There was a very spirited discussion last week about alternative billing arrangements - specifically flat or fixed fee arrangements - on the Solomarketing list serve (and to a lesser extent on Solosez).
Litigators continue to raise concerns about using fixed fee arrangements because of the fear that factors outside of their control - such as the behavior of opposing counsel - will cause the case to take a turn that requires additional work. These issues can be handled by ensuring that your initial fee agreement specifically defines the scope of the work included under the fixed fee arrangement. It is also helpful to give clients some idea of the kinds of additional services (such as motions, additional depositions, etc.) which might be required.
If and when those situations arise and additional services are required, you can prepare a supplemental services agreement that outlines the additional services to be performed and the fee for those services. If you've defined the scope of work and discussed the possibility of additional services with the client at the outset, the client is much more likely to accept the supplemental services agreement.
The question that always arises at this point in the conversation is, 'But what if the client doesn't agree to the supplemental services agreement or doesn't want to pay the additional fee?'
In response, I have to ask - what is it that you'd do under your hourly billing arrangement? Presumably, when unforseen circumstances arise, the hourly billing lawyer contacts the client to let them know what's happening and to outline the course of action the lawyer recommends. What happens when the client doesn't agree or says they don't want to pay? What happens if the lawyer does the work, bills the client, and only then does the client say they refuse to pay?
Some of these issues are problems not with a specific fee structure, but with client selection or client communication. If a client isn't willing to pay under a supplemental services agreement, is that same client likely to pay under an hourly billing arrangement? If the client disagrees with the lawyer's chosen course of action or doesn't take the lawyer's advice, what difference does fee structure make?
Might the lawyer get 'stuck' doing some work that the lawyer doesn't get paid for? Perhaps. But under a fixed fee arrangement with a supplemental services agreement specifically rejected by a client, you've got more support for a motion to withdraw, if necessary. And you may know sooner, rather than later, that the client is unwilling to pay. You might even find out in time to get out of the case before doing work you won't get paid for.
Carolyn Elefant did a post on this subject on Friday on My Shingle entitled, "Billing Alternatives for Solos." Carolyn talks about two solos that use alternative billing arrangements. Both agree that clients like to know the price of the services up front.
There's probably no such thing as a perfect billing arrangement, and no fee structure is going to solve every problem lawyers have with their clients (or with opposing counsel, or with the court). Some lawyers must bill by the hour because the courts set fees based on hours, or require lawyers to provide the court with time records. But if you're not in one of those situations, it's certainly worth considering ways that you might be able to used fixed fee agreements.
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