The hourly rate has been the standard for billing legal services for decades. While it is the prevailing model, it is not the most efficient and clients don’t like it. Could you imagine going to the Dentist for a cleaning and not knowing if it would cost you $5 or $1,000? You would have a lot of apprehension about going to the dentist (beyond the usual fear of the cleaning). Luckily, there is a trend in the legal industry to provide flat fees. A flat fee is one fixed rate for a specific service. The flat fee may be one fee or a series of flat fees, depending on the length and scope of the representation.
Flat fees are great because Clients know exactly how much it will cost before they retain an attorney's services – eliminating the concern over a “surprise” multi-thousand dollar bill. Lawyer’s like flat fees too because it removes the demand of keeping track of every minute of their day – they can spend as much time as necessary to do the job without worrying about the Client’s bill.
ALH law utilizes flat fee billing as much as possible for our clients. One thing we notice is confusion. We quote a price – say $500 for a basic estate plan. We offer most of our services on a flat fee rate, with the exception of litigation (though we are working on that too). Yet, when we tell clients about our flat fees, we still often get – “great, what is your hourly rate?”
This question is perplexing – our hourly rate is irrelevant when we offer a flat fee service since clients will not be charged any fee above and beyond the flat fee we quoted. There are no hidden fees or junk fees. The only exception would be if the court or government charges us a fee to do something, we will pass that onto the client. We had an internal discussion as a team about this then realized so few things are actually the price advertised, all of these factors are important when choosing the right attorney for your case. Your hair stylist might be $65 for a cut, but then there is an expected tip; the plumber you called for a backup charges $100 “trip fee” and then a rate for the work; the oil change on your car is $95 plus tax.
The important piece to understand about flat fee work is the scope of the work. If the scope of the work changes drastically (instead of 1 document you need 4 reviewed) the fee will change based on the increased scope of work. However if the scope of the work remains the same so too should the fee.
At ALH when we quote a flat fee, the cost to our client is what we quoted unless there is a government filing fee (though we usually include those too)! We work hard to be transparent in our pricing, so our clients know exactly what they are paying before signing the retainer agreement!