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Be an Informed Consumer of Flat-Fee Legal Services

Lawyers traditionally bill by the hour for work done on a particular matter. The client pays for the time the lawyer spends on his or her matter. There is a trend now toward flat-fee billing. In flat-fee billing, the idea is that the client knows how much the total cost will be, no matter how much time is required. Sounds good? Sometimes. Flat-fees work as long as both the lawyer and the client understand the process.

Many lawyers resist flat fees because they are not good at estimating what will be required on a particular case, or because they are afraid that the client will under-report what is needed. If the lawyer quotes a too-low flat fee, then the lawyer ends up working for free. On the other hand, if a lawyer quotes a too-high flat fee, or is able to settle the case quickly, the client pays more than he or she otherwise would pay. Somebody gets a raw deal.

Many lawyers offer a stepped fee plan. It is important for the client to pay attention to what the flat fee actually covers and what it doesn’t cover. In the family law context, it might cover filing a petition for divorce, serving the other party, drafting the decree, and proving up the divorce at an uncontested docket. But read the contract before you sign it. Does it cover everything you’ll need? What happens if the case becomes more complicated – what additional fees are there? What if you need to go to mediation – is that included or an additional fee? This often catches clients by surprise – he or she believes she has paid for the whole case, but it really only covers a few discrete things.

Many flat fee or stepped fee arrangements are nonrefundable.   This is different from a traditional hourly retainer because you will not receive a refund of the unused funds.

It is important to read the contract carefully so you know what you have already paid for and what you have not paid for.

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