Why You Might Want to Consider Charging a Flat Fee

Too many lawyers have the misconception that flat fees are only appropriate for small, simple matters such as basic wills and trusts or entity formation. There is, however, a much broader range of work where flat fees are appropriate. Flat fees should be considered when one of the following factors is present:


  1. The value you provide in expertise is greater than the time you’ll spend. If you’ve been in your practice area for 10+ years, you likely have a level of expertise that means you don’t have to spend as much time researching as you once did. You know the issues your clients face, and you can apply your knowledge quickly. In a case like this, charging by the hour isn’t an effective way to value your work. If you want to avoid charging less and less for more and more expertise, consider a flat fee.


  1. Your work spans a short period of time. When a lawyer provides a lot of value quickly, it can be cumbersome to charge the client on an hourly basis and then bill them monthly. Doing so runs the risk that you’ll have to collect from the client after completing your work – once you’ve lost a lot of leverage. In this scenario, using a flat fee can serve to avoid collections issues.


When both factors are present, it is more likely that a flat fee can be substantial. It is not uncommon for appellate lawyers to ask clients to pre-pay most of the fee for a brief that needs to be drafted in 30-45 days, and that can easily run into the high five figures or beyond. Likewise, corporate internal investigations, especially involving white collar criminal matters, often command significant flat fees.


Charging and collecting a flat fee does raise some specific accounting issues, so be sure to comply with your jurisdiction’s rules. For instance, Rule 1.15(b) of the State Bar of California’s Rules of Professional Conduct, which was approved in November 2018, addresses when a lawyer charging a flat fee may withdraw money from their client trust account.


If you have only been charging hourly rates, it may be time to add flat fees to your repertoire.

Law Firm Cost Cutting Led to Greater Profitability in 2020, But That’s Not a Sustainable Business Development Strategy

Thomson Reuters’ Peer Monitor Index, issued earlier this month, draws attention to the root of the strong profit growth with which law firms ended a turbulent year. With some practice areas, including corporate and tax work (as well as bankruptcy) experiencing around 4% growth or more, reduced demand in areas like litigation was partially offset. But those practice areas that continued to thrive despite or because of the downturn did not account for the rise in profits. The determining factor was decreased expenses.

In response to the rise of the pandemic, firms were quick to reduce staff sizes, especially when a work-from-home model made it more difficult for administrative personnel to communicate and coordinate with attorneys. Going into the second half of 2020, lawyers began to be hit by layoffs as well. Thomson Reuters notes a 1.6% reduction in attorneys, mostly at the associate level, which is comparable to lawyer job loss during the great recession.

Without conference fees, travel expenses, and other costs associated with entertaining clients, it’s unsurprising that firms could easily create a short-term dip in expenses. Overhead costs related to office space, on the other hand, might decrease on a permanent basis as firms choose to adopt partial-remote models that allow for fewer lawyers in the office at any given time.

As demand grows, firms will rebuild their ranks, and the bottom line is that cutting costs can only go so far toward increasing profits. For law firms and individual attorneys determined to not just weather the storm but continue expanding, the real triumphs will come from building their books of business. Reducing expenses may have resulted in favorable profits per equity partner last year, but it won’t carry firms forward. Each firm’s ability to bring in new clients, grow in additional practice areas and specializations, and maintain its position in the market will be the truer test.

5 Ways This Election Could Affect Law Firms

The dust has yet to settle on the election, but it’s not too early to identify specific impacts the results could have on law firms and the legal services industry. Below are five ways this election could affect law firms.


  1. A win for Biden-Harris is also a big win for large law firms and their clients. With BigLaw and its individual attorneys fundraising heavily on Biden’s behalf and Harris’ husband Doug Emhoff a partner, until recently, in DLA Piper’s L.A. office, the ticket has strong ties to the industry. The transition team for the DOJ is populated with numerous lawyers from Am Law 200 firms.


  1. Regulatory changes will mean more work in certain practice areas. In specific areas, such as environmental protections and foreign trade, the Biden administration is likely to make newsworthy changes and Trump-policy reversals. These shifts will benefit lawyers who advise clients in these areas. Ultimately, the broader economic trends will have much farther-reaching ramifications than these particular laws or regulations.


  1. For most lawyers, the impact of this election will be tied mainly to the economy. How the new administration uses executive orders or issues regulations in relation to COVID-19 will affect solo practice and small firm clients. Meanwhile, firms that serve larger corporations may continue to dodge the pandemic’s devastation.


  1. If the federal government is divided along party lines, more action will take place at the state level.Especially in California, law firms will benefit in the short term with respect to compliance issues. But regulatory changes may have adverse effects as well, negatively impacting the economy and causing businesses and individuals to leave the state. Down the line, this is likely to hurt the legal services industry in the region.


  1. Smaller practices will continue to struggle. With divided outcomes, increasing market share and consolidating into bigger firms will still be effective strategies. Practicing solo, in contrast, will get even harder.


What election-related changes to the world of law do you foresee?

The Right Way to Communicate High Hourly Rates

When you charge higher hourly rates than most of your competitors, it’s important to understand how you can effectively justify this number to prospective clients.

The first rule of quoting fees to potential clients is not to mention a specific hourly rate until you and the client have discussed what is at stake for them. Your hourly rate might be fifty times the minimum wage, which could seem outrageous to a prospective client in the framework of money for time spent. For this reason, you need to discuss the context of the representation. If you charge $600/hour – or the equivalent of $10 per minute – that could sound unreasonable unless the client has a $10 million business deal or potential jail time on the line.

Secondly, reframe the discussion to focus on total cost and costs relative to the client’s exposure or potential upside. Lawyers have been conditioned to discuss their fees in terms of hourly rates, but this is counterproductive when your hourly rates are higher than your competitors’. Instead, educate the prospective client about their total cost, cost per phase of the representation, or cost per month. Any of these options will make a lot more sense to a client than the hourly rate alone. Discussing fees this way will also allow you to showcase that a higher hourly rate doesn’t necessarily translate to a higher overall cost.

Third, and perhaps most importantly, emphasize your expertise and what makes you well positioned to solve the client’s problem. When lawyers focus too much on their hourly rates, it can have the unintended consequence of reinforcing the idea in the client’s mind that competing lawyers are essentially the same. If the client feels that they are choosing between apples, the lower-priced apple is likely to win out. That is why highlighting your specific expertise, in addition to focusing on total costs, is so important when your hourly rates are higher.

A Better Way to Generate New Client Leads: The Zoom Roundtable

In the early months of the pandemic, many lawyers were especially attentive to their key clients and referral sources, recognizing the importance of checking in. Firms reassured their clients that business would continue on without interruption, emails were exchanged to offer support to anyone who might need it, and Zoom calls were scheduled to connect in virtual happy hours.

There’s a natural tendency to lose this momentum over time, so the challenge becomes finding sustainable practices for maintaining those professional relationships as the risks of in-person meetings remain high.

When the demands of personal life have risen for many, especially those with school-aged children, and Zoom fatigue is setting in, it is increasingly important to find a way to continue connecting with potential clients and referral sources.

Fortunately, there is an effective alternative. Rather than dedicate an enormous amount of time to one-on-one calls, you can strategically select anywhere from three to eight people to catch up with at once. In addition to majorly cutting down on the burden these networking activities have on your schedule, this will allow you to offer great business development opportunities to your contacts.

Seven Tips for Running a Successful Zoom Roundtable

  1. Your selection of invitees is the most important aspect of this process, so make sure you are giving plenty of thought to its business purpose for your work and how you can create value for the others involved.
  2. Choose each group of people (start with three or four people) so that it makes sense for them to meet one another. For instance, you could organize a meeting around a particular clientele served by each attendee in a different way.
  3. Consider having a co-host to share your networking duties.
  4. As the host, you should send out information a day or two ahead that gives some background on who is going to be there.
  5. Have attendees bring their calendars so you can schedule the next roundtable at the end of the call.
  6. Imagine that lots of other people will be hosting similar remote get-togethers, so limit the call to an hour or so.
  7. Ask your first group whom they know that would fit well and consider making it a recurring event with rotating combinations of people. You could have, say, twenty members with eight people meeting at a given time.

As we continue settling into this prolonged period of remote social life, these small groups represent one of the most efficient and effective paths under the present circumstances to generate leads and attract new clients.

The Plight of Law Firm Marketing Departments

We’ve begun to see a disturbing trend in professional services as organizations respond to the economic impact of the coronavirus. Faced with an uncertain future and looking to cut costs wherever possible, some firms are trimming their marketing departments as a way to reduce expenses.

We are aware of at least one Am Law 200 firm that has frozen business development spending, including certain reimbursements for partners. Notably, some firms are going as far as to lay off or furlough their marketing teams, including senior officers.

This is a curious move. Billion-dollar entities should be able to afford to keep senior marketing officers on the payroll for a few months. Moreover, C-level executives have expertise and institutional knowledge that should make them valuable in a crisis and hard to replace.

Perhaps certain law firm managing partners are showing just how little they value their most senior administrative managers. Large law firms have historically favored paying lawyers and resisted paying top dollar to senior administrative managers. In a crisis, firms might be reverting back to this tendency, and the marketing department is bearing the brunt of administrative cost-cutting efforts. As hiring needs decline, it is possible that HR departments will be next to see cutbacks.

In many ways, it’s harder to lose the head of marketing (which is happening now) than to fire your 29th-most productive partner. That is why all of these reductions in law firm administrative management should serve as a warning to underperforming attorneys.  Given what large firms have demonstrated recently, no one should be shocked when firms go after senior lawyers, especially high-earning service partners in disfavored practice areas.

Marketing: Professionals Must Define Needs

If you’re waiting for potential clients to voice a need right now, you may be waiting a while. And they’ll be losing out in the meantime.

Even under the best of circumstances, clients are often shortsighted or mistaken about what is in their self-interest. As a professional, you are likely more attuned to the consequences of inaction than your clients are. You recognize that, in this moment when many are especially reluctant to spend money, addressing issues sooner rather than later will be well worth the upfront costs. All the unknowns will make a lot of business owners want to hit the pause button when it’s more important than ever to deal with certain problems.

During a crisis, it’s crucial for business development that professionals define the needs they serve. Landlords without rent coming in probably aren’t looking to hire a law firm even though a workout could save them from foreclosure. Likewise, retailers seeing a huge drop in sales probably aren’t looking to pay their employment lawyer. It’s up to the lawyer to explain the benefits of an updated employment handbook and new training processes, as well as the costs associated with non-compliance when it comes to the new rules around paid sick leave.

You, as the provider of such preventative measures and other valuable solutions, should take it upon yourself to anticipate these needs and articulate them in your messaging. The people you’re speaking to will likely be feeling the instinct to crawl into their shells, and it’s your job to clearly explain why that isn’t in their best interest.

Describe the problem these clients can expect down the line if they don’t take certain steps now. Then, have something specific and deliverable to offer that will solve this for your audience before it has the chance to become a bigger issue.

While you’re very much aware of the ways you can provide critical support to your clients right now, they may not be. Make these points clear to give them the best chance to weather this crisis and yourself the best chance to help.

This Is a Time for Humility

The decisions made by human beings are subject to numerous logical flaws and idiosyncrasies. Unfortunately, COVID-19 and our individual and collective responses to it require us to make prudent decisions despite our flawed reasoning.

There is a lot of research showing that we tend to underestimate risks associated with low-probability but catastrophic events. For example, humans can’t easily distinguish between bad outcomes that are likely to happen one in twenty times and those that take place one in two hundred, two thousand, or two million. This flaw in our thinking is linked to an even more general and systematic one – overconfidence. Whether it’s business owners estimating the chances of their business surviving five years or experts assessing the chance of a rare event, we tend to overestimate what we know.  And this can be a particularly severe problem in cultures that encourage positive thinking and ostracize those who are deemed to be “negative” people.

As a business owner or manager, some anxiety under the present circumstances is a sign of intelligence. But anxiety without some analysis is not useful. So, where should the analysis of your business start?

In our experience consulting with law firms and other professional services companies, two areas of risk tend to get overlooked during a crisis. The first relates to low probability events involving cash flow. For example, business owners tend to underestimate the chances that typically reliable clients will stop paying. We understandably focus on those clients who have a history of paying us inconsistently or who have said something to alert us to the threat of non-payment. That’s why businesses tend to get blindsided when a dependable client suddenly changes course. You should, therefore, run revenue scenarios that include non-payment by some of your best clients. That will help you decide what to do before such an event takes place and how to react once it does.

The second area of balky risk assessment involves relationship management. In a crisis, we tend to shrink our focus to those who are closest to us, and that is true of both personal and business relationships. But weaker relationships have been found to be especially helpful in creating new opportunities and finding new clients. Excessive reliance on your strongest relationships often results in you knowing the same people. And when you know and rely on a relatively narrow circle of people, you are at risk of something happening to a key relationship. That is why you should evaluate your systems and identify key relationships and alternative ways of receiving certain services. For example, if you are entirely dependent on a single person to provide your IT support, consider what will happen if that person falls ill or otherwise becomes unavailable to you.

The list of human logical flaws is long and varied. Papers like Eliezer Yudkowsky’s “Cognitive Biases Potentially Affecting Judgment of Global Risks” have done a good job of cataloging these. But even without delving into the academic literature, you can help your business and the people you care about by being aware that our ability to assess risks is impaired during a pandemic and we should be wary of overconfidence.

This is a time for humility.

COVID-19 Presents Lobbying Opportunities for Law Firms

The rapid expansion of law likely to follow the COVID-19 crisis presents a unique opportunity for smaller firms and solo practitioners to get involved in lobbying efforts. While larger and more established firms have a head start when it comes to decades-old regulations, the establishment of new legislative schemes provides a chance for even footing.

Historically, crises have led to the development of new laws in response to unforeseen issues and vulnerabilities. Litigators, in particular, are in strong positions to expand their advocacy in such times because they’re able to represent clients in these burgeoning areas of law before local, state, and federal bodies. Other attorneys may find that their expertise feeds into one or more of the topics up for debate, and they could use that knowledge in lobbying efforts.

With the sudden surge in unemployment, those who specialize in employment law will be able to jump onto the ground floor of new policy and precedent-setting litigation.

As many renters feel the effects of an economic downturn, real estate lawyers might find ways to weigh in on landlord-tenant matters. The implications of this pandemic will touch a huge number of industries, creating similar lobbying and advocacy opportunities across many practice areas.

As laws are formed following this crisis, lawyers should be looking at how they can utilize their existing specialties and expand their expertise to include these new markets. No one will be an authority initially when it comes to just-developed regulations, so one lawyer has as great a chance as any other to adopt an additional, related specialty. Operating at the forefront of legal change allows a practitioner to establish herself as a trusted source on a given subject when there may not be many. There’s an enormous benefit to being among the first in line.

Succession Planning in the Age of Coronavirus

The increased importance of succession planning that preceded the onset of coronavirus may only ramp up as a result of the pandemic. The difficulties of running a law firm or other professional services company remotely may be the straw that breaks the camel’s back for some practitioners nearing retirement. And as many practice areas experience declines in demand, firm management may need to consider transitioning or acquiring new ones to pick up the slack.

With stiffening competition, we’ve already seen an onslaught of Big Law mergers over the past several years. At the same time, the attorney population has continued to age, resulting in a disproportionate number of practicing lawyers over the age of fifty. Recent losses in the stock market will undoubtedly motivate some more senior attorneys to push back their retirement date. But, as we’ve witnessed in just these first few weeks, the uncertainty of COVID-19 is leading others to expedite their decision to retire now.

It’s more important than ever to consider succession planning options in your business development strategy. In the coming months, there’s a very real likelihood for many firms that current clients will generate less revenue than they did a month or two ago. While some assistance is available to supplement these gaps and maintain payroll, the reality is that you will need to continue generating new business as the current situation unfolds. While adding new clients should be part of your plan, succession planning, mergers, and acquisitions present especially powerful opportunities to grow during this crisis.

Free Webinar on April 14th: How to Grow During a Crisis Through Succession Planning and M&A

We will be addressing this topic in depth during our next webinar on Tuesday, April 14th at 2 p.m. PST (4 CST/5 EST).

To join us for this no-cost Zoom webinar, please register using the link below:

We look forward to sharing ideas and best practices for this crucial aspect of business development in a crisis.