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What Practice Areas Are Best for Flat Fee Billing?

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By Jonathan R. Tung, Esq. on June 23, 2016 6:59 AM

A good bit of your solo or small firm practice will be devoted to maintaining the books and making sure money is coming in. As times change, the usual practice of taking in about a third of your client's takings is becoming less and less pervasive -- and there's good reason: it costs too much to wait for the outcome of a suit. In the worse case, you might not get paid at all.

It's often preferable to have money coming in consistently. How do you accomplish that? Introducing the menu style of legal practice: flat fee billing.

Advantages and Disadvantages

There are a number of pros and cons that practitioners should become familiar with when it comes to flat-fee billing (FFB), but in all honesty, the controversy over FFB is starting to die down quite a bit.

Some ethical considerations have been debated over at the ABA and other fixtures within the legal profession. But in reality, this was more noise than actual controversy. The biggest thing that a practicing lawyer should know is this: flat-fee or fixed-fee arrangements are kosher so long as the fees are reasonable and otherwise conform substantially to the meaning of ABA Rule 1.5. As an obvious example, charging $50,000 for a demand letter could subject said practitioner to sanctions.

But the advantages are great. First, it allows the lawyer to menu out his services in predictable bite size chunks. The client has a concrete idea of what her costs will be, and since you already have templates, you can complete the task quickly and efficiently. FFB tasks and practices generally are volume based.

Bankruptcy

Bankruptcy law is entirely federal and the only real differences between the different regional courts have to do with the local court rules and procedures -- which can vary at the edges. But bankruptcy law lends itself very well to fixed fee billing. It's very common for such firms to handle a client's Chapter 7 case for anywhere between $800 to $1,200. Everything is very methodical and there are very few surprises. It's not the sexiest practice of law, though.

Some Tort Law

The reason we use the word "some" has to do with the fact that only a portion of tort law lends itself well to FFB arrangements. The most obvious one is this: the demand letter. A fair number of firms "mill" out their letters and make a tidy profit off of the letters they send out. Clearly, the practitioner must be careful not to abuse the system, but a steady volume of letters from $200 to $500 a pop can create enough revenue to enable you to build a more stable practice.

Basic Criminal Law

Basic hearings in court can be offered for small fees and many practitioners do just that: criminal hearings that last for all but ten minutes. Criminal defendants, particularly small time defendants, need representation more than their richer counter-parts. But you can make a living with this because there are plenty of them around.

Basic Estate Plans

Basic estate plans can be as simple as filling out forms, though you should let your client know how rudimentary that would be. Even still, a basic will goes from anywhere between $200 to $500, depending how much customization goes into it. This is another volume money maker that many attorneys have used to pay off their student debts.

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