The document discusses the transition to fixed fee legal services, emphasizing the importance of determining fee amounts based on various factors such as market rates and past matters. It covers the logistics of fixed fees, engagement agreements, legal ethics, and strategies for improving profitability through efficiency and technology. Additionally, the document advises on client involvement in pricing and the specification of services within agreements.

1. 1 2017 © AppFolio, Inc. Confidential.
Fixed Fees – Ditching the Billable
Hour
#fixedfees2018

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5. Debra L. Bruce, JD, PCC
• Practiced law 18 years in firms ranging from solo
to megafirm
• Professionally trained coach for18 years
• Member of Law Practice Management Committee
of State Bar of Texas
• Editorial board of ABA Law Practice magazine
• First lawyer in Texas credentialed by the
International Coach Federation
• Helps lawyers adapt effectively to unprecedented
changes in legal industry today

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Getting Started
• Test the waters? • Dive in?

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Fixed Fee Logistics

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Determining Fee Amount
• Going rate
• Publicly available records of legal fees
• Average revenue per similar matter
• Recurring work for current hourly client
• Analysis of past matters

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Analyzing Past Matters
• Identify key elements of matter
• Phases/Milestones (Investigation, Discovery, Trial, Appeal)
• Some aspects more predictable?
• Factors causing variance
oCourt/jurisdiction
o Opposing counsel
oClient sophistication/emotionality
o Attorney experience

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Sample Elements
• DIVORCE
• Children - Custody
dispute, special needs
• Marital estate size
• Infidelity, misbehavior
• Family business
• Income differential
• Emotion level
• Prenup
• ACQUISITION
• Number of owners
• Real estate transfers
• Receivables collection
• Liabilities – environmental,
products, warranties, litigation
• Stock or asset sale
• ERISA plan
• Stock options
• Recordkeeping adequacy

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Predictable Expenses
• Filing fees
• Medical records
• Expert fees
• Court reporters
• Demonstrative evidence
• Travel, parking, gas
• Overtime/Contract workers
• Delivery/Shipping costs
• Consultants
• Title registrations
• Transcripts
• Certified copies

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Don’t Forget
•Overhead
•Profit

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Prepping for Future Fixed Fees
• Track all time at least for a set period
• Standardize descriptions
• Categorize activites
• ABA Uniform Task-Based
Management System
• LEDES eBilling formats:
activity, expense, timekeeper

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Engagement Agreement
• Carefully specify scope – set out underlying assumptions
• Specify work not to be performed; whether expert fees included
• Change fees/hourly rate for scope creep
• Escape clause for change of circumstance
• Payment due dates in advance of next phase
• Withdrawal if non-payment X days in advance
• Client obligation to keep attorney informed
• Define when portions of payment deemed earned
• Pricing tiers - # of phone calls, emails, depos, drafts, reporting, etc.
• List expenditures not covered or requiring client approval
• Specify staffing

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Fixed Fee Ethics

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ABA Model Rule 1.5
• (a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee
or an unreasonable amount for expenses. The factors to be considered in determining
the reasonableness of a fee include the following:
• (1) the time and labor required, the novelty and difficulty of the questions involved, and
the skill requisite to perform the legal service properly;
• (2) the likelihood, if apparent to the client, that the acceptance of the particular
employment will preclude other employment by the lawyer;
• (3) the fee customarily charged in the locality for similar legal services;
• (4) the amount involved and the results obtained;
• (5) the time limitations imposed by the client or by the circumstances;
• (6) the nature and length of the professional relationship with the client;
• (7) the experience, reputation, and ability of the lawyer or lawyers performing the
services; and
• (8) whether the fee is fixed or contingent.

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Other Related Ethics Rules
• Rule 1.15(c) “A lawyer shall deposit into a client trust
account legal fees and expenses that have been paid in
advance, to be withdrawn by the lawyer only as fees are
earned or expenses incurred.”
• Rule 1.16(d) “Upon termination of representation, a
lawyer shall…[refund] any advance payment of fee or
expense that has not been earned or incurred.”
• Rule 8.4 “It is professional misconduct for a lawyer to…
(c) engage in conduct involving dishonesty, fraud, deceit
or misrepresentation”

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Retainer, non-refundable fee, or deposit?
• If truly non-refundable, explain why in engagement agreement. (Ex:
earned at payment to secure immediate availability of high profile
expert, precluding other work) ABA Rule 1.5(a)(2)
• Note: In some states like CO, a fee is never non-refundable
• Unearned portions of fee are refundable if early termination
• Subsequent developments may render collection of full fee
unreasonable (Ex: Divorcing couple reconciles early in case)
• Deposit fee into trust account until each portion is earned
• Break work into activities or milestones to clearly designate when
earned (Ex: 20% investigative phase, 40% discovery, 40% trial)

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Improving Profitability

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Eliminate Waste
Waste caused by:
• Poor planning
• Wait time/delays between processes
• Mistakes that require rework
• “Gold-plating”
• Duplication – poor communication or unclear roles and
responsibilities
• Wrong resource assigned
• Actions or expense that don’t provide value to client

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Steps to Improve Profitability
• Increase efficiency – with flat rates & efficiency you can charge same
as competitors, but spend less time
• Automate as much as possible with templates & merge fields
• Use workflows & checklists in practice management programs
• Delegate to lowest tier possible
• Budget timelines to establish fees
• Plan in advance and follow timelines to avoid fire drills
• Provide training & process manuals for employees to reduce error and
increase proficiency
• Provide guidance on amount of time task should take
• Let go of perfectionism – focus on value to client

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Technology
• Accounting
• Timekeeping
• Budgeting
• Practice management
• Task management
• Dashboard reports
• Automation

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Clients & Fee Setting

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Client Not Involved in Pricing
• Low risk of scope change
• Clearly defined outcome/goal
• Unsophisticated clients
• Repetitive process

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Involving Clients
• Ask clients about their needs & objectives
• Discuss typical timeline, deadlines & elements with client
• Checklist questions to ferret out issues that increase cost
• Verify proposed plan of action meets client goals
• Agree on scope, what will and won’t do
• Clarify what costs extra
• Establish communication preferences, limits and plan

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Debra L. Bruce, JD, PCC
www.lawyer-coach.com
debra@lawyer-coach.com
713-682-4353