Dealing with Lawyers - the benefits of a flat fee
MAY 31, 2018
Most lawyers and law firms bill "by the hour" with a minimum charge of 1/10th of an hour (6 minutes). Under this fee arrangement, if you send your lawyer an e-mail and they spend nine minutes reading and responding to your e-mail, you are billed .2 hours for this interaction. If your lawyer charges $250 an hour, this e-mail cost you $50.00. This open-ended billing arrangement leaves much to be desired. It is difficult to predict, with any accuracy, how much your legal case is going to cost and, while lawyers loathe to admit it, the system creates incentives to drag a case out and postpone resolution.
An alternative to "by the hour" billing is negotiating a flat-fee with your attorney. Some cases, like non-contested divorce or child-custody cases and non-contested step-parent adoptions are well suited to flat fees. The work the lawyer performs is more or less the same in each of these types of cases and the lawyer can agree to a flat-fee with confidence that he or she will not end up working for substantially less than their normal rate. The client benefits because he or she knows, up front, what the case is going to cost. At Foothills Family Law, for example, we charge a flat fee of $1560 for non-contested divorces without children and $2000 for non-contested step-parent adoptions.
It is also possible to negotiate flat fees in more complex, contested matters but the fee is likely to be substantial in light of the uncertainty as to how many hours, precisely, the lawyer may need to spend on the case. There is also the risk that the case will resolve quickly, and the flat fee turns out to be higher than what the fee would have been if the case had been billed hourly. That said, the piece of mind of knowing with certainty what the case will cost is often worth it to clients.
In negotiating a flat fee with your lawyer, make sure you know exactly what you are getting for the agreed fee. There should be a written fee agreement setting forth what actions the lawyer is agreeing to perform and clarifying what actions the client may be expected to perform on his or her own. The written agreement should also specify when the flat fee is deemed "earned" by the lawyer. The Colorado Supreme Court has ruled that unless substantially all of the legal work will happen very shortly after the flat fee is charged, lawyers must set 'milestones' for when portions of the fee is earned. For example, Foothills Family Law's flat-fee non-contested divorce agreement specifies that 50% of the flat fee is earned upon entry into the agreement, 25% is earned upon filing of the case and 25% is earned upon entry of the decree dissolving the marriage. This 'milestone' arrangement protects the client in the event he or she chooses not to pursue the case or decides they wish to terminate the lawyer's services.
Not every case is well suited for a flat fee but it never hurts to explore this possibility with a prospective attorney. If an attorney you are considering tells you "no one does this type of case for a flat fee", they are not being entirely honest with you. Every lawyer is free to decide how he or she bills but being willing to discuss a flat fee with you is a factor to consider in deciding whether or not to retain the lawyer.
(c) 2018 Eric D. Wollard - The Wollard Law Firm, PC dba Foothills Family Law