or even worse, pay more because it took me longer to do something than it should have?

  • http://www.mercklaw.com Billy Merck

    I agree, and this is how I bill; I give an estimate that is based on my hourly rate, and then require a retainer that I quote to the client as a flat fee. Unless circumstances change substantially or the case ends up involving work far beyond the scope of the original agreement, I stick to the estimate regardless of how long it takes me. Why should the client have to pay for my inability to accurately estimate, or even worse, pay more because it took me longer to do something than it should have?

  • http://www.legalandrew.com/2006/08/07/flat-fees-or-hourly-billing-what-is-more-efficient/ Legal Andrew

    Flat Fees or Hourly Billing: What is More Efficient?

    As usual in the law community, there is a discussion regarding whether attorneys should bill clients by the project or by time. My Shingle has a good point to add to the discussion: who bears the cost of overage if the project costs more than expected…

  • http://www.legalandrew.com/2006/08/07/flat-fees-or-hourly-billing-what-is-more-efficient/ Legal Andrew

    Flat Fees or Hourly Billing: What is More Efficient?

    As usual in the law community, there is a discussion regarding whether attorneys should bill clients by the project or by time. My Shingle has a good point to add to the discussion: who bears the cost of overage if the project costs more than expected…

  • http://www.legaleaseconsulting.com/legal_ease_blog/2006/08/who_bears_the_b.html Legal Ease Blog

    Who Bears the Burden When a Lawyer Underestimates the Fee?

    Carolyn Elefant recently posted about fixed fees over on her blog, My Shingle, with a post entitled, Flat Fees are Fine, But Lawyers Can’t Have It Both Ways. Carolyn is a fan of using fixed fees, but says that when

  • http://www.legaleaseconsulting.com/legal_ease_blog/2006/08/who_bears_the_b.html Legal Ease Blog

    Who Bears the Burden When a Lawyer Underestimates the Fee?

    Carolyn Elefant recently posted about fixed fees over on her blog, My Shingle, with a post entitled, Flat Fees are Fine, But Lawyers Can’t Have It Both Ways. Carolyn is a fan of using fixed fees, but says that when

  • http://scott.shuker.tripod.com Scott Shuker

    While I agree that I like and often use flat rate pricing, in some types of matters, I have found that it leaves you open to abuses by you client. Attempting to bring in unrelated matters that could not have been anticipated as part of what you were taking on, is one way but the more common problem is a client that is way too active in terms of telephone calls. Perhaps I just need to get a better handle on controling my clients, but I make it a point to take/return every call that comes in. For this reason, I still use hourly billing for some clients.

  • http://scott.shuker.tripod.com Scott Shuker

    While I agree that I like and often use flat rate pricing, in some types of matters, I have found that it leaves you open to abuses by you client. Attempting to bring in unrelated matters that could not have been anticipated as part of what you were taking on, is one way but the more common problem is a client that is way too active in terms of telephone calls. Perhaps I just need to get a better handle on controling my clients, but I make it a point to take/return every call that comes in. For this reason, I still use hourly billing for some clients.

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    I will have to disagree. In litigation, you can never predict if the other party will use scorch earth litigation practices, running you into court every week, taking every deposition of anyone who heard about your case, having the judge cause extra court appearances, etc. etc. It really is close to impossible to estimate at the front end what others whom you can not control, will cause the fees to do in a case. So, if you charge for every conceivable contingency, the client may not hire you and it may turn out to be a wrong estimate.

    I would be interested in how to handle the unknown opponent and court system.

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