Paladin Didn't Charge Split Fees.

 Posted on May 09, 2009 in Uncategorized

Everyone thinks that his way is the best. In his "How to Hire a Gun Slinger..." blog post (a staple of criminal law blawgs: the post suggesting to potential clients criteria they should look for in hiring a lawyer, and explaining how the blogger fits those criteria; I may have written that post a time or two myself), Mississippi criminal-defense lawyer Remy Orozco (Hostis Civitas) writes:

In my office I operate on a standard flat fee for evaluation and preparation. I then have a separate flat fee if the case ends up going to trial. Most lawyers charge you one flat fee which covers the entire case but end up settling 80% of cases with a plea and do not refund you any of the money paid to cover the trial. Having an option not only saves you time and money but ensures that if your case does settle that you are not overpaying for the lawyers time or advice.

There are jurisdictions in which criminal-defense lawyers must charge split fees (New York comes to mind). In my neck of the woods, the rules allow more freedom of contract. Many criminal-defense lawyers charge a nominal fee per court appearance. Some charge a flat fee for plea, dismissal, or trial, win, lose, or draw. Very few charge an hourly rate. Most charge much like Remy does: $X for handling the case until it's set for trial; $Y if the case is set for trial.

Every one of these lawyers can justify the billing method she has chosen by explaining how it is best for the client. Those who charge a hundred bucks per court appearance might explain that they are making legal services available to the working poor. Those who charge an hourly rate might say that they are ensuring that clients only pay for the services they need. To those who adopt a different practice, the justifications might sound like rationalizations of naked self-interest.

There is always, in any attorney-client relationship, the possibility a conflict of interest between the lawyer and the client. The client has an interest in getting his case resolved as well as possible while spending as little money as possible; the lawyer has an interest in minimizing the time he spends on the case while maximizing his fee.

An argument against the hourly rate is that the lawyer is motivated to "churn"-to spend unnecessary time on the client's case; an argument against the per-appearance fee is that the lawyer is not motivated to spend necessary out-of-court time on the client's case.

An argument against the split-fee arrangement is that the lawyer is motivated to lead the client toward trial; an argument against the flat-fee arrangement is that the lawyer is motivated to lead the client toward a plea.

Regardless of the fee arrangment, the lawyer also has an interest in treating the client fairly, and in getting the client's case resolved as well as possible. Ideally, these shared interests will dominate both the lawyer's and the client's decisions, so that neither will take advantage of the other, but neither will cut corners at the expense of the best possible resolution.

Here's an argument for a split-fee arrangement:

1. Most cases don't end in trial. (In Harris County, even most cases that are set for trial don't end in trial.)

2. Negotiation continues up until the last minute. In many cases, the lawyer doesn't know for sure that a case will be tried until jury selection begins. It's extremely impractical to try to collect money from a client after jury selection begins.

3. Even when a case is not tried, the client gets the best possible resolution (dismissal, favorable plea) when his lawyer is prepared for trial.

4. The client should not pay for work that the lawyer doesn't do, but

5. The lawyer must be fairly paid for the work that he does. A lawyer who isn't charging for his time preparing for trial has to make up for it by not preparing, or by taking on more clients than he can effectively represent. (Remy talks about a fee for evaluation and preparation. If Remy Orozco tells you he's going to prepare for trial, he's going to prepare for trial, and he's not going to take on more clients than he can effectively represent, so I'll bet he's charging appropriately for that work. Which brings us to...)

6. Once the lawyer is prepared for trial, in most cases trial is a small amount of additional work.

All of this supports charging the bulk of the fee for preparation, and charging a comparatively small additional fee once the case is set for trial. But if it's okay to charge a flat fee for all of the preparation-whether two hours or 200-before a case is dismissed, pled, or set for trial, why is it not okay to make the flat fee a little bigger and include the possibility of a trial? Should we all be charging by the hour?

Forgive my cynicism about the money management habits of the accused, but a split-fee arrangement inevitably leads to situations in which the accused feels compelled to plead guilty because he doesn't have the money when he needs to pay it or plead, or the lawyer is tempted to write a letter like this.

Consider, instead, an arrangement under which the client pays a fair fee up front, and the lawyer agrees that that fee will cover whatever work needs to be done, up to and including a jury trial. If the case is dismissed or the client elects to plead guilty, the fee does not decrease; if the case is tried, the fee does not increase.

Those whose cases are not set for trial pay more than they would under a split-fee arrangement, but those whose cases are set for trial pay less.

By including in every fee the possibility of a trial, the criminal-defense lawyer can spread the risk. Not everyone winds up needing a trial, but the lawyer can charge less to those who are less likely to need trials, in essence selling trial insurance.

There are equally important policy reasons for charging a flat fee rather than a split fee: many people would be better off going to trial-or at least to the brink-than pleading guilty early, and the world would be a better place if more people accused of crimes would make the government do its job.

By agreeing to pay an additional fee in the event of a trial, though, the client hands the State a lever to force a plea; if setting the case for trial triggers the additional fee, the lever will press the client to plead guilty early. I prefer to deprive the State of this leverage from the beginning, so that the client's crucial go/no-go decision can be made based entirely on the client's judgment (with my counsel) of his best legal interest. To take away the lever, I don't charge extra for a trial.

Remy writes, "When your life and freedom are on the line you should not be looking for a lawyer who is going to charge you by the bullet." He's right. Don't look to save time or money. Don't look for a lawyer who is going to come back to the well for more money later on. Find a lawyer whom you trust to charge you a fair fee now, then put the money out of mind and get the job done.

(Update: Scott reminds me that I've written about trial insurance before, as has he.)