The WSJ poses the question, which type of case makes an attorney work harder?
I have done both types of cases before and I need to think about this one.
When I did a flat fee case, I would try to be effective, i.e. take as little time as possible to close the case. My superiors would put pressure on me to complete the case as soon as possible because flat fee cases were considered low yield, and were only taken on as a means to get referrals for more lucrative cases, i.e. cases billed hourly.
The goal of taking on any case was to do it in the amount of time it would take to remain on par with your billable rate. For example, if you were doing a complicated real estate closing for $3000 and you typically charged $225 an hour--you had to accomplish the closing in 13 hours or you have lost money for your firm. So, we still tracked the billable hours to measure profitability and as a means of putting pressure on an associate.
So, effectively, by keeping tab on the time it takes you to do a flat rate case--you are working harder and faster. But I can't say that you're doing a better job. After all, you're rushing and many mistakes happen when you are rushing.
In my experience, I have seen many mistakes in real estate closings. Because real estate closings are flat fee cases and the practice is more about volume than details. Chances are, if you fail to review the Title Report thoroughly and you don't have time to look at the minutes for the Condo that your client is buying, then everything will be fine. So, I would venture to say that many real estate attorneys take short cuts in getting to the closing--under the assumption that everything will be fine or the bank attorney will catch it or Title Insurance will kick in. It's wrong, but it's reality. Does that mean that real estate attorneys work hard? Yes, they work very hard. But when you are billing $1500 for a real estate closing and your time is money, it's hard to fit all of that work into 7 hours.
I would venture to guess that the same may be said of contingency cases, where an attorney will take on a case for a percentage of the award--25% to 33%. Once again, the goal is to both maximize the award and get to the finish line in as little time as possible. As such, the tendency to cut corners is there. So, do "ambulance chasers" work hard? Heck, yes. But are you getting the best result? Probably not. Trials are costly, so I think that settlement is often pursued as a way to cut expenses off at the head.
What of criminal lawyers? Typically, you are paid a flat fee to represent a client (unless you're court appointed). As such, as a private criminal defense counsel, your incentive to visit the jail to speak to your client and understand his/her case is killed. You want to get to the finish line as quickly as possible. That translates into not seeking costly trials, if there is any chance you can convince your client to take a plea. After all, a plea is the quickest and most cost effective way to close the case. So, a flat fee in this case is most likely detrimental to the rights of the client.
So, all in all, a lawyer on a flat fee may work harder, but not better.
Now, the idea of flat fee cases seems to be extending to the realm of BigLaw, the bastion of the billable hour model. Corporations, who traditionally felt that more time spent on their cases provided them with better quality representation, are looking for discounts. Flat fees seem to be the way to go. If BigLaw will charge clients flat fees then the lawyers will have incentive to work more effectively--resulting in potential savings. The future of BigLaw will be changed dramatically. Instead of associates being rewarded for the number of hours they bill--they will be rewarded for working effectively and working less hours. Surely, since lawyers are generally ineffective, the law firms will end up with the short end of the stick when it comes to complex litigation--if they want to retain their stellar reputations. Or, they will go the way of the ambulance chaser. The implications are huge and I can only imagine the future of BigLaw. Will BigLaw become Shitlaw????
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