Flat Fees and Hourly Billing: How Does It Work at Jackson LLP Healthcare Lawyers?
Understand how our fee structure works so that you can move forward with clarity and peace of mind.
If there’s one thing most likely to make new clients nervous about working with an attorney, it’s billing. What does a flat fee project include? Will there be additional unexpected charges? What if you need more communication time than allotted in the flat-fee arrangement? If you have these thoughts, you’re not alone.
Hourly and Flat-Fee Billing
Years ago, when we founded our law firm, we billed most of our work hourly. In the classic hourly billing model, which is still the industry standard, attorneys record all of the time they spend on a case. This includes everything associated with that case:
- Reading and writing emails
- Client calls
- Conferring with fellow attorneys
- Interactions with third parties
- Preparing documents
We still use the hourly model when the time needed to complete our work remains uncertain, such as research-heavy projects. We also bill hourly when a case is more open-ended or dependent on the actions of another party, such as a partner dispute. We bill time in 6-minute increments (again, an industry standard).
However, we found that hourly billing sometimes made our clients hesitate to undertake much-needed projects such as establishing PLLCs, writing practice policies, drafting contracts, or preparing intake forms. Every case is different, so we couldn’t tell them exactly how much attorney time the work would require.
Many clients wanted more predictability. Some clients tried to save billable time by asking us to cut corners (we don’t cut corners). Some would even try to reduce communications, which made it difficult for us to complete our work.
So, with hundreds of cases under our belts, we decided to study the typical hours needed for specific projects and tasks. Based on this, we introduced flat fees for some of our services. Clients rejoiced. Knowing their fees in advance allowed them to make more informed decisions and budget appropriately.
Flat-Fee Project Scope
This part is really important because it represents the most significant potential for misunderstandings.
Each flat fee project has a predetermined scope. That is, the flat fee encompasses certain tasks and ends with the delivery of a specific deliverable. Say, for example, the firm agrees to review a contract before a client signs it. Negotiating that contract with an outside party falls outside the project’s scope unless specified. Similarly, if the client returns with a new version of the contract, reviewing it would also fall outside of the original scope.
We try to be 100% transparent about what’s included in a flat-fee project. Any task outside the scope will incur additional fees, billed hourly or as an entirely new flat-fee project. So, if you’re assuming a flat fee includes a task that you don’t see in the work plan, talk to us before we commence work. If not listed, it might be outside of the project’s scope.
Communications for Flat-Fee Projects
Based on our extensive experience, we know how much client communication we usually need to complete the tasks in a flat-fee project. Sometimes clients are skeptical. What if there’s a wrinkle that demands more interactions or longer discussions? What if they have additional questions?
Rest assured, our flat fees are built to include the communication needed to complete the task in the overwhelming majority of cases. Remember, we created this fee structure from real-world experience.
If a client wants more communication, we bill the excess at the attorney’s hourly rate. We think this is much fairer than padding our flat fees with extra communication time that most clients simply won’t use.
If you know in advance that you would like more communication than the typical client, we can always build that into your work plan and increase the flat fee. But you may find that the included communication time is enough. Later, you can always add extra calls or emails to be billed hourly.
What About Revisions?
When we first deliver a completed document, the client may have feedback that leads to a revision. That time is calculated into the flat fee. But say a client introduces brand-new information that changes our approach or wants to go back and forth to make multiple revisions. Those discussions and revisions will be billed at the hourly rate.
In short, our flat-fee arrangement gives clients more control over costs. You can keep the communications to what we need to complete the task (no additional fee) or opt for enhanced communication at the hourly rate. You can work efficiently with us to draft a document that meets your needs in the first go-around or opt to extend the revisions process at the hourly rate.
While the elements and scope of a particular project may be evident to us, it may not seem as intuitive to a client. That’s why we encourage you to look carefully at the work plan. Please ask for clarification as early as possible if you’re concerned that the plan, as stated, won’t take you all the way to your goal. By that same token, we also want to reassure you that our flat fees are based on previous experience with clients much like you.
We hope that you better understand the fees in your work plan and look forward to working with you.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.