Welcome to the Lawyerist Q&A Forum! Before you register an account and start posting, please take a moment to read our posting guidelines. (You can dismiss this message by clicking the X in the corner.)

2010 Flat Fee Experiment

samgloversamglover Minneapolis, MN Admin
Until recently, I have given most clients the option to pay me by the hour, even if I also quoted them a flat fee. No more. It just doesn't make sense. In my debt collection defense cases, for example, I usually charge 20-30% (with minimums) as a flat fee. I was doing my billing, when I realized an hourly client has effectively paid less than 5%. Sure, they have paid for my time, but what about the value of the results I achieved?

So no more. For 2010 (at least), I will only charge flat fees. In my fledgling business practice, I will only charge monthly fees, with flat fees for things like litigation.

I hope most of you have also tried flat fees. It seems scary, at first, I know. But soon, you realize you are making the same money more reliably--or possibly more money, since you no longer dock your own hours, spend a ton of time billing, or tie value to time.

Many people worry about getting burned on cases that get out of hand. Sure, it can happen. I have been burned once in three years. The cases where I have not been burned more than make up for that one case. Way more than make up for it.

Give it a go and let me know how it goes for you. I would love to see how others go about setting fees and what kind of results you see.

Sam

Comments

  • Just a comment on your statement that "But soon, you realize you are making the same money more reliably--or possibly more money, since you no longer dock your own hours, spend a ton of time billing, or tie value to time."


    Even if you charge flat fees, it is prudent to record your time. If a client files a fee dispute, for example, the attorneys on the fee arbitration committee do not relate well to flat fee arrangements, at least here in New Jersey. There is simply no way to support the work you have done with a flat fee arrangement and no time sheets. And don't expect the committee members to judge your fee in terms of the results you have achieved for the client.


    In my experience, our profession has just not come that far and does not approve of value billing. For better or worse, the hourly fee is the standard, so any other arrangement must be supportable through analogy to the hourly arrangement.

    Don Vanarelli

    Donald D. Vanarelli, Esquire
    Law Offices of Donald D. Vanarelli
    242 St. Paul Street
    Westfield NJ 07090
    http://www.dvanarelli.com
  • samgloversamglover Minneapolis, MN Admin
    I don't track my time on hourly fee matters because my fee has little to
    nothing to do with the time I put into a case. In fact, I think continuing
    to track hours after I stop billing that way would create the illusion that
    there is a connection.

    In debt collection defense cases, for example, my fee is often much lower
    than the competition, but I also generally achieve better results with less
    effort. This is because I know the subject matter and I have worked long and
    hard on effective forms, strategies, and procedures. If I get better results
    with less work and for less money, I don't think I should be tied to the
    time I put in.

    I am comfortable making that argument to a fee arbitration panel, because
    even if they disagree with me, it will not be much different than having a
    case that blew up on me. I lose on one case, but the others will make up for
    it.

    Moreover, I have never had a client complain about my flat fees. I think the
    structure of the fee arrangement is less likely to generate fee disputes,
    because as long as I do what I said I would do, there is no question that
    the client knew what they were paying beforehand. Hourly fee structures, on
    the other hand, create a potential for a fee dispute with every monthly
    bill.
  • I'm going to agree with Sam on this one (although I completely understand
    the fee arbitration concern).

    I have a client who owes me around $2600 right now, and his main complaint
    is that so much of it is research. Since it is a litigation matter, if I had
    simply set billing fees at $1000 for a motion (including the hearing), then
    I don't think my client would have the complaint he has now.

    Graham
  • I find flat fees work with my virtual law office when I am providing
    unbundled or limited legal services.  I have also found that for every
    one of the cases where it takes me twice as long as anticipated, that is
    made up for by the many other clients whose matters are handled quicker
    than expected to where the fixed fee equates to what would be a much
    higher billable hour than if I had straight out asked for a billable
    hour.  In the long run, it pays off.

    That said, I do not confine myself to only one method of billing.  I
    often will use a combination of billing methods that include fixed fee
    and billable hour.  I do this when I am not providing a more packaged
    service and have some concern that the matter may become more involved
    than when the representation begins.  The key here is to make this
    arrangement very clear in that first engagement letter, which in my case
    is online.  I will say that I charge a flat fee of X for Y services and
    that if the work exceeds Y, then I will charge my billable hour rate.  
    That provides more flexibility to cover myself if the case gets out of
    hand and far exceeds the fixed fee expenses.  So far this has really
    been working for me and my clients too because they have the ability to
    know their legal expenses ahead of time and can better budget for them.

    -Stephanie

    --
    Stephanie L. Kimbro, Esq., M.A., J.D.
    Kimbro Legal Services, LLC
    http://www.kimbrolaw.com - A NC Virtual Law Office
    http://www.virtuallawpractice.org - Virtual Law Practice Blog
Sign In or Register to comment.

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!