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Charge Hourly, or Grow Your Practice. Your Choice.

Raise your hand if you prefer trading time for money instead of building a real business.

I don’t see any hands.

Most attorneys I’ve spoken with are completely baffled about ditching hourly fees and shifting to flat fees. There are so many misconceptions and misunderstandings about how to be profitable with flat fees.

Here’s the bottom line.

Adopting a flat fee model provides you with more predictability, simplicity, efficiency and profits. You know what an engagement is worth from the moment you accept it. If it costs you a certain amount to acquire a new client, you can easily calculate how much you’ll get out of it.

And guess what? You’ve just built a machine – a real business capable of growing much faster than you ever imagined.

Click here to get access to my free Law Practice Growth Guide that shows you how to grow your law firm predictably and create freedom for yourself.

Obstacles to Switching to Flat Fees

The first obstacle faced by attorneys when making the switch, myself included, is the fear of losing money.

It’s comforting to know that if you spend 10 hours in the office you’ll make a certain amount of money based on an hourly rate. With a flat fee, you’re not sure how many hours something is going to take, so you think that don’t know if you’re going to make less or more. That fear alone paralyzes most attorneys. But, as we’ll see in a moment, the when you do flat fees the right way you know what you’re going to make. And it’s going to be more than you’ll make hourly.

Another obstacle is that flat fees have been associated with low commodity pricing. The classic example is the attorney who offers to handle your divorce for a flat fee of $750.

But there’s a big difference between developing a profitable, flat fee pricing model and using a cheesy, price-based advertising gimmick. The latter does nothing but devalue your service, build a crappy business and cause a lot of aggravation.

To be absolutely, unequivocally, clear – flat fees do not mean cut rates, and do not mean a low-end, volume-based practice. If that’s what’s in your head, you will fail at flat fees. That is, unless your version of success is a low-end practice getting your butt handed to you by LegalZoom.

The Wrong Way to Set Flat Fees

The intrepid few who venture into flat fees typically get it all wrong.

They set their fees by estimating how many hours it would take to complete all tasks. Inevitably, something will go wrong at some point and they feel like they got screwed. Because they were burned, they say flat fees don’t work.

Actually, they screwed themselves.

If you want to make flat fee pricing profitable, you can’t base it on hourly estimates. The whole point of doing flat fees the right way is that your delivery has absolutely nothing to do with hours.

Basic rule: if you’re thinking hours when setting your flat fee, you’re thinking wrong. You’ll get burned. Don’t think hours, think value gap and think portfolio theory.

The Only Exceptions

The only time an hourly fee would ever make sense is when some kind of government entity or agency must approve your fees. For attorneys practicing in bankruptcy and other areas in which courts approve fees, flat fees may not work, mainly because those courts are living in the powdered-wig era and don’t grasp the flat fee concept.

Only in those cases should you use an hourly fee. As for me, I don’t have the stomach for the government telling me how much I can make (I mean come on, they’ll take more than their share on the other end anyway) ... so more power to you if you can take it. But just know that choosing these practice areas will distort the economics of your practice.

In any other case, if you haven’t figured out flat fees or think they don’t work, it’s likely because you haven’t tried or, if you have, you haven’t seen a successful model.

Making Flat Fees Work

After retiring from practice, I ran a workshop called the Flat Fee Formula to take attorneys off the billable hour, and onto flat fees. We had 44 motivated attorneys join out of a pool of many, many more applicants to the event. I chose attorneys from different practice areas and different parts of the country to get a good cross-section of practice areas. Family law, civil litigation, estate planning, corporate transactional, intellectual property, workers compensation, real estate … and yes, even large-scale complex litigation.

Guess what? Armed with a template for how to move to flat fees successfully, they could do it.

We packaged their services. Priced at a premium. And for many of them, they were finally, finally able to market a service entirely different from every other lawyer in their area.

Giving them clarity not only of how to price with flat fees, but even more importantly how to run their practice like a real business. Not the cobbler taking orders in the front then running back to repair shoes. To run their practice like a CEO with a great product. Like a business owner finally proud to talk about who they served, and how they did it.

Those who let go of their limiting billable hour mindset, took the time, and jumped in with both feet got phenomenal results. Candidly, some took longer than others or got further than others because, strange as it may seem, real business progress takes both time and effort.

Now it’s not realistic for me to compress an entire workshop on successful flat fees into this article (Practice Alchemy members, see below on how to get the entire workshop), but in essence it boils down to these steps:

  1. Identify Ideal Clients: Who are ideal, premium-paying clients who value the certainty of flat fees? Identifying these clients, and what drives them, makes your pricing model alone attract clients.
  2. Understand Client Psychology. Analyze the psychological drivers that make clients buy, because you’ll use those to structure your flat fee packaging.
  3. Packaging. Create packages for clients that are clear, compelling, and operationally efficient.
  4. Pick The Right Premium Price. Combine the psychology of how clients buy, with the package to premium price. Engineer (yes, that means don’t pick out of a hat) the right price that guarantees overall profitability higher than your billable hour practice.
  5. Construct Guarantees. How do you get clients to sign? Guarantee your package. If you’re thinking “lawyers can’t make guarantees,” sorry, not true. You can, and it’s a sales supercharger. I’ve written on this elsewhere.
  6. Architect the Close. The usual lawyer dog-and-pony show, or “free consultation” is fatally flawed. Fact is, most lawyers have no idea how to sell. Less so, when it comes to a flat fee engagement. Effective selling is templated so it’s low-stress, high-win – even with an unusual, premium flat-fee service.

Now, if you haven’t thought through every one of these steps, that’s why your flat fee process hasn’t been nearly as successful as theirs. Every one necessary. Every one to be not just done, but done carefully.

I’m sure there are some lawyers still reading this who think it can’t be done. Think they’re different. “Well, that can’t work in my practice because [insert excuse].” They’re wrong. Period.

I proved with my practice, with firms across practice areas and across the country, that it can work. Stop the billable hour insanity. People thought bloodletting was a good idea too. That was then. Not now.

If you think it can’t work, it’s because you haven’t seen it. If you’ve tried and it didn’t work, it’s because you didn’t have the formula. And, frankly, I’m not about to spend time converting wagon-wheel era naysayers when there are so many great lawyers ready for a more profitable, efficient, lower-stress, self-managing practice. A real business, with real equity.

The naysayers can settle for the average lawyer’s fate, trading time for money for the rest of their career. Have fun.

For you – the ambitious ones, the ones engaged in creating a better business, the ones creating a different future for yourselves and your families - you have the steps. Yes, there’s detail. Yes, it will take experimentation. And yes, you will stumble.

But in the end, your practice will be something far, far different. In all the right ways.


Note to Practice Alchemy members: The Flat Fee Formula workshop materials are included in your membership. A complete recording of the Flat Fee Formula workshop, including of all the coaching calls, and done-for-you worksheets, engagement letters, website text, and other resources are in the members area.



Raj Jha