New York Divorce Lawyer & Attorney : Clement Law Firm : Family Law Serving Manhattan, Westchester County, Brooklyn, Queens, Bronx, New York City

My dialogue with Ben Stevens on the merits of billable hour versus the flat fee in a matrimonial action continues.

Let me say at the outset, that I am certainly no fan of the billable hour. For many reasons, I  prefer the flat fee model. The number one reason, it is predictable. With certainty, I can answer the question every client asks, “How much will this matter cost?” When billing on an hourly basis, I can only estimate, giving a meaningless range.

As pointed out in The Billable Hour: Are its Days Numbered, a flat fee may work on more routine stuff, high-volume work or repeat work, but not on “bet the farm work.”  Certainly, a flat fee arrangement lends itself to an uncontested divorce or the negotiation or review of simple marital agreement.

But does the flat fee really lend itself to an emotionally charged and litigated divorce or custody action? Mr. Stevens states that because he charges his client’s a flat fee he is selective in his case selection, agreeing to represent clients, who, for instance are reasonable in their expectations. That, however, is only half the equation. It takes two parties to reach an agreement. What happens if the other party or legal counsel is not acting reasonably?

Mr. Stevens also contends that the billable hour rewards inefficiency and waste. That statement would be true if one were looking to make a “killing” on a single client. I prefer to treat my clients fairly and build my practice by referrals. A client, who feels that he was treated fairly, is the absolute best source of new business. For this reason, it would be shortsighted to invoice a client for needless work or excessive time charges. .

Regardless, I will accept Mr. Stevens challenge and will accept, at least, one new litigated case on a flat fee basis. I will report my thoughts here. Stay tuned.

• Print
• Comments
• Trackbacks

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.

• Print
• Comments (1)
• Trackbacks (1)