Billing by the hour, though seemingly more profitable for law firms, presents a compounding conflict of interest between an attorney and their clients. For this reason, many lawyers celebrate the transition to a packaged flat-fee billing model — introducing predictability, incentive to make progress, and even a competitive advantage for their firms.

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

3. 3

4. 4

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

6. 6 2017 © AppFolio, Inc. Confidential.
Getting Started
• Test the waters? • Dive in?

7. 7 2017 © AppFolio, Inc. Confidential.
Fixed Fee Logistics

8. 8 2017 © AppFolio, Inc. Confidential.
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

9. 9 2017 © AppFolio, Inc. Confidential.
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

10. 10 2017 © AppFolio, Inc. Confidential.
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

11. 11 2017 © AppFolio, Inc. Confidential.
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

12. 12 2017 © AppFolio, Inc. Confidential.
Don’t Forget
•Overhead
•Profit

13. 13 2017 © AppFolio, Inc. Confidential.
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

14. 14 2017 © AppFolio, Inc. Confidential.
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

15. 15 2017 © AppFolio, Inc. Confidential.
Fixed Fee Ethics

16. 16 2017 © AppFolio, Inc. Confidential.
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.

17. 17 2017 © AppFolio, Inc. Confidential.
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”

18. 18 2017 © AppFolio, Inc. Confidential.
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)

19. 19 2017 © AppFolio, Inc. Confidential.
Improving Profitability

20. 20 2017 © AppFolio, Inc. Confidential.
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

21. 21 2017 © AppFolio, Inc. Confidential.
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

22. 22 2017 © AppFolio, Inc. Confidential.
Technology
• Accounting
• Timekeeping
• Budgeting
• Practice management
• Task management
• Dashboard reports
• Automation

23. 23 2017 © AppFolio, Inc. Confidential.
Clients & Fee Setting

24. 24 2017 © AppFolio, Inc. Confidential.
Client Not Involved in Pricing
• Low risk of scope change
• Clearly defined outcome/goal
• Unsophisticated clients
• Repetitive process

25. 25 2017 © AppFolio, Inc. Confidential.
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

26. 26 2017 © AppFolio, Inc. Confidential.
Debra L. Bruce, JD, PCC
www.lawyer-coach.com
debra@lawyer-coach.com
713-682-4353