Management Assistance Program

The Power of the Flat Fee (May 27, 2020)

The current economic situation means many people are unemployed and underemployed. Many small businesses are in dire situations where survival is at stake. Even many large corporations have challenges.

But people and businesses still have situations where they need legal advice or need to hire a new lawyer. The current situation is one where you are not just competing for business with other lawyers, but you are also “competing” against the challenge of very tight consumer and small business budgets.

A way for smart lawyers to distinguish themselves is to offer certain legal services for flat fees. All of us appreciate the certainty of a fixed price and that is even more true when cash flow is limited. While lawyers have traditionally offered some services for a flat fee, now may be the time to expand those offerings.

Tips for flat fees

  • An executed attorney client contract signed is very important. A clear list of what tasks the lawyer will do for the flat fee is vital. But even more important is setting forth any related matters that the lawyer is not engaged to do under the agreement. In some cases, the additional fees that would be charged for additional services if needed may be included in the original contract.
  • How are contingencies handled? The biggest fear of lawyers relating to flat fee agreements is that unexpected matters will crop up and cost the attorney more time and effort with no additional fees. But many situations are not unforeseeable and can be dealt with in the agreement. For example, some clients require more “handholding” and frequent contact than usual. Perhaps the agreement states that one call per week to discuss the matter’s status is included, but additional nonemergency calls from the client will be billed at $X.
  • If the client undertakes to do certain tasks related to the matter, this starts looking more like a limited scope legal services agreement and it is important to outline what the client is doing, the time frame and, if appropriate, the consequences if the client doesn’t follow through.
  • Under Oklahoma law, flat fees should be deposited in the client trust account until earned. But that doesn’t mean a lawyer has to track their time as precisely as a matter billed hourly. It is appropriate to set stages or landmarks where the matter is deemed half or one-third completed and partial trust account withdrawals may be made on that basis.
  • If your client likes this arrangement, remind them to tell others about your services when it is appropriate.