A few years ago, I hired a computer technician to resolve issues with the computer network in my office. As he’s toiling away on the network, he asked me questions about a legal problem he was trying to solve with his business partner. I gladly answered his questions and gave him helpful suggestions as he took his attention from his work and focused on our discussion. After about 20-minutes, I suddenly realized I was paying this guy by the hour – I was essentially paying to answer his questions while he wasn’t fixing my problem. I became annoyed by the whole episode and tried to rush him to finish the job I had hired him to do before I had to pay him for more of his time. It was stressful.
I have used the same plumber for more than 15-years (I actually wrote a blog post about him here). Here’s what he does: he comes to my house, considers the problem and then he tells me how much the job will cost. There’s no billing by the hour; no surprises at the end of the job; and there’s little wasted time chatting about his problems (although he’s a good guy and I enjoy talking with him). My experience with my plumber is a world apart from my experience with my (former) computer technician. So, I thought –
Why can’t law firms just tell you up-front how much their services will cost?
Most law firms bill by the hour and you never know when the end is in sight. To make it worse, there is no shortage of law firms and lawyers that make it a practice to overbill their clients and “pad” their bills. What does that mean? It means something that took an hour of time is billed at two, three or four hours. There are lawyers that are committing felonies multiple times a day by stealing from their clients. And their clients never even know. There are countless examples here, here, here, here, here and here. It’s an absolute scandal.
Why Can’t Law Firms Give You a Fixed or Flat Fee for the Entire Case?
Many law firms will not tell you the cost to litigate the entire case and they use that as an excuse to charge clients by the hour. Undoubtably litigation is unpredictable. But, after practicing for almost 20-years, I can generally tell you a range of how much time each phase of a case will take. With a little forethought and knowledge of the claims, the parties and the facts, I’ve got a good idea of how much work will be involved to take a case from filing the complaint all the way through trial. I can tell you up-front how much it will cost to take the case all the way through trial. And, I will tell you.
How Fixed or Flat Fee Litigation Works
You don’t pay for the entire case up front. Over 90% of cases that go into litigation resolve with no trial. So, you don’t need to pay for a trial if it doesn’t go that far. Depending on the case, it’s broken down into 6-phases of litigation. These usually include:
- pre-suit before the lawsuit is filed (or an answer is filed in a defense case);
- initial disclosures and paper discovery;
- trial discovery including depositions of witnesses and experts;
- mediation and settlement discussions;
- pre-trial motion practice and preparation; and
Each litigation phase is assigned a fee and you pay the fee 30-days before the litigation phase begins. There are no hourly fees. It doesn’t matter how much attorney time a particular litigation phase takes as it’s included in the fixed fee. Besides the fee for the litigation phase, there are usually expenses that the client is responsible to pay separately (these expenses might include the costs for a process server to serve a subpoena, a court reporter for a deposition or to hire an expert if needed). There are no surprise monthly bills. You know right up front the fees you will pay for your case.
Why Clients Like Fixed or Flat Fee Litigation
Here are the reasons my clients have told me they prefer this method to pay for litigation:
- There are no surprises. You know how much each phase of the litigation will cost and when the payment is due. You can make an informed decision if a case should be pushed all the way through trial or if a settlement makes more sense. In addition, you can decide before even suing if you’re ready for what it may cost to pursue it.
- You Don’t Have to Worry the Meter is Running. I want clients to call me when they have a question, an idea or they remembered a fact and they’re not sure if it’s important. When there is no hourly billing, clients feel much less restricted to call me on these things. In a lawsuit, we’re going into battle. The free flow of ideas, questions and information between my clients and me is invaluable to helping me prepare and litigate the case. With fixed or flat fee litigation, there isn’t an obstacle to allowing this to happen. You don’t have to worry that you’ll receive a bill for that phone call.
- We Can Focus on Your Case. Litigation and trials are stressful. On any day numerous decisions need to be made, tactics and strategies to come up with and legal and factual issues to figure out. The cost of litigation is a factor in every case. When we’ve already agreed on a fixed or flat fee, this issue isn’t something we even need to discuss. We can focus on litigating and putting together the best case possible without worrying about the time it will take to do it.
- The Outcome of Your Case is Better. I’ve noticed that when clients pay their lawyer by the hour, sometimes they do dumb things. They sign documents they shouldn’t sign; they talk to witnesses they shouldn’t talk to and they make financial or business decisions that adversely affect their case. They don’t want to call their lawyer because it’s too expensive. With fixed or flat fee billing, I’m more accessible to clients and this allows me to deliver a better outcome.
- You’re in Control. Because you know up-front the fee that each phase of litigation will cost, you don’t have to guess what it will cost to push the case as far as you want to go. While I can never promise how a judge or jury will look at a case, you’ll know what it will take to get there to give them the chance to hear it.
Why I Love Fixed or Flat Fee Litigation
With hourly billing, I have to be mindful of how I spend every 6-minutes of time that clients are paying for. It’s rigid and controlled. There is not a naturally free flow of communication and ideas with clients. There’s a clock and the meter is running. When the case is billed by the hour, both the client and the lawyer are always mindful of it. It’s restricting and stressful.
For me, litigation and trials are a creative process. I like to go down rabbit holes and see where they lead. I love spending hours coming up with themes for trial or researching legal issues that may give the client leverage at mediation or trial. Sometimes, I want to spend all day preparing for a deposition where I think it will pay off, even if it’s just a hunch. I want a relationship with my clients that is collaborative and I need their thoughts, opinions and ideas. I can’t do it alone. I need the free flow of ideas and collaboration that make litigation and trials so meaningful. With fixed or flat fee billing, I don’t have to justify to anyone the time I spend coming up with ideas and strategies to win the case. Sometimes it may take me just a matter of hours and sometimes it may take me weeks. But it doesn’t matter how long it takes. Ultimately, I’m confident it allows me to put on the best case for my clients.