Should an Attorney Charge a Flat Fee or Bill Hourly?

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Whether an attorney bills you hourly or at a flat rate should have no bearing on where you start searching for a trusted attorney. This is because as a matter of fact, it is impossible to determine which arrangement promotes your client’s “best financial interest.” A good attorney should be able to determine this based on the circumstances specific to your case and also provide an explanation as to which one is in your best interest.

What a client should first consider is the type of work the Attorney will be performing

If a prospective client meets with an attorney to discuss becoming divorced from their spouse, it is likely the first thing he’ll want to determine is whether the divorce will be contested or uncontested. If the parties are in a position to agree to the terms of the divorce, it is likely the client would be quoted a flat fee. And what would typically drive the cost of the attorney fee in an uncontested divorce is the complexity of the marital estate and whether there are minor children involved.

When might a flat fee be appropriate?

A flat fee might be appropriate if it involves an uncontested proceeding or an otherwise “routine” contested proceeding in which the attorney has quoted a reasonable fee based on his degree of proficiency in the particular area as well as the amount of time he predicts the case to be completed in. Regardless of whether the case is billed by the hour or a flat fee, Rule 1.5 of Alabama’s Rules of Professional Conduct mandates that an attorney shall not collect an unreasonable fee from a client, regardless of whether the client agrees.

Examples of when our firm has traditionally implemented “flat-fees”

  • Uncontested Divorce
  • Prenuptial Agreements
  • Estate Planning (e.g. Will, Trusts, Power of Attorney, Health Care Proxy, etc.)
  • Probate for Small Estates (Petitions for Summary Distribution)
  • Criminal Defense (Misdemeanors and Felonies)
  • Probation Revocation Hearings
  • Traffic Court (Speeding Tickets, etc.)
  • Uncontested Adoptions

When is it common for an Attorney to charge by the hour?

If an attorney is retained to represent a client in a contested matter, there is a good chance the attorney will bill hourly and here’s why:

The nature of a contested proceeding involves uncertainty. And uncertainty leads to possible litigation. Average attorneys have at least one thing in common and that is that they appreciate that their time is valuable. Above average attorneys take that one step further: they appreciate that everyone’s time is valuable. This concept is certainly not exclusive to lawyers as most people who have found success in life have long understood and appreciated the value of someone else’s time.

Examples of when our firm traditionally implements hourly billing

  • Contested Divorce
  • Divorce Modification
  • Establishing Custody
  • Child Custody Modification 
  • Establishing Paternity
  • Petition for Contempt
  • Probate Administration
  • General Civil Litigation

Example: Client hires Attorney for representation in a divorce proceeding. According to the retainer agreement, Client pays $5,000.00 as a retainer fee and Attorney is to charge $200.00 per hour. One month later the Parties reach an agreement and the case is settled without a trial. At this point in time Attorney has billed approximately 10 hours of work. As such, Client will be returned $3,000.00 of her retainer fee.

What are the advantages of hourly billing?

Transparency and Accountability– An attorney has an obligation to keep open lines of communication with his clients. This also includes keeping clients informed on a regular basis concerning all aspects of their case, including their bill. All funds held by the Attorney must be kept in an IOLTA “Trust” account, which is a special bank account that the Alabama Bar Association requires Attorneys to maintain. Attorneys are required to maintain payment records for several years in the event a bar complaint is filed against the attorney.

Safety Net for both Attorney and Client– In most scenarios the Client is free to terminate the attorney’s representation and be returned the retainer fee. While it is true the client will only receive the retainer less the hours billed up to that point, the client should never be contractually bound to continue employment of the attorney.

In addition, hourly billing protects the attorney should the case take an unexpected turn. If a simple case that would normally require 10 billable hours turns into a 50 hour case (this happens more than you think), the firm would take a huge loss by charging a flat fee. As such, hour billing protects the attorney from continuing representation of a client if it turns into a financial hardship for the attorney.

Questions you should ask before hiring your attorney

  • How much will representation in this matter cost?
  • How does your fee compare to what other attorneys are charging?
  • If I am unhappy with your services can I get my money back?
  • Am I free to hire a different attorney if I have already paid you?
  • Will you provide me with an accounting of your billings?
  • Do you require the full amount up front or do you offer a payment plan?

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