Why Flat Fees Are Good for Clients

 Posted on January 14, 2011 in Uncategorized

I want to talk about the proposed amendments to the Texas Disciplinary Rules of Professional Conduct and the State Bar of Texas's war on flat fees, but to care about that you need to know why flat fees are good for people charged with crimes.

So your loved one is charged with a serious crime.

There are two ways we can handle this fee. Either you pay me a flat fee, earned upon receipt. Or you pay me for each stage of the case.

If you pay me a flat fee, that fee is the minimum fee for my handling of your loved one's case. It is also the maximum. If we go to court the first time and, for whatever reason, the case is dismissed, I don't owe you any money back. On the other hand, if we spend a year litigating and then wind up in a two-week trial, you don't owe me any more money.

If you pay me for each stage of the case, on the other hand, and we resolve the case quickly, you will pay me less than the flat fee. So staged payment may seem-especially if you're not a good long-term planner-like the more frugal option. But if you pay me for each phase of the case and the case goes to trial, you will pay me more than the flat fee-possibly much more. That is, the minimum will be lower but the maximum will be higher.

But when I set a flat fee, I take into account, based on my experience, the probability that the case will drag on, and discount the fee based on the probability of an easier resolution. So if I think there's a 50% chance that you'd wind up having to pay a $X fee under a staged-fee agreement, I'll set the flat fee at $X/2-actually less, since the immediate payment has value to me that the prospect of future payments doesn't.

Other than a speedy dismissal (which I will certainly aim for), how much work this case will require is entirely up to your loved one. He decides whether to plead guilty or go to trial. I'm not going to count my hours either way, and I'm going to fight equally hard for him whether you pay a flat fee or pay for each stage. We have no idea right now what the end result is going to be, but the result is going to be the same however I'm paid.

And here's the thing: whichever option you take, I'm going to require you to pay the maximum fee up front.

Why? For four reasons.

First, once I'm in the case, it's not easy for me to get out. I have to get permission from the judge to withdraw, which might mean that your loved one has to have some lawyer ready to step in to represent him. As long as I'm on the case, I must keep fighting for your loved one (no matter how mad I am at you). So if you stop paying me, I can't stop working for your loved one. I don't like working for free.

Second, if you don't have the resources to pay the maximum fee now, you're not going to have them later. You are not going to win the lottery, and the income-tax refund check, in my experience, never arrives.

Third, even if you have the resources to pay the maximum fee now, I have no reason to believe that you'll still have them later.

Finally, even if you will have the resources later, there is no guarantee that you will still be committed to funding your loved one's defense when the time comes to pay for a trial (especially now that you know that I can't freely withdraw from your loved one's case).

If you pay a staged fee, I'll take all of the money, but put the portion covering later stages in my IOLTA account (that's a trust account; it bears a little interest, but the interest goes to the State Bar rather than to you or me).

So pay a $X/2.5 flat fee (less if I think trial less likely, more if I think it more likely). Or pay $X, which I will deposit in my trust account.

You can come up with $X/2.5, but can't come up with $X right now? Lots of people are in that position And that's why flat fees are good for clients.