Sunday, April 26, 2009

Interesting Fee Agreement

I saw a post on one of the mail lists I follow regarding an interesting fee arrangement for criminal cases. The attorney reports that his fee agreement only covers pre-trial matters and has a clause that provides that any case that goes to trial will carry an additional fee to be negotiated later.

I can see the issue he is trying to address - the situation where you charge $x and then enter a guilty plea very early in the process so that you don't have enough hours in the case to justify $x. But I would worry that, since the client knows that he will have to pay more if he maintains a not guilty plea and goes to trial he will feel great pressure to take a deal even if it would be better for him to go to trial.

It is tempting to adopt the incremental fee approach and I am going to look closely at the issue. If anyone has any thoughts on the topic I would love to hear them.



Starving Solo said...

How common are flat fees in criminal matters generally? The incremental approach, in the abstract, would not appear to put any more pressure on a criminal case defendant than would an hourly arrangement. In either case, the client is facing increased fees if they go to trial. It's just that the incremental fee agreement makes this explicit, which is why I think it gives you the jitters.

From the lawyer's perspective, it's also the same. The lawyer could be accused in either case of advising a client to go to trial just to earn more fees.

I don't do criminal trial work, but in my civil cases, I always tell my clients who are considering a settlement to think carefully about whether they want to continue paying me money. "I'm happy to continue the representation and to continue earning fees," I tell them, "but does it make sense for you to keep paying me?"

Tim Hatton said...

Flat fees are often used in criminal matters, at least in my experience. "Get the money up front" is Rule 1 of criminal defense.

Now, I suppose you're right if you're billing by the hour. The longer the case rolls on the more fees are generated. The client would always feel pressured to settle if the defense was getting too expensive.

But the arrangement that I heard about was a flat fee for everything, excluding a trial. If there was a trial the attorney negotiated a new fee with the client to cover that phase of the case.

Now, I suppose it's not much different that bankruptcy work. There, attorneys charge a flat fee that covers a specified set of services (which must be disclosed to the client). If additional services are required, the attorney receives additional compensation (and the client must approve the additional services).

Still, you don't go to jail or have a criminal record if you elect to settle a civil case or don't defend an adversary in bankruptcy. I would hate to put people under additional pressure to make a deal, given the consequences, than they already feel.