As alternative billing approaches go, flat fees have many fans. Clients like to know exactly what a particular legal service will cost and lawyers like to leverage experience they have gained in providing the same service to others. Sometimes a flat fee even lets a lawyer spend more time on a matter because there’s no concern that the client will feel the lawyer was trying to run up the bill by spending more time on legal research or clever drafting. Flat fees are also important for clients who are at a high risk of future nonpayment. 

The place where lawyers tend to get in trouble ethically with flat fees is when they want the fee to be both flat and nonrefundable. From a definition standpoint, calling a fee “flat” merely says what the amount will be and says nothing about when the client is expected to pay, when the fee will be considered earned, and what portion (if any) the client will get back if the client is unhappy or just decides the lawyer is ugly.

One way to handle the flat fee is to have the client pay the amount up front, put it in the lawyer’s trust account, and state in the representation agreement when the fee will be considered earned, so that the lawyer can take it out of trust and put it in the business account.  This works well for document-intensive projects, such as an estate plan or an incorporation. But even in a criminal matter the agreement could be that 25% of the fee is earned after the arraignment, another 25% after the omnibus, and the rest after trial, with all of the fee earned at any time a plea bargain is reached.

Most lawyers who use flat fees, however, see them also as a way of avoiding having to place funds in a trust account.  Of course, one could avoid trust account issues by having the client pay after the work is done, but getting the money up front is a key part of keeping a law practice afloat.

This is where the ethics problems start.   (more…)

Like time-share shysters and ultra high-end restaurants, most lawyers prefer not to advertise their fees. Oh, many attorneys advertise their hourly rate, but that does not really help consumers, who have no idea how long a task should take.

Why not?

Sure, you have a better chance of getting a client to sign a retainer once they walk in the door, so many attorneys focus on that. But if potential clients already know what you charge before they walk in the door, your potential client:client ratio should approach 1:1.

Will you lose clients if you give up the opportunity to give your “spiel” to each one? I suppose that, in part, depends on your spiel.

I have seen criminal defense attorneys whose sales method seems to be scaring the hell out of potential clients, then trying to find out how much money the client could beg, borrow, or steal for a retainer fee. That is definitely harder to do through a website or phone book ad.

If, on the other hand, your strategy is to be straightforward, up front, and consistent, I think advertising your fees—to the extent you can—could only help. We’ll see, anyway. I am giving it a try to see how it goes.