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Affordability: Working for a flat fee

On Behalf of | Aug 30, 2012 | Affordability

I was speaking with a client the other day about how attorneys bill.  Like all smart clients, he was concerned about affordability.  He asked me about an arrangement he’d seen another firm offer, a flat fee.  He asked me how that worked.

“The theory is that the flat fee lawyer has a single fee that he charges for whatever has to be done,” I told my client.  “But what if the work is extensive and takes many, many hours?” he asked.  “The fee is the same,” I answered.  “That sounds too good to be true,” he opined.  “That’s because it is,” I answered.

A few lawyers advertise that they handle matters for a flat fee.  No matter how much time a case requires, they only charge a single, flat fee, nothing more, ever.  They claim the moral high ground of affordability.  The problem with this approach, however, is that it doesn’t work.  In a flat fee scheme, the lawyer’s profit rises when he does the least work.  If he charges a flat fee of $2,500, he can make $1,250 an hour if he only works two hours on that case.  If he has to work 25 hours on that case, he only makes $100 an hour.  The attorney has a huge incentive to end the case quickly.  The attorney has an equally huge incentive to not work too much on the case.  So who suffers?  The client.

Flat fee attorneys argue that they work the law of averages, some cases they lose their shirts on, some cases they make a killing on.  If true, of course, it means that some clients are getting swindled by being grossly overcharged, but even this isn’t true.  When a client doesn’t have buy in to a case, a motivation to keep costs down, the case can quickly spiral out of control with spurious, dubious and unnecessarily litigious claims borne of anger, resentment or plain spite and fueled by the knowledge that making more work, causing more pain won’t cost the client anything.  This is not the path to a peaceful, successful, win/win resolution. This is the path to litigation without end.

And the attorney who practices in family law knows this problem.  That’s why no attorney who practices family law will actually practice with a flat fee.  It’s bait and switch.  The game favors the house.  The client who hires a flat fee attorney will not get what he has paid for.

I admit that I’m on a soap box here.  One attorney I know who advertises flat fees bragged to one of the Firm’s attorneys that it didn’t matter that the flat fee attorney lost so badly and that his client was ordered to pay our attorney fees for frivolous litigation.  What mattered to this attorney was that he got paid and the case was over within two days of it starting.  As a flat fee attorney, he said, he made a mint!

At The Manely Firm, we work on the maxum of an honest day’s work for an honest day’s pay.  If a project takes us one hour and seven minutes, we bill for that one hour and seven minutes.  It’s honest.  It’s transparent.  We don’t get a windfall.  Our client doesn’t take a bath.

So, if some attorney tells you he’ll handle your contested custody case for a flat fee of $2,500 or even $5,000 and that is all you will ever have to pay, remember, if it sounds too good to be true, it is.  If you hire him, kiss your money and your children goodbye.

Michael Manely