Flat fee vs. hourly fee. A flat fee is a set amount paid to an attorney to cover all aspects of a divorce—from beginning to end. A flat fee is the attorney’s money at the moment it is paid, regardless of how hard the attorney works on the case.
An hourly fee, on the other hand, is an amount paid for each hour of work an attorney actually performs on a case. Hourly fee attorneys typically require an upfront deposit—known as a retainer—against which hourly fees are billed. A retainer is deposited into a law firm trust account and does not belong to the attorney until work on the case is performed. The lawyer periodically invoices the client for work performed (usually monthly). The client may either pay the invoice or have the amount due deducted from the retainer. Retainers must be replenished on a periodic basis as work is performed on the case.
While a flat fee may be appropriate in the rare simple divorce (i.e., no children, no property, and no other issues), it is not appropriate in most divorce and custody matters for the following three reasons.
- Flat fees disincentivize lawyers. Let’s face it, lawyers are businesspeople. They have salaries to pay and groceries to buy just like everyone else. Lawyers are not in business to lose money. A lawyer’s only commodity is time—and it’s limited.
So how do flat fee lawyers make money? The answer is simple: they limit how much work they do on a case. Preparation results in leverage and leverage results in favorable results. Flat fee lawyers, however, often don’t prepare cases to go the distance and, as a result, do not have the leverage inherent in being prepared and willing to go to trial. Why? Because preparation takes time. And flat fee lawyers generally aren’t willing to put in the time.
Divorce and custody cases get resolved without going to trial when they are prepared as if they are. Flat fee lawyers often do not push to go to court. Opposing lawyers know this and will engage in hardball negotiation tactics—which, in turn, will often result in significantly less favorable outcomes for clients of flat fee lawyers.
- Flat fees do not protect clients whose cases must be litigated. A divorce case is a lawsuit. So how do flat fee lawyers limit the amount of work they put into a case? They, for example, may limit client communications (g., few answered emails and returned calls, but virtually no contact until the final court date). Flat fee lawyers also may use boilerplate forms lacking provisions unique to your situation. They may not send discovery requests or take depositions, so their knowledge about your assets and liabilities is limited to what you tell them (and will not include assets your spouse may be hiding). And flat fee lawyers may not aggressively negotiate a settlement on your behalf, but rather, simply draft what they are told.
But if a settlement cannot be negotiated, the flat fee breaks down. Flat fee lawyers lose money by going to trial. Discovery, depositions, hearings, and trial are all expensive. Flat fees do more than diminish the prospect of trial; they eliminate the threat of trial and the ability to gather information in preparation for it. Most people seek to avoid trial like the plague. But if you are not in a position to let the judge decide the case, you have zero leverage in a negotiation, which, paradoxically, will be your only option at that juncture.
- Flat fees overcharge some clients. Clients also should be beware of large flat fees because they could be overcharged. Divorce and custody cases take on lives of their own. They can evolve in many directions. While a large flat fee may seem reasonable in your situation, your case could very well take much less work to complete. If that happens, you will overpay your lawyer by a substantial amount. The economic incentives to limit the work performed by your attorney exist here, too. That is to say, your attorney would make even more money by doing less work.
A wise man once said, “In this old world of sin and sorrow, you get what you pay for.” With your children, your finances, and your future on the line, why would you ever hire a flat fee lawyer and hamstring your case? The smart strategy is to pay a skilled family lawyer on an hourly basis to do precisely what is necessary to protect your interests. And only pay for the work actually performed—no more and no less.
Sonya B. Coffman is a Board Certified divorce and family lawyer in Beaumont, Texas. She also is a C.P.A. Ms. Coffman only practices divorce, custody, and family law in Jefferson County, Texas—and she charges by the hour. No flat fees here. Ms. Coffman regularly tries jury and non-jury divorce, custody, and property cases. Her specialty is cross-examination. She’s been doing it for over 25 years.