Saturday, November 15, 2008

Nonrefundable Flat Fee Issues A Hot Topic With State Bars

I believe in flat fees, and I believe hourly billing is a thing of the past and one of the reasons people hate lawyers. Hourly billing is a fraud. It doesn't take 18 minutes to write a short letter, and very few things take as long as they are "billed." Hourly billing is the darling of the insurance industry for the purpose of keeping tabs on us lawyers, and all it does is create dishonesty and make the clients fearful to call their lawyers because it costs too much. P.S. when a client asks for hourly billing I do not charge for phone calls that are less than a few minutes. Call me anytime.

Progressive lawyers believe that flat fees are the future, and not just for criminal lawyers anymore. Client's love them too. Of course now that everyone believes it's a great idea, in steps the Bar to regulate, regulate, regulate.

Proposed rules are popping up everywhere.

Minneapolis Ethics Maven Eric Cooperstein has a great post on his Lawyerist Blog about flat fees.

Eric likes flat fees as well. He says "Clients like to know exactly what a particular legal service will cost and lawyers like to leverage experience they have gained in providing the same service to others. Sometimes a flat fee even lets a lawyer spend more time on a matter because there’s no concern that the client will feel the lawyer was trying to run up the bill by spending more time on legal research or clever drafting. Flat fees are also important for clients who are at a high risk of future nonpayment."

The nonrefundable issue comes to light according to Eric in this manner: "From a definition standpoint, calling a fee “flat” merely says what the amount will be and says nothing about when the client is expected to pay, when the fee will be considered earned, and what portion (if any) the client will get back if the client is unhappy or just decides the lawyer is ugly. (Ha Ha Eric).

Eric goes on to give his thoughts on handling these issues, and mentions the reason nonrefundable flat fees are a problem:

Inevitably, a client comes back a short time after paying the lawyer the fee, after very little work has been done on the case, and says that the client has changed his or her mind so they’d like a refund. The lawyer says, sorry that wasn’t our deal, and the frustrated client complains to the ethics authorities.

Read Eric's entire post, as in the end he advises:

"So keep quoting those flat fees to clients. Just watch out for the ethics bumps."

Located in Miami, Florida, Brian Tannebaum practices Bar Admission and Discipline and Criminal Defense. Read his free ebook The Truth About Hiring A Criminal Defense Lawyer. Please visit


1 comment:

Mark Bennett said...

There's a Colorado ethics opinion holding that calling fees "nonrefundable" is unethical.

I describe in my contract why the fee is what it is; among other things, there is an unknown but high opportunity cost to taking any drug case because of the high potential for future conflicts.