Why Flat Fees – What’s in it for H&C?

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I had posted a video and post to LinkedIn and Facebook that got a fair amount of attention called “Why Flat Fees for Business Litigation.” That video talks about one aspect of why we like a flat fee paradigm, the freedom to run a case any way we see fit. There are other reasons that we believe this model will be good for us and the clients, and we have wrote about them, “Dr. Strangelove, Esq. or: How to learn to stop worrying, and love [your lawyer],” “Why Litigation Price Uncertainty Kills Businesses,” and “Business Litigation Flat Fee v. Hourly Case Comparison.” I could talk about how we believe it gives us a competitive advantage or how we are in a better position to take on the risks. Basically this portfolio of cases is a sine wave, there will be ups and downs but as long as our algorithm keeps us on that efficient line, we can manage the ups and downs over a portfolio of cases. People wanted to know though, why are you really doing this, what is the catch…

…the real reason we want to make this switch and have all of our business litigation cases on alternative or fixed fees…

IT MAKES US HAPPIER AS LAWYERS!

We started looking at and talking about what are our least favorite cases. Which are the most frustrating, which do wish would simply go away? We realized there was no underlying similarity to subject matter, we have had cases involving refurbishing rail cars, software development disputes, heat damper explosions, purchase order disputes, printing manufacturer defects and they were all unique and interesting. Some had difficult clients, demanding clients, unresponsive clients, all things that might lead to unhappiness in a lawyer. But, we were not finding any consistent correlation. Then we noticed that every one of the unhappy cases had one thing in common, they were hourly billing case, and usually over smaller dollar values at issue. That is not to say that we are unhappy in every hourly case, but the cases we were unhappy with were generally hourly cases. Why was that? Then we realized the other common factor, stress about the cost/benefit of the litigation. Our least happy hourly cases involved clients who are very worried about throwing good money after bad, which results in constant phone calls, not to discuss the merits, but to try to get a handle on what is happening and what is it costing them. Who can blame them? When the monthly fee is a big question mark it can be hard to simply trust the process. This leads to inefficiencies and unhappiness.

We realized that for each of our non-traditional cases, flat fee, contingent, or blended fee cases, we didn’t have to deal with billing in the same way, there were no uncomfortable conversations with the client about an unpaid bill, there was no frustration for a client that stopped paying and forced us to withdraw from the case, but more than that, we did not have to waste time and energy talking about the bill, the fees, what a decision might cost, whether filing that motion was worth it or not. We were free to do what we do, litigate the case and prepare it for trial. Flat fee cases also take the power away from an opposing party that wants to harass you with expensive litigation. When the other attorney  wants to abuse you with wasting time, we are free to just handle it, we don’t have to engage in discussing whether the case is really worth it, or how we can try and cut some corners to save on fees. Taking all of that energy and time spent discussing these issues and fees with the client allows us to focus on the case, the merits of the case, and also allows settlement discussions to be driven by the actual merits of the case, not whether the client can afford to keep throwing an uncertain amount of money at the case. This makes us happy. Doing what we like, finding the best angle or argument to present our clients case, not endlessly discussing how much it currently costs, how much it might cost in the future, and what are options are to make it cost less. That way leads to less happy clients and less happy lawyers.

While I believe that all of the reasons we have laid out above and in our other articles are great ones to justify flat fees in business litigation, the one that makes me most excited, is the idea that we can love all of our cases, rather than being frustrated by those that are a constant cost/benefit battle and requires tremendous energy and attention on helping the client make financial decisions for each step, rather than merit based decisions. Come join us in making business litigation a little less frustrating and a little bit of a happier place to be, let us handle your next case on a flat fee.