Why I (Mostly) Abandoned Flat Fee Billing

A portrait of a beautiful lady who is looking at the hovering pocket watches. A concept of a value of time in business. Business icons are drawn over the concrete background.

For many years, the profession has been talking about alternative billing schemes such as flat fees, unbundled legal services, and pay-what-it’s-worth options. But flat fees are arguably the concept that’s stuck around the longest and the one lawyers are using most regularly.

As anyone who has tried flat fee billing knows, it’s important to balance the potential risk of such billing between you and your client. Charge too little and you end up doing most of the work for free. Charge too much and your client might feel taken advantage of, in addition to whatever ethical pitfalls you might run into for setting unreasonable fees.

When I first started practicing law, I tried to do flat fees for the majority of my clients. As part of a small firm, I was able to make these decisions. I thought flat fees would be better for me because I wouldn’t have to keep track of my time.1 And I was certain it would be better for my clients because they would know what to expect up front and they wouldn’t receive any unexpected bills.

This caused some major problems. First, I found myself underestimating the time a project would take me and then doing far more work than I would have been paid for had the representation been hourly. As a new lawyer, I didn’t have a good handle on how long any given project would take, and I was terrified of overestimating and having the client balk at the price tag and run for the hills or, worse still, be found to have charged unreasonable fees. So I lowballed myself repeatedly and got worn out.

I also found myself spending an inordinate amount of time trying to determine what a reasonable flat fee was. Instead of answering the phone, stating I charged $195 an hour, and then taking or declining the case, I called the prospective client back after I had done research. Lots of research. Also, some guessing. What documents would I need to draft? How long would that take me? What could go wrong, and how would I accommodate those unknowns? I was trying to do this for every client in every practice area, and I was exhausted before the legal work even started. Additionally, my constant underestimation of my fees turned into undervaluing my skills.

So, I changed the way I charge.

My practice right now is estate planning, probate, and family law. Of those, I only do flat fees for estate planning. I have practiced in this area long enough to know that surprises rarely appear, so I’m willing to take the risk. I know how long drafting a document is likely to take, so it’s easy to estimate a fair price for clients and one that is also good for my business.

Doing away with flat fees for probate and family law was tough at first. I wanted to be the lawyer who did things differently and offered the best option for my clients, and I perceived that meant offering flat fees. But, as time went on, I realized two things: (1) my clients actually didn’t expect flat fees, so they weren’t disappointed when I didn’t offer them anymore; and (2) I started to value my services more and became more confident in not only my hourly rate but my skills.

Neither hourly rates nor flat fees nor unbundled legal services will be best for everyone. Take the time to think about your practice, your mission, and your clients to determine which kind of billing is right for you.

  1. In at least one case, this is no longer strictly true. The Supreme Court of Kansas issued an opinion disciplining an attorney who failed to track his time, even though the case was a flat-fee case. 


Get Lawyerist in Your Inbox, Daily

Current Articles
Current Lab Discussions
  • My office has been successful using flat fees for high volume insurance defense work. Because of the high volume, the extra work needed on hard cases is offset by the easy cases. In the end, our revenue per case on the flat fees is roughly the same as that of the hourly work. The difference is that the firm bears the risk and expense of protracted litigation on the flat fee work.

  • Stephen Donaldson

    Good observations.

  • Flat fees can also be a problem when you’re seeking fees from the other side.

    • This shouldn’t be the case, but you’re right. It seems risky to ask the court to award a flat fee in a fee petition.

      I’ve considered a fee petition that states my flat fee and backs it up with a time sheet, but I bet the court would just pick the smaller number between the two.

  • Jay

    My practice is similar to yours except I skip the divorce work. I have used flat fees for estate planning for 23 years and for probate for 16. It works for me. Clients are happy because they know what to expect. They bring a check or credit card to the document signing and pay on the spot. My historical collection rate is 99%. Of course, I occasionally lose a prospective client who calls and is fee sensitive but that is true for any attorney no matter the billing method.

    I think you might be unreasonably concerned about charging an unreasonable fee. Your market will tell you when your fees are unreasonable – clients will not hire you at the price quoted.

  • If you are worrying about aligning how much time it takes you to do a project or task with how much you charge for it, then you are really charging by the hour but guessing on the time in advance instead of keeping track of your hours and billing afterwards. That is one of the mistakes I made when I started doing flat fees five or six years ago. I would always, without question, underestimate how long something would take me. And then once I had an “estimate” of my time I would further reduce the price before I quoted it because I was afraid a client would think it was too expensive and therefore refuse to hire me. Which meant I was getting burned by taking on matters that included more work than I anticipated and charging too little for them.

    The lightbulb went on for me when I stopped thinking of myself and instead starting to focus on the client. Clients don’t care how long something takes me as long as I meet any set deadlines and keep them informed of my progress (which you need to do regardless of how you bill). They just care about the results I provide and the value it gives them. By pricing on the value I provide, I can charge two times, three times, or even more of what I would get if I just billed hourly. And clients are happy to pay the higher prices when they understand the cost is still less than the value they are receiving.