During the past month or so, we’ve begun a transition in the Firm from hourly billing to flat fees for our divorce and family law matters. There are a number of reasons we have decided to become a flat fee divorce law firm, but probably the biggest reason is that switching to a flat fee model is what makes the most sense for our clients and aligns with our long term vision. And at the end of the day, making our clients happy is what will drive the long term growth of our firm.
Here are some of the benefits of a flat fee model and why we have decided to move in this direction:
1. Flat Fees Align Our Interests With the Interests of Our Clients
The biggest problem with hourly billing, historically, is that is pits our interests as a firm against the interests of our clients. We want to be profitable and generate revenue, while our clients want to pay as little as possible and have their case resolved as quickly as possible. If we are charging on an hourly basis, then (theoretically at least) our incentive is to keep the file open as long as possible, while at the same time billing as many hours as we can.
We tried to combat this by charging minimum fees. But the problem with these is that clients were reluctant to sign a new minimum fee contract once their initial contract was up – thus they became hourly clients anyway. So even though we don’t place any funds in trust, (we are not required to do so under the minimum fee model), we are still billing most of our clients on an hourly fee basis after their initial minimum fee was depleted.
A flat fee structure, on the other hand, aligns our financial interests as the attorney with our client’s own financial interests. Once a flat fee is set and agreed upon, our sole incentive is to complete the work on your file as quickly and efficiently as possible. Meanwhile, you no longer must worry about how much time we are spending on the matter. We can work more efficiently, you gain predictability, and the value of the work becomes the focus of our engagement with our clients.
2. Flat Fees are Predictable
Hourly fees are completely unpredictable. As the client, you don’t know how much your bill will be for any given month. You know that when there is more work done, you pay more, but you don’t know exactly how much more until the bill arrives. Unless you have an unlimited legal budget and don’t care about your fees, this is going to be a problem, especially for most family law clients whose funds are already stretched thin because of their legal separation and other financial obligations.
Flat fees eliminate this uncertainty. If we quote you a specific flat fee to draft a separation agreement, or represent you at mediation or in court, and promise that the fee will not change for that portion of the engagement (even if the work proves more difficult or requires more time than anticipated), you can now predict what your costs will be, and plan accordingly. This model reinforces the “peace of mind” that the attorney-client relationship generates for you as the client.
3. Flat Fees Incentivize Efficiency
Hourly billing rewards inefficiency. The longer we take to complete a task, and the more inefficient we are in working on your file, the more we can bill. This seems counter-intuitive. Flat fees, on the other hand, will reward our firm for being efficient with our time.
The more we can streamline the process for you, and make it easier to resolve your case, the less time we will work on your file to drive it towards the same conclusion. With flat fees, creativity and efficiency are rewarded – just as they are with most typical businesses. Over the long-term, this will allow us to develop strategies to systematize routine and repeatable tasks, which will lead to a more streamlined, modern, and profitable law firm.
4. Flat Fees Will Save You Money
Flat fees don’t necessarily equate to less legal costs. Lawyers are an investment in your own peace of mind, no matter if you are paying on an hourly basis or a flat fee.
However, with flat-fee billing, there is an opportunity for you as the client to save some cash. This is because a flat fee incentivizes efficiency. At The Hart Law Firm, we are already using cutting edge legal technology to save our client’s time and money. From auto-responder sequences that are customized to the specific issues in your case, to online schedulers, to document automation systems, we are already taking proactive steps to move your case along more efficiently. As a result of these investments, documents that may take other firms 3-4 hours to prepare will take us less than an hour because of the systems and processes we have created. As a result, we can spend more time focusing on higher-level strategic work, and less time on mundane drafting.
5. Flat Fees Emphasize the Value of Your Attorney’s Work
Time is not necessarily an appropriate measure for value. As lawyers, we could easily spend an entire day researching a discrete legal issue that wouldn’t necessarily add more value to a client’s case.
Time is not a good way to measure value. Will the fact that your lawyer researched a legal issue for 8 hours make a difference in your case? Maybe, but probably not. The bottom line is whether that research resulted in a discovery that will change the outcome of your case in a meaningful way or otherwise drive your case towards a settlement. More often than not in a family law case, extensive legal research is not necessary.
Hourly billing rewards this type of inefficient work. As the client, you want to limit unnecessary waste in your case. And since the lawyer is in the best position to know what is a good use of their time and what isn’t, a flat fee is a great way to incentivize the lawyer for doing the work that matters – not just the work they can bill a lot of hours for.
You don’t necessarily want to limit the amount of time an attorney works on your file, but you do want to limit the amount of wasted time that is spent on your file that isn’t moving your case towards a conclusion.
A flat fee structure emphasizes the value of the tasks that matter, such as:
- Developing case strategy;
- Meeting with the you to collaborate and learn more about your situation;
- Researching only the legal issues that will move the case forward;
- Attending mediation sessions; and,
- Negotiating with your spouse or their attorney
6. Flat Fees are a Competitive Advantage
Because the majority of family law attorneys in Wake County specifically and North Carolina generally, continue to use an hourly billing model, we believe that our firm is perfectly positioned to gain a competitive advantage in the marketplace. That’s not to say that there aren’t other lawyers that offer flat fees, there certainly are. But they are rare, and there aren’t many small firms like ours who not only offer flat fees, but who have also embraced technology to more effectively represent their clients.