Divorces can be incredibly expensive. Most divorce lawyers charge by the hour, and rates range between $200 to $400 per hour, or more! This means that for a short phone call to your attorney, you will be charged $50, $60, or $100! Is the advice you receive during that phone call worth that much? It might be, depending on the nature of the question, but it usually doesn’t seem like it.
There are all sorts of problems created by the hourly fee model: the lawyer has no incentive to settle your case quickly and efficiently because it means he or she will be paid less. This model assumes that every minute of a lawyer’s time is of equal value, regardless of the benefit imputed to the client. In my experience, this is a false assumption: the amount of time the lawyer spends on the case bears little relation to the actual benefit received by the client.
Fortunately, there is another way: the flat fee contract. With a flat fee, the lawyer will estimate–based upon his experience and the information provided by the client–how much it should cost to complete the case from start to finish. The attorney may quote a fee that is somewhat higher than a standard, up front, hourly-fee retainer, where the client makes an initial deposit then pays for attorneys time. This is because there is a certain amount of risk involved in a flat fee that is not present in an hourly fee contract. If the lawyer underestimates the complexity of the case, he could end up losing money. On the other hand, the higher flat fee is often attractive to the client, because he knows the total cost at the front end. He doesn’t have to worry about being billed $75 for a simple phone call, because phone calls are included in the total fee.
A good flat fee arrangement will set objective measures so that the lawyer and client can tell when the lawyer’s fee is earned. For instance, the contract may state that the lawyer will have earned a percentage of the total fee as soon as the divorce petition is filed, another percentage after the financial disclosures are completed, another upon entry of temporary orders, and the final balance upon completion of the case. That way, the unearned portion of the client’s fees may be refunded if the case is dismissed; for instance, if the husband and wife reconcile as soon as the petition is filed.
It should be noted that not even the best attorney can anticipate every issued in a divorce or custody matter. The amount of time and effort that an attorney must spend on a case is determined not only by the client but also on the other party and opposing counsel. Therefore, a good flat fee contract will set out what situation will merit an increase of the fee. For example, if the client hires an attorney for the limited purpose of increasing the other parent’s child support obligation, and then the other parent files for full custody; the flat fee will not cover the custody case. The lawyer and client will have to renegotiate the fee for representation on the broader issues.
Every system has pros and cons, and the flat fee contract is no exception. It is not right for every case. However, when a person with limited resources faces the uncertainty of the legal process, a flat fee contract will provide some assurance that the process will be affordable and efficient.