How Legal Fees & Billing Works
Traditional legal services offered by most law firms are billed as a function of time, on an hourly basis. For example, 2 hours of legal work at a rate of $250/hour results in a $500 bill. While this is simple and straightforward for the attorney, it is often unpredictable for the client.
This is why HARP LAW offers Flat Fee and Hybrid Fee options whenever it can. We want to take the guesswork out of our billing practices so that clients can make more informed choices about the value being created.
Flat Fee Rate means that services are billed at a set flat-rate-price regardless of the actual time an attorney spends on a matter. For example, if we are hired to prepare a Will, Power of Attorney and Patient Advocate for a flat fee of $1000, that is all you will pay no matter how long it takes us to prepare. While in some cases it might take us 5 hours to consult and prepare these documents, and in other cases it might take us 7 hours, the flat fee rate provides you with certainty that it will cost the same price no matter what.
Most clients prefer flat fee rates because it gives them certainty and clarity on how much to budget. Services we perform regularly with a high level of predictability, as well as those that might involve little to no outside variables can often be provided on a flat fee basis. This might include services such as (A) drafting basic will, power of attorney, and patient advocate documents, (b) business incorporation, or (c) a simple contract review. However, not all matters lend themselves well to flat fee rates.
Hourly Fee Rate simply means that services are billed based on the amount of time spent on the matter. If it takes 1 hour to review a contract and another 30 minutes to make changes, the 1.5 hours on the matter is then billed at the applicable hourly rate.
Services that involve uncertainty and unpredictability, such as negotiations, niche and complex contract drafting, and other matters that are dependent on the cooperation or diligence of an opposing party or client, are generally be billed on an hourly basis. Some forms of advanced estate planning are also billed on an hourly fee rate.
Hybrid Fee Rate is a combination of both flat rate and hourly billing. Meaning, the fee model includes both a flat fee and hourly component. Hybrid billing may include a fixed fee price for services up to a certain threshold or event, and then if necessary, hourly billing thereafter.
For example, a hybrid fee arrangement might include drafting a contract template with up to 2 rounds of client revisions. If the client requests additional revisions beyond the 2 rounds included in the flat fee, the hourly fee will kick in moving forward. The trigger from flat fee to hourly billing could also be the result of other things, such as total time spent on a matter, beginning communications with third parties, or requesting additional services outside the scope of the flat fee arrangement. Of course, the trigger is always determined ahead of time between the client and attorney.