May
24

Flat Fees, Black Holes, And The Value Of Chaos

I've begun to wonder whether flat fees for legal services ought to be prohibited. Charging them leads to an almost inevitable conflict between lawyer and client. Perhaps lawyers should be required to charge hourly fees for their services.

Here's the issue in a nutshell: Once you've practice for a few years in a given area you get a pretty good idea of a typical case's complexity. A routine hand-to-hand narcotics sale, for example, is only so complicated. When someone seeks your representation, you have a pretty good feel for the value of this particular specimen of chaos insofar as your time is concerned. When it comes to charging a fee, then, you know what to charge.

A flat fee is a one-time payment for representation. It can also be a payment made in increments, with so much being charged for pre-trial work and then so-much due at the time of trial. A flat fee places a premium on efficiency. If you expect a case to take 40 hours of time to resolve, you know what to charge to cover your time.

But suppose a black hole opens up in the middle of the case? Suddenly you learn that the case is far from typical. Perhaps an unexpected legal issue arises, or the facts, once examined, yield some extraordinary wrinkle. Or maybe the client's family smothers you with calls and demands for meetings that amount to little more than social work. Once you take a case, you go where the facts and law lead. These trips can be lengthy and costly. For all your experience, you learn over and over and over again that there is no such thing as a typical case.

It is difficult to go back to a client once you realize you've not charged enough for all that is required. Some clients want to call all of the shots in case. No matter how many hours you spend preparing examination of witnesses, the client wants you to review it all with them. The client wants to tutor you on how to do your job. These lost hours add up. You are the surgeon required to explain what scalpel works best to a patient who will be anesthetized during your work.

There are cross-cutting incentives in a flat-fee case. The client has paid for a lawyer and wants her expectations, no matter how unreasonable or unnecessary from the perspective of the experienced lawyer's judgment, met. The lawyer, on the other hand, has an incentive in effectively presenting the case in as efficient and cost-effective manner as possible. Both client and lawyer can err given these conflicting imperatives. A client can demand too much; a lawyer can do too little. Discontent lurks at the periphery of every flat fee case once a black hole opens up, sucking time out of the world as if there were an infinite amount of it to be had.

A far better course is to charge an hourly rate. Negotiate a rate that reflects the complexity of the case, your experience and what the market bears in your area. In that case, a client is forced to consider the benefit of each additional increment of cost. A demand to interview folks not actually present at the scene of the crime becomes a demand the client must reckon as necessary. A lawyer, paid hourly, can counsel against a fool's errand. But if the client insists, the lawyer can then choose either to accept the hourly fee or ask the court to be relieved from a case if the client's demands become repugnant or irrational.

The problem with charging hourly is that most folks in the middle-class and lower-middle class really cannot afford to pay for the representation they want and to which they are entitled. It takes many hidden hours to prepare a case. There are witness statements to review, statutes to ponder, rules of evidence to consider. And how, I wonder, would you bill for the tossing and turning at the midnight hour, when some of the most creative work for trial is really done? I rarely sleep well during evidence at trial. My wife tells me I argue throughout the night. But the sleep work pays because it often seems in court as if I merely reciting lines already prepared and written by some secret hand. Is there a rate for unconscious processing?

There is no good way to charge for legal services, I am persuaded. Clients come in need. They are afraid and angry. They want a hero, a savior, a warrior. You offer them what you can. Most often it is enough. But sometimes it is not. A client grows disenchanted, angry, they want what you cannot give. It is a risky thing to agree to represent a person in crisis. You cannot tell where people will turn in the dark of night. What to charge for this work is a topic about which I am not at peace.

Most folks cannot afford to pay for they want, and most lawyers cannot afford to give what is demanded. Charging hourly rates might provide both lawyer and client with a means of managing a relationship that shouldn't really be about money at all.
Comments (1)
Posted on May 24, 2010 at 9:17 am by Jamison
Since I am still relatively new at private practic...
Since I am still relatively new at private practice, my thinking on the flat fee versus hourly rate debate is still evolving. I agree that some of the most productive work is often done late night when you should be sleeping. However, precisely because it it so difficult to quantify the amount of time you devote to a case at odd hours, this strikes me as an argument in favor of a flat fee. You simply factor a certain amount of this more-difficult-to-quantify time into your overall rate.

I also prefer the flat rate because I never need to worry that I may be thinking about or working on a case unproductively. I assume this will change with more experience.
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About Norm Pattis

Norm Pattis is a Connecticut based trial lawyer focused on high stakes criminal cases and civil right violations. He is a veteran of more than 100 jury trials, many resulting in acquittals for people charged with serious crimes, multi-million dollar civil rights and discrimination verdicts, and scores of cases favorably settled.

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I believe that the state is a necessary fiction and that failing to combat it is the first step toward tyranny.
– Norm Pattis

Disclaimer:

Nothing in this blog should be considered legal advice about your case. You need a lawyer who understands the context of your life and situation. What are offered here are merely suggested lines of inquiry you may explore with your lawyer.

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