Another Wrinkle in the Fixed Fee Billing Discussion

As part of the continuing discussion on fees (see my previous post here), one lawyer asks:

What do you say to the “fixed fee” client when you tell the client the additional fee for the motion will be “X” dollars, and they balk?

Here's my response:

You say the same thing you say to an hourly client when they balk at the fee – you remind them of the goals that you discussed at the beginning of the engagement, you talk about why these services are necessary to reach those goals, or why you can’t accomplish those goals without taking this action. You tell them that in order to represent them effectively, this needs to be done. You remind them that when you originally discussed the matter, you also discussed the possibility that you might need to make motions, etc. You explain the value of the service you’re providing.

The same lawyer also asks,

Might you be in a worse position using a fixed fee than you would be if you were billing hourly? Doesn't the fixed fee system require you to choose between your obligation to what's right for the client and your own interest in getting paid for what you do?

In the hourly context, at least I can use an 'evergreen' retainer, which would give me the opportunity to do the work, protect the client’s interests and seek to be relieved as counsel later - but I'd still get paid because I'd already have the retainer money.

My response:

Regardless of how you bill, any time a client doesn’t want to pay for services you think you need to perform to protect their interests, you’re going to have the same dilemma.You’re obviously in a much better position with an hourly client if you use an ‘evergreen’ retainer than you are if you’re getting paid after the fact. But be careful - an evergreen retainer doesn't give you carte blanche to perform work the client objects to and take your fee from the client’s trust account for that work, knowing that the client has specifically objected to the work and objected to paying for it. That presents an ethical dilemma.

The fact of the matter is that these kinds of fee disputes with clients should be pretty rare if you have the right conversations with clients in the beginning of the engagement, if you’re communicating well with your clients and if you’re taking on the right clients. Even if these issues arise, you’d still have the option of trying to withdraw.

If a client doesn’t agree to your chosen course of action, in most cases the work that they disagree about is probably not going to be something that must be done immediately, which should give you the opportunity to move for withdrawal in the interim. There may be occasions when there are time limits involved and you might have to do the work while the motion is pending, or you might get a judge that refuses to let you out, but those problems could arise whether you're billing hourly or on a fixed fee.