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Clients Love Flat Fee Billing Based on Defined Deliverables

I’m in Los Angeles, California this week for a federal court status conference and facilitated mediation in an unfair competition, keyword advertising trademark infringement case.  At dinner last night with the clients, the issue of lawyers quickly came to the forefront.  Both clients’ fathers were lawyers, and are inundated with friends who are lawyers.  They wanted to let me know that they really appreciated and loved the flat fee defined deliverable billing model, which we use at our firm.  One of my clients shared a story.  His dad pulled him aside during a hunting trip when he was a teenager.  He let his son know that he was not making any money on the trip because he was tied to an hourly billing method.  His dad let him know that his friends, who were businesspeople, were all still making money even when they weren’t sitting at their desks. 

Unfortunately, neither the flat fee nor the hourly billing method allows you to make money when you’re not working in the service business.  But I am constantly being reminded by clients, especially sophisticated clients, that they prefer and appreciate the flat fee defined deliverable model.  A lot of times, lawyers and commentators discussing the issue forget that the real proof is in the pudding.  Clients prefer to know what they’re going to get and what it’s going to cost.  Lawyers prefer to know what they have to deliver and to be in a position to focus on those deliverables.

Comments

Paula Cree

Two comments; #1 I think you are in Los Angeles not Las Angeles...maybe you are wishing you are in Las Vegas instead.
Secondey, the only problem I see with using the fat fee, which our firm does often in Will preparations and estate plannings, is that the matter often becomes more complicated than original anticipated and the attorney ends up loosing money.

Bill E

I appreciate Paula's comment. We find at our firm that starting out with an smaller assessment project to flush out the variables prior helps define the primary project and reduces risk to both sides. Using an assessment project for a more nominal fee helps define the scope of the second phase project.

flat fee; value billing; defined deliverables

There is always the ability to issue a "change order" to the project when new information comes to light. However, I agree with Bill E that an assessment project that properly defines deliverables is anticipates such issues (to the extent possible) is preferred.

Let's also not forget that there are times when the issue ends up being less involved and there is a "windfall" for the attorney. Sometimes it is worth assessing how you have done as a whole rather than on a particular project.

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