Looking to Hire an Attorney? Which is better, a Flat Rate Fee or Hourly Fees?

By Attorney Marc J. Victor

 
When facing a legal issue, one of the first decisions you’ll need to make is hiring a lawyer. As you begin your search, you’ll likely come across different fee structures, with two common options being nonrefundable flat rate fees and hourly rates. I will explain what these fee structures entail and why being billed hourly is often the most beneficial. At the Attorneys for Freedom, we believe in transparency and empowering our clients with the knowledge they need to make informed decisions.

Nonrefundable Flat Rates

A nonrefundable flat rate is a fixed fee agreed upon between the client and the attorney for a specific legal service or case. The fee remains constant, regardless of the time spent on the case. There is no possibility of a refund. This arrangement may seem appealing, as it offers certainty about the overall cost of the legal representation. However, it’s essential to consider the substantial drawback to this type of arrangement.

Profitability Concerns:
Attorneys sell time. As such, maximizing their hourly rates is how attorneys make money and become profitable. If you have entered into a nonrefundable flat fee arrangement, you have given the attorney a financial incentive to resolve your legal matter quickly. This is why in criminal cases clients often complain that their lawyer didn’t spend sufficient time on the case and instead immediately offered to resolve the case with a plea. While everyone wants to resolve their legal matter quickly, resolving it quickly at the cost of achieving the best result is never in the client’s best interest. With nonrefundable flat fees, the more time the lawyer spends working on the case the less money the lawyer makes per hour. It’s a bad idea to give your lawyer a financial disincentive to work on your case.

Overpaying:
Lawyers can generally estimate how many hours will be needed to resolve a case. As such, they are not likely to set the flat fee at a price point where they will lose money. More often, a lawyer will set the flat fee higher than would actually be paid with an hourly fee arrangement. Given that there is no possibility of a refund, the lawyer will sometimes set the flat fee too high, and clients will wind up paying more for legal services than necessary.

Hourly Rates

In contrast to flat rates, hourly rates involve billing clients for the actual time spent working on their case. While it may seem less predictable, hourly billing offers several advantages that are worth considering.

Flexibility:
Hourly rates allow for greater flexibility when it comes to complex legal matters. Lawyers can dedicate the necessary time and resources to thoroughly investigate and work on your case, ensuring a more comprehensive and effective representation.

Incentive for Efficiency:
With hourly billing, attorneys have a direct incentive to work efficiently, maximizing the value they provide to the case. They are motivated to streamline processes, research thoroughly, and achieve optimal results within a reasonable timeframe. Ethical attorneys are aware that clients do not want to be overbilled so they must be prepared to justify the time spent working on the case. Wasting time on frivolous matters will guarantee an unhappy client.

Cost Transparency:
While hourly rates may seem uncertain at first, experienced attorneys can provide estimates based on similar cases they have handled in the past. This transparency allows clients to budget accordingly and have a clear understanding of the legal expenses involved.

Expense Control:
Unlike flat rates, hourly billing ensures that you only pay for the time spent on your case. This structure eliminates the risk of overpaying for services that require less time and effort. Additionally, the breakdown of charges allows clients to review and discuss billable items, ensuring transparency and accountability. Clients only pay for the time the lawyer actually spent working on the case.

Lower Initial Deposit:
With nonrefundable flat fee cases, the attorney will often expect the entire flat fee payment to be made in full at the beginning of the case. However, with hourly billing cases, the attorney will often accept a lower amount to start the case and allow additional payments into trust as the case progresses. So long as the amount in trust is sufficient to cover the work in progress, most attorneys will continue to work on the case. This type of fee arrangement makes representation more affordable for many clients who cannot pay the full amount up front.

Refund:
With the hourly fee arrangement, any amount of money remaining in the trust account at the conclusion of the case is refunded to the client. Unlike the nonrefundable flat fee, clients never pay for more time than the attorney actually spent on the case.

Conclusion

While the appeal of a nonrefundable flat rate lies in its predictability, it’s important to recognize the potential limitations such nonrefundable flat fee arrangements present. Hourly billing ensures clients do not pay for more time than the attorney spent on the case. Importantly, they do not give the attorney a financial disincentive to work on the case. If you desire a lawyer who wants to invest the proper and required time to do a good job on your case, then the hourly fee arrangement is the most efficient and fair fee arrangement.

At the Attorneys for Freedom law firm, we believe in fostering long-term relationships with our clients based on trust and open communication. By embracing an hourly rate structure, we aim to deliver comprehensive legal representation tailored to your specific needs. When choosing legal representation, carefully consider your unique circumstances and consult with an experienced attorney to determine which billing method is suitable for your case.

If you or someone you know has been charged with a crime, please contact the Attorneys for Freedom Law Firm or call our Arizona office at 480-755-7110 or contact hour Hawaii office at 808-647-2423.