Mavericks at Law
I read with great interest an article about law firm mavericks in the Law Practice Magazine of the American Bar Association. I found the article particularly appealing having recently read the book Mavericks at Work.
One of the maverick lawyers featured is 29-year-old Christopher Marston of Exemplar Law Partners of Boston. Marsten used every penny of his personal savings to start a law firm that is turning the practice of law on its head by charging for services only on a flat fee basis. For decades law firms have talked about "getting away from the billable hour". Marsten's firm is determined to walk the talk. One look at this firm's Web site and you quickly realize they have a distinctive and disruptive purpose that sets them apart from their rivals.
Another Massachusetts law firm featured is ConvergentGC. The law firm operates from the premise that most entrepreneurs really need in-house counsel but few can afford it. The firm is an outside general counsel firm that essentially adds a senior-level attorney to the management staff. The firm has no hourly rates, no bills for phone calls and no bills for overhead costs such as faxes.
In my own practice I am developing the strategies implemented by these firms. I already provide outside general counsel services to certain business clients based upon a mutually agreeable fixed monthly fee. These clients receive a fixed monthly bill and do not receive bills for phone calls and overhead costs such as copying and postage. I also perform certain projects such as incorporation and LLC formation on a fixed rate and have also done so with contract review and writing. I have continued to bill hourly for litigation in the past but in 2007 these mavericks have inspired me to begin handling litigation matters on a fixed rate basis as well.
I have felt for a long time the billable hour needs to be thrown out the window. This coming year I plan on doing just that.
This is HUGE from a client prespective!
I think attorneys are missing a goldmine in business from prospects who are eager to "do it right" but are frustrated by open-ended, gawd only knows, legal fees.
My prediction is, you will encounter some significant hostility from members of the bar if this "grows legs." But, in the end, fixed-fee for standard service is begging to happen in many areas of law.
Now if we could only make "loser pays" the standard here as it is in Britain. I know. I'm dreaming.
BTW, I'm emailing this post to all the attorneys I know here in Des Moines. So, better put on your helmet.
Let's hope you don't know that many lawyers. (I am just kidding). I don't expect the backlash you predict.
I am not personally a fan of the "loser pays" system found in Britain but you may want to check out http://www.pointoflaw.com/loserpays/overview.php for an interesting blog post on the topic.
Flat Rate Billing...A thing of the past. Obviously Mr. Nigut has been practicing in the corporate realm for too long and is lucky enough to have enough corporate paying clients that his fixed rate billing just might work. I would like to hear his tune after taking a "messy" family law dissolution case on his flat fee proposal. I have a feeling it would change after all the phone calls, emails, letters, depositions, mediations, temporary matters hearings, and ultimately a 3 day trial.
My position on the flat rate billing is this: It will not allow the general community to fully appreciate the time and effort that attorneys truly do put into their clients' cases. Also clients that agree to the flat rate billing may wonder where they rank on a level of importance to their attorney. I personally care about everyone of my clients and their case and try to make every one of them a priority. But that is not realistic when it is played out. Naturally some clients will get put on the "back burner" when there are not any pressing issues in their case, and attorneys are forced to devote more time and energy to their filing deadlines and upcoming hearings for their other clients. So some of the clients that are paying according your monthly flat fee agreement, may feel as though their money that they just paid you was for nothing since you did not work on their case this month.
Now I will agree with Mr. Nigut that in some instances flat fee billing will work, and work well, but since every case should be individually and independently evaluated, I don't believe it is the attorney's or the client's best interest to agree to an "across the board" flat fee billing arrangement. Anyways, this was my first time "blogging." Merry Christmas, Aaron H. Ginkens, Ginkens Law Firm, P.L.C.
The only types of attorneys I have seen successfully use "flat fee" billing are very good attorneys and very bad attorneys. I know Mr. Nigut and can attest his is solidly of the former persuasion. The previous poster is correct that flat fee billing is not for every attorney, client or case. It is only for those attorneys with the skill, knowledge, experience and confidence to bet their time on being able to fulfill their promises. It is only for those savvy clients looking to build a relationship of trust with their attorney. It is only for those cases where efficiency is the only consideration.
Granted, if you run a family law practice, flat fee billing across the board is not for you. As an intellectual property attorney I try to bill on a flat fee as much as possible. The clients like it, and it gives me the freedom to do things the way I think they should be done. While I do not foresee a time where I could ever move my entire practice to a flat fee structure, I commend Mr. Nigut for having the chutzpah to give his clients what they want.
I understand that fixed rate billing may not be for every attorney or every client. I do have a practice that lends itself to billing on a fixed-rate basis in many situations.
I am not asking other lawyers to follow my approach. A fixed-rate approach seems to work better for my clients in many situations and I enjoy it more. Like Aaron, I care about my clients and I am fortunate to represent some great people on an ongoing basis. My services for these fixed-rate business clients is a little different than Aaron may realize. These clients have various legal projects each month which is probably why they see value in a fixed-rate approach.
Having worked on more than a few "messy" situations during my time I can appreciate Aaron's points. His comments explain my reluctance to handle litigation matters in the past on a fixed-rate basis. But my clients have reacted well to this approach when used. If interested, I recommend reading Chris Marston's blog - http://chrismarston.blogspot.com/. Chris has some great insight on how he thinks fixed-rate billing will work in any situation including litigation.
Rush
I started out doing strictly hourly billing but tracking hours, billing etc. was too time intensive. So I moved into contingent fee plaintiff's work but gradually worked my way out of that primarily because I got tired of being a party to every case. Too often I would advance substantial expenses, get the case to a good settlement and encounter the newly "fearless client" who wanted to up the ante and go to trial when it would put us at substantial risk of a defense verdict or poor outcome due to the additional costs of trial, which would have to be paid by, you guessed it- me.
Now I am 100% fixed fee, all paid up front in full. When I explain it to them, bankruptcy clients seem to appreciate that their attorney is the one person they do want to have fully paid so they won't hesitate to call us with questions, we will work on their case and not become another collector against them.
I use the "natural selection" approach to practice, picking the low fruit and sending the hard cases to colleagues who are kind enough to occasionally entertain my dumb questions in return. I still have a few cases that I end up spending way too much time on but it tends to even out due to the simple ones mixed in.
Volume practices like consumer bankruptcy are well suited for this approach which clearly does not work in all practice areas.