Thursday, February 26, 2015

Flat fee billing - the way to go?

Norman Pattis - a criminal defense lawyer and prolific blogger has a recent op-ed piece in the New Jersey Law Journal.  Writing about flat fee billing, he reports:
Those of us walking on the wild side of the law are bemused that large firms are turning to flat-fee billing in order to keep legal fees down. Small firms have survived with flat-fee billing for a long time. Few clients can afford to pay hourly fees. But can large law firms afford to survive on flat fees?
Consider the conflicting imperatives governing lawyers' fees.
We are expected to charge reasonable fees. We cannot charge nonrefundable retainers. Clients are entitled to a return of unearned fees in cases where the attorney-client relationship ends sooner than anticipated. How do you reconcile all these imperatives?
It's not easy.
Here are some things that can easily go wrong in flat-fee cases.
First and foremost, some clients will view flat fees as an invitation to consume as much of your time as they can. We're required to return calls, to communicate, to educate, and to advise, counsel and advocate. Some clients bring a sense of maturity to the relationship; others need their hands held daily. On a flat-fee retainer, you can be bled to death.

Suppose the client behaves so unreasonably that you can no longer represent him with the zeal required. You might be tempted to withdraw. In that case, expect opposition to the motion to withdraw from the court. "The lawyer agreed to represent me for a flat fee," you will hear. "If he withdraws, I want my money back. He did not perform what the contract requires."
But you've spent countless hours answering calls, emails, drafting letters, negotiating with adversaries, trying to follow each of the bouncing balls the client belched out in his not always sober hours of need.
Who decides which portion of the fee is reasonable compensation? Don't trust the trial court. It is looking down the barrel of a potential pro se case if you are gone. Expect resistance from the court on your motion.

A flat-fee case might be a marriage from which there is no divorce.
Next, suppose you agree to represent a party and then, shortly after your flat fee clears the bank, the client turns surly and fires you. At this point, you've put time into the file, researching the law to make sure you understand the case, and familiarizing yourself with the facts. Can you keep the fee?
If you do, you'll most likely get in trouble. The rules prohibit nonrefundable retainers.

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