THE CASE FOR FLAT-FEE STATE COURT COMMERCIAL LITIGATION

“I am pleased to confirm your retention of my law firm represent you in the referenced state court litigation action. There will be no fee due for this representation beyond the flat retainer of $25,000, payable in twelve monthly installments.”

Hypothetical Flat-Fee Retainer

An old proverb from Oscar Wilde captures the modern conundrum of hourly billing for legal fees: “Nowadays people know the price of everything and the value of nothing!” The truth is that hourly billing creates an inherent economic conflict-of-interest between lawyers and their clients. Selecting a flat-fee structure for state court business litigation can lower costs, eliminate unwelcome fee disputes, improve budget predictability, and promote the value of legal services in effectively achieving desired results.

A Brief History of The Billable Hour

The daily tracking of attorney productivity in six-minute increments was never intended as a pricing tool but rather as a cost-accounting mechanism. Paper timesheets arose in the early 1900s in response to the theory that lawyers who kept track of their time were more profitable. But timesheets were never intended to determine the price for legal services. For an excellent history, see http://verasage.com/blog/the_modern_father_of_the_billable_hour_and_timesheet/

Daily time records allow law firm managers to measure profitability and keep track of their “inventory” of associate hours. But there is nothing endemic to commercial litigation that requires clients to be billed by the hour for legal services, and certainly no statistical or other objective evidence that it enhances client outcomes.

Hourly Fees Encourage Overbilling

A lawyer who bills by the hour is inevitably focused on selling his or her time, instead of his talent for finding practical legal solutions for clients.

Unfortunately, law firms encourage inefficiency by rewarding partners who can keep the litigation meter running and compensating associates for their ability to fulfill monthly billable-hour quotas. Associates spend an inordinate amount of time “tracking” their hours instead of using their time to the client’s best advantage. Moreover, because many associates “create” their time records many days (if not weeks) after the fact, resulting in a vast amount of over-billing.

There is no incentive for an hourly biller to find an economically efficient, winning legal strategy. In fact, billing by the hour emboldens lawyers to file every conceivable motion contemplated by the rules of procedure regardless of the likelihood of success. The reality is that not every case warrants a summary judgment motion; indeed, given the low rate of granting such motions by Florida trial judges, and the high rate of reversals when they are granted, there is very little marginal utility to clients in paying for such extremely expensive outlier motions.

Hourly Billing Foils Creative Legal Thinking

The name of the litigation game is winning. There is no proven correlation between brilliant legal ideas and increased associate hours.

Effective litigators figure out how they are going to win their case before it starts. With a solid roadmap, and advance research on anticipated shortcomings in a case, a lawyer can avoid the “black hole” of needlessly litigating untenable positions and unwinnable motions. Judges tend to put cases into familiar pigeonholes, and commercial litigation is no exception. A lengthy motion based on an arcane legal theory is unlikely to persuade a harried state-court judge to grant involuntary dismissal and instead creates wasted time and effort.

Foresight avoids expensive detours and promotes accurate budgeting and cost-predictability. Forcing attorneys to focus on projects that “advance the ball” to the hoop benefits everybody. Judges appreciate the practical professionalism; lawyers avoid the awkwardness and stress of advocating flimsy legal arguments; and clients benefit from cost efficiency.

Spotting critical legal issues and coming up with creative solutions is the job of a commercial litigator; nothing about succeeding in that job is directly proportional to hours billed. And because clients have no choice but to rely on the advice of their lawyers to determine which issues and motions are most likely to be effective, a flat-fee structure removes the economic disincentive for a lawyer to be practical and goal-oriented.

State Court Judge’s Don’t Read Lengthy Motions

The “inconvenient truth” is that the Florida state court system – as opposed to the federal system – does not have sufficient resources. The result is that most trial level decisions are made superficially, without any cross-courtroom consistency, and often based on which lawyer gets in the last word at a five-minute motion calendar hearing. For better or worse, the Big Law mentality of submitting 20-page legal briefs has no utility in Florida state court. More effective advocacy is achieved with concise motions followed by tenacious oral advocacy.

For defendants, delay is not only “the name of the game,” but it has become the game. Delays are hard-wired into the Florida Rules of Civil Procedure, and the various mechanisms for interlocutory appeal, and those delays have been magnified by the inadequate number of judges, the absence of judicial law clerks, and inefficient management of over-crowded state-court dockets. For all intents and purposes, the Florida state court system runs like molasses. Getting a case to trial in under four years takes heroic efforts by the plaintiff.

The Time Has Come for A Flat-Fee Retainer Agreement

The bright side of this perpetual state of systemic lethargy is an opportunity for flat-fee billing. Months go by, sometimes half a year, before a hearing on a motion to dismiss. These delays allow for incremental, flat-fee retainers because very little legal work happens on a daily, weekly, or even monthly basis. And judges respond more quickly, and decisively, to simple, concise applications for relief that do not “throw in the kitchen sink.” For a plaintiff, the best time to settle a case is right before or after a jury is selected. Until then, the most effective use of a plaintiff’s lawyer’s time is diligently pushing the case to trial. For Defendants, being successful in taking advantage of built-in delays is not measured by the number of motions filed, but rather by their creativity and effectiveness. For either party, billing excessively to file motions with marginal chances for success rarely translates into a courtroom victory.

Putting my time where my mouth is, I am prepared to accept flat-fee representations for Florida state court commercial litigation matters.

Call The Simring Law Group at 954-816-2417 for more information.