Can Matrimonial Lawyer in New York Use Alternative Billing and Fixed Fees?

During a recent speaking engagement discussing alternative billing and using fixed fees rather than billing by the hour, a spirited discussion sprang up about the ability of matrimonial lawyers in New York to use fixed fees.

As I’ve written before, sometimes it’s difficult for lawyers to use fixed fees in their practices if the courts will be reviewing their retainer agreements or their fee structure and basing a determination of fees on the hourly rate and length of time invested, as is sometimes the case when a fee dispute arises, when fee-shifting applies or when the courts have the ability to set the lawyer’s fee. But it occurred to me — are the courts basing their decisions on billable hours because billable hours is the only thing they can base it on, given the circumstances?

In other words, if the lawyers involved in the case bill their clients using an hourly billing system, can the court base a fee determination on anything other than the reasonableness of the hours expended and the rate charged? Do we really know for sure that the courts would reject fixed fee arrangements if they were presented properly to the court and fully explained in the retainer agreement?

As I’ve written in the past, the Model Rules cite a number of factors to be considered when determining reasonableness of attorneys’ fees. Included among those factors are the time and labor required. But those are certainly not the ONLY factors.

In New York 22 NYCRR 1400 regulates fees in matrimonial actions.The New York rules require matrimonial lawyers to provide clients with a written retainer agreement which must be written in plain language and include the nature of the relationship and the details of the fee arrangement. The client is entitled to request that the lawyer clarify any of the terms of the retainer agreement in writing.

Matrimonial clients are not required to enter into a fee arrangement that is contingent on the securing of a divorce or on the amount of money or property that may be obtained.

Matrimonial lawyers may not request a retainer fee that is nonrefundable. In other words, if the lawyer withdraws or is discharged, they are entitled to be paid for work performed and may not automatically keep the entire amount of the retainer.

It does not appear to me that any of the rules prohibit matrimonial lawyers in New York State from entering into fixed fee arrangements with clients, or from using staged or other alternative billing methods. In fact, the rules even state that a New York matrimonial attorney may enter into a minimum fee arrangement that provides for the payment of a specific amount below which the fee will not fall based upon the handling of the case to its conclusion.

Indeed the rules would seem to favor fixed fee arrangements and the use of supplemental services agreements, as the rules state that, after the attorney has had a reasonable opportunity to investigate the case, the client is entitled to be given an estimate of approximate future costs of the case, which estimate shall be made in good faith but may be subject to change due to facts and circumstances affecting the case.

If the scope of the work is outlined well and the attorney follows the other rules, perhaps it isn’t as impossible as you may think.