Is flat fee a good deal? And, if so, for whom?
It is easy enough to set a flat fee. $5,000.00. There, see, you’re done.
But what are you getting for that? What are you giving up? Why would a law firm want to do that in the first place?
As a worst case scenario, all businesses want to stay in business. So if a firm quotes you a flat fee, that fee is not designed to force them out of business. They hope (plan) to make some money on each case, over and above their costs. That’s why they are in business. Here’s the problem, a firm has no way to know how much any given case will actually cost. Things could go to hell in a hand basket. They often do at some point in the litigation. The more savvy the firm, the more likely they have figured out how to make money on each case, even when, perhaps particularly when, it goes to hell in a handbasket.
The traditional model is based upon the billable hour. You pay for each minute that the firm works on your case, no more, no less. The problem with this model is that it is open ended. You do not know how much your case will cost. Neither does the firm. If your ex decides to battle you to the finish, your ex is betting that they can pay their attorney longer than you can pay yours. Detente is the best governor in this situation. Mutually assured destruction often reigns in the worst angels.
So, back to our flat fee model. The firm doesn’t know what demons your ex might bring to the litigation, but it decides to quote you a flat fee anyway. So your ex decides to bring the hounds of hell down upon you, and you can relax because your attorney’s fees are capped. No matter how bad it gets, you won’t have to pay a dime more. Really? Do you think a law firm filled with lawyers would leave themselves so vulnerable as to represent you through the gates of hell for that very modest fee?
I consulted with a fellow who had a very complicated divorce. His wife had accused him of an egregious crime. He was facing a felony with a long term prison sentence if he was convicted. He proclaimed his innocence and had hired a very gifted, renowned criminal defense attorney. He had a shot at being successful in his divorce, but it was extremely complicated and needed to be intricately coordinated with his criminal case to make it all come out right.
He was interviewing law firms and had come across a very well advertised firm in town who quoted him a very modest flat fee. There was no way that this firm was willing to take a bath on this complicated case. They got into family law, not based upon their calling but based upon their business acumen that they could cynically make a mint on people’s suffering. So their modest flat fee was designed to make the firm a tidy sum by filing the divorce and then sitting on it, waiting for the criminal case to run its course, and then picking up the pieces, however they fell. The client would get representation, but phone in representation at best. No effort to help the client get justice; just a cynical strategy to mop up the blood at the end. The client would suffer by not having a well coordinated, thought out strategy designed to best protect him. Sad. Even bad.
Flat fee can certainly work. At least, we hope so, because we still do it. Sort of like unbundled representation, which we handle through our Justice Cafe, a flat fee retainer can work when your case is on a short leash, ie, not much time left between retaining and trial, or when your case is trully contained, the issues are narrow, the facts are largely known and agreed to by both sides. Otherwise, one party or the other to a flat fee contract is going to make out like a bandit. And, don’t bet against the law firm who came up with the flat fee program in the first place.
So, the moral to our story: if your case is straightforward and uncomplicated or if it is going to trial very soon, flat fee can work for you. Neither you nor the firm will be on the losing side of that transaction. When a firm offers you a flat fee under these circumstances, you can trust it. The safeguards are there.
Just remember, like in all agreements, if it sounds too good to be true, it probably is. Life, and law, are like that.