Potential clients (and lawyers) need to know that lawyers change their incentives in flat fee cases. It happens because of the different type of relationship with the new client. The fee is fixed, the lawyer and client can focus on handling the case and do not have to worry about the fee relationship, beyond making payments if that is the agreement. The often awkward discussions about “did you need to spend time doing that” and “how much is this case going to cost me” are not going to occur.
The only way to get to a successful “flat fee” is to engage in serious discussions about the case, the issues of great concern to the client, and the lawyer’s ability to meet those needs. The lawyer will get to know more about the potential client early enough to allow it to make a rational decision to become partners in the case.
The design is that the lawyer should know that the client does not expect an inexpensive resolution to a complex problem, and the client with the complex case gives up hoping that the lawyer can easily produce an inexpensive miracle. Lawyers will have more walk away clients than before, due to the sticker-shock of realistic legal fees. But the walk away is better for the lawyer than a client who decides the lawyer has lied about the complexity or expense of the legal matter.
As a matter of fact, the lawyer and client can enjoy the miracle if it occurs. Say a client brings in a case of some complexity. The lawyer’s experience and knowledge, plus her understanding of the facts, the parties and the capacity of the client to deal with the matter allows the creation of a fair fee, offered before the engagement and accepted by the client. At that time neither the client or the lawyer know if the case will take weeks or years to get to a resolution.
Due to the lawyer’s exceptional handling of the case, a matter that might have taken years or at least months is resolved in a matter of weeks. The lawyer’s reputation of integrity, and ability to show the opposing party a means of successful settlement helps the client make a prompt resolution of the case. The client thinks this is a miracle, and the lawyer makes more than might be expected if the matter was billed on an hourly basis.
The client still gets the benefit of the bargain, in avoiding a protracted period involved with the case. The lawyer benefits with a fee that is earned by the above average skills put into the case.
Would the client have benefited by an hourly fee? Probably not. Without a reward for the prompt resolution, the case may not have had a priority among the many cases in the lawyer’s file cabinet. The value of a dollar settlement today is worth more than the value of that same amount of settlement several months from now. And in today’s economy, a check deposited and paid, even from an insurance company today is better than a promise to pay tomorrow. Insurance companies have died while people were waiting for their settlement checks.
This also can work the other way. A lawyer with an unrealistic expectation of her ability to close out a case may end up with a long case with lots of hearings and research and time spent. If the scope does not change, the flat fee protects the client from an unexpectedly (because that is the case the lawyer described) complex case.
An alignment of the interests of the lawyer and client is possible, and an Alternative Fee or Flat Fee arrangement is a better way to handle that. A good fee that works for the mutual benefit of the client and the lawyer is one mark of professionalism in a lawyer.