More Small Firms Are Turning to Flat Fees - What is the Impact on Work Life Balance?

A March 29, 2007 article on Law.com discussed a trend among small law firms to switch from billable hour compensation to flat fee arrangements for various types of engagements. Firms that have made the switch report that clients are generally happier since "flat fee" arrangements allow them to more easily budget their legal expenses.

From the standpoint of work life balance, an interesting -- and not surprising -- comment from one firm manager is that billing by flat fees has also improved the atmosphere of his firm. "The culture of our firm itself has been transformed," he said. "Lawyers think if they are not billing, they are losing money. They are trained to think like this. Even when they are home for the weekend, they are thinking they are losing money by not billing."

Dear readers - what do you think? Is flat fee billing the wave of the future?

Comments

[Sachin R. Mehta]

It's tough to set the actual flat fee. The problem I have, especially in the areas of family and criminal law, is that there is a lot of unpredictability, that in the end, could force you to do much more work than what a low flat fee would justify. Perhaps flat fees work well in areas that you know well, but for new areas of law, you stick to hourly?

[Christian Vinaa]

My experience is; when clients have a fixed flat fee agreeement, there are NO, repeat NO, limits as to how offen they call you, and want you to do this and that. Of course you can explain that x work is not covered by the fee agreement but that only make unhappy clients.