Lawyer Rates: The Billable Hour vs. Flat Rate Fees
With law firms setting such high yearly billable requirements for their associates, it is no wonder many attorneys have a great dislike for the billable hour. Some firms have recognized this issue and turned to alternative billing arrangements for the sake of their associates and their clients.
However, with the public recognizing law as an open market in which rates are often reflective of a lawyer’s reputation, resources, and prior success, how can firms providing flat rate fees demonstrate to clients that they are going to receive the same services as those paying an hourly rate?
The beauty of the open market is that it is ever changing. It has led many to believe that a lawyer’s rates are reflective of his or her success, but it can also be beneficial to the firms and associates who believe the billable hour is undermining the core values of the profession. Establishing a good reputation, building up ones resources and success rate all come in good time for those in the profession who choose alternative billing options.
However, while moving away from the billable hour may prevent attorney and client relationships from appearing as billable units and allows lawyers to have “normal” relationships with their clients based on the services they provide, flat rate fees may not be for everyone in the profession. The success of flat rate fees is dependent on a number of factors including:
- The client. Carefully screening each client can provide one with the feel for the individual. Demanding clients may not be good candidates for fixed retainers.
- A complete understanding of the legal issues that underline the retainer and the services the client will require before quoting a retainer. In cases in which this is not possible, a fixed retainer is not advised. Certain types of lawyers will have a much more difficult time with flat rate fees.
- Being open and honest with your client on all matters related to the retainer and any additional fees that the client may be subject to. It is advised attorneys who choose to provide clients with flat rate fees draft a retainer agreement that details the scope of the retainer in regards to services to be provided and timelines for the completion of services.
While many lawyers have grown to hate the billable hour, clients are just looking to find the best deals whether they be paying by the hour, or a flat fee. In fact, many clients have come to know and love the benefits and services the billable hour provides.
It is the business structure the billable hour has created that clients dislike and professionals who have neglected to remember that law is not a business, but a profession.