Legal Fees

Who’s Zooming Who?

Long ago, when it came to billing, lawyers addressed precedents in one of two ways:

  1. Some lawyers saw a precedent as their intellectual property which they should charge for in addition to billing for the time that they spent tailoring it for a specific client.  So, if I had a great precedent for a confidentiality agreement that I could tailor for a given situation in 30 minutes, I might attach a value of $300.00 to the precedent and then add 30 minutes of time at (say) $600.00 per hour for a fee of $600.00. (Whether I disclosed that to the client or just told the client the hourly rate and put in an entry for $300 as if I had spent an additional half hour drafting is another story.)
  2. Other lawyers believed that they were expected to bring the generic document to the party and would only charge the time spent tailoring it for the client. In the above example, the fee would be $300.00.

Over time the second approach started to dominate. For example, I had a partner who practiced commercial leasing. Being very well organized and technologically savvy, he created great systems for producing commercial leases efficiently. Years ago when he was marketing for new landlord clients, he would charge $6,000 to provide the standard form lease plus the value of the time that he spent customizing it for the client. Then he would handle all of the lease transactions at his normal hourly rate.  That worked out well for a while.  But, alas, all good things come to an end, and eventually there came a time when the landlords let him know that if he wanted to be hired to do the individual lease transactions, he was expected to provide a form of lease without charge. After all, our competitors were doing that. So we did also.

As precedents became easier to come by because of the electronic exchange of documents and the availability of documents from commercial providers, this second approach became even more common.

I got to thinking about all of this because I saw an advertisement today from a law firm advertising that for a fixed fee of $1,000, they would provide a generic policy that complies with the new Ontario legislation on the right to disconnect from work, a checklist to help clients remain compliant and to determine how they might wish to tailor the policy for their own requirements, and a $500.00 credit towards their services to tailor the policy.

It seems to me that while talking “fixed fee,” what they were really doing is going back to the idea of charging for their precedents.  Here is how I figure:

  1. Assume an hourly rate of $500 and 3 hours of legal work to complete the project.
  2. With their ‘fixed fee’ deal, the cost would be $1,000 +$1,500 – $500, or $2,000.
  3. If they threw in the precedent without charge and did not offer the $500 credit, the cost would be $1,500. 

‘Fixed Fee” is a great buzzword, but it means different things to different people. Proceed with caution.

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