As a divorce lawyer, and somebody who cares deeply about client-satisfaction, I have been reading a book entitled “Winning Alternative to the Billable Hour, Strategies that Work” by Mark A. Robertson and James A. Calloway.
It is an interesting book to me. It is, however, also a book for lawyers. Sorry if you are not interested.
But, it does bring up an interesting questions that I cannot answer easily: would a family law or divorce law client rather be billed by the hour or pay a flat rate fee? I know I would prefer charging flat rates. In my experience, client just don’t understand the billable hour arrangement and I don’t think they trust it. Please comment on this post if you have an opinion.
The Billable Hour
I have almost always billed by the hour. I think it is because that is what the first firm I worked for typically did. Furthermore, family law and divorce work is condusive to billing by the hour. Why? Because you never know what kind of case you are getting into when it starts. I don’t mean to be rude, by clients have no real expectation of how much of the lawyer’s time their case is going to take.
Furthermore, in my practice as a Apple Valley MN divorce lawyer, some clients call incessantly. I think they need reassurance. I understand that. However, when I charge by the hour, those phone calls cost my clients a lot of money. I don’t like it when the bill gets gigantic and I know my client’s really don’t like it.
The Flat Fee
So, I’ve been considering an alternative arrangement: the flat fee. Essentially, a flat fee is a one-time fee that a client pays to a lawyer to cover everything in their case. The lawyer takes all the phone calls, does all the interviews, drafts all the pleadings, goes to all the court hearings, negotiates a settlement, etc. This is all covered by one flat fee.
But, a question that many lawyers have is what is a reasonable rate to charge? Some divorces take minimal effort. Some take a lot of effort. Is charging $5,000 for an easy divorce ethical? Is only getting paid $5,000 for a two-year-long, hotly contested divorce a good idea? Difficult questions, both.
What Do You, the Client, Think?
I realize that much of this post is simply my ruminations on how to charge a flat fee and whether it is a good idea. I want to give service to my clients. I want there to be perceived value for the service I provide. I also don’t want to charge clients too much. On the same token, I don’t want clients fail to pay my for the hard work I do.
So, what is your opinion on flat fees versus the billable-hour? Do you care? Are you interested? Basically, how would you, the client, like to be charged by your divorce lawyer?
I used to be a legal assistant in a family law firm and I just don’t see how a flat fee can work in a family law scenario. Having said that, I hate the billable hour and the flat fee of $5,000.00 sounds very reasonable even for an “easy” divorce. An “easy” divorce can turn into a mess, the separation agreement is drafted and ready to be signed by the parties and someone suddenly snaps. If you are going to try and do the $5,000.00 fee for a divorce, make sure this doesn’t include disbursements.
The lawyer I worked for would charge about $5,000 just for a settlement conference because her billable hour was so high, but her files also had a lot at stake (people with businesses and inheritances/gifts worth millions of dollars).
The billable hour also encourages settlement in a family law matter. My concern with a flat fee is a client sees that they get the whole thing for $5,000 and now wants to run a 3 to 5 day trial on all issues just to be a prick to their ex.
Try it on one client and see how things work out…maybe put a clause in the retainer along the lines of: if this matter doesn’t settle 90 days before trial I will charge my hourly rate of ____ for trial prep and time at the trial.
Ian,
Great point. I think the big factor is the type of clientele and assets the lawyer is dealing with. In a small divorce, a flat fee or $5,000 may be very reasonable. It may even be too much for a simple dissolution. The problem, as you bring up, is when there are more complicated assets and/or when the divorce becomes messy – as so many of them do. For instance, when I take a case, I have an idea of how the case will go but I never really know. If I charge a flat fee I could be limiting myself and potentially hurting my client – which is unethical – because I am hamstrung by my fee agreement. That is why the billable hour is still around.
Yes ethics are definitely always a concern.
I don’t know what Country Province/State you are in, but you could do a flat fee for each task.
For example, $???? to write a letter to the other side, $???? for a trial $???? for a motion $???? for a settlement conference $???? for attending mediation with the client $???? for a separation agreement whether it is signed or not etc. You must have some idea as to what each task usually costs when you bill by the hour. $???? for a cohab/marriage contract whether it is signed or not. Just think of it like a renovation, you want your floor redone it will cost this much plus materials.
You would be the world’s most popular lawyer if you could pull off a flat fee for family law matters.
The only thing I know lawyers use a flat fee for is uncontested divorces.
Agreed on all fronts.