Attorneys’ Fees-Flat Fees or the Billable Hour- Which is Better?

Benjamin Stevens offers a thoughtful series of articles on why attorneys and clients benefit from fixed fees in a divorce action.

Some of the benefits cited by Stevens are:

•Clients know the total cost up front, which enables them to determine prior to retaining the attorney whether or not they can afford his/her services and to budget for the attorney's fees and costs.
•Clients have another basis upon which to compare attorneys, both in the manner they charge for their services (fixed fee vs. hourly) as well as the amount charged ($X vs. $Y).
•Clients never end up in fee disputes with their attorneys, because all fees were negotiated and agreed upon before the representation began.
•This method encourages open communication from the client to the attorney. In hourly billing situations, clients sometimes hesitate to provide information to the attorney because they know that they will incur fees and costs for doing so.
•Clients have a higher level of trust with their lawyers, which results in a better working relationship, which frequently yields better outcomes in the clients' cases.
While a flat fee may be appropriate in a matter where the legal representation is somewhat limited in scope, for instance, representing a litigant in an uncontested divorce. At flat fee may be inappropriate in a litigated matter or in a case where the issues will have to be extensively negotiated.

Too often, and particularly in matrimonial mattes, parties take irrational and economically untenable positions fueled by emotions. In the worst cases, parties, left to their own devises would fight about assets with no value. The billable hour is one mechanism of bringing a litigant back to realty. A gentle reminder that cost of litigating about a particular item exceeds the benefit to be achieved oft reins the client in.

In fact, a client who paid his attorney a flat fee has absolutely no incentive to give up the fight and every incentive to assert a position “on principle.” After all, in the case of a flat fee, the legal bill is the same whether or not you prevail.

I would expect an attorney, working on a flat fee in a contested matter, to price into his fee the potential for a client to act irrationally and to set the fee on the high side. On the other hand, I have heard lots of complaints about attorneys who do not return clients’ calls (I understand this to be the leading cause for attorney disciplinary action) - maybe these are the attorneys that charged too low a flat fee.

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