Why Fixed-fee billing may not be the answer it claims to be

Fixed-fee billing involves the offer of defined legal services for a fixed fee amount.

Some law firms promote offering fixed-fee billing for all types of litigation work, claiming it promotes certainty, efficiency, and savings to the client. But such claims should be treated with a strong measure of caution, if not distrust.

Here's why.
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A fixed-fee billing model is most applicable where input (internal resource cost) and output (scope of work) is predictable in advance, thereby allowing a fixed price to determined and offered. The solicitor's retainer then requires the scope of work and cost to be fixed by agreement prior to work commencing.

Fixed-fee billing requires a fixed scope of work as its basis, which by its nature can be incompatible with the variation and changes in the work required as new information in contested legal disputes becomes available, and the dispute evolves as it progresses.

So while fixed-fee billing may be an appropriate option for standardised process-driven legal work where "one size fits all", it often lacks the flexibility necessary to be responsive to dynamically opposed dispute litigation.

A fixed-fee billing model requires the standardisation of a lawyer's work. In litigation, this usually entails repeating a predetermined internal process using standardised documents which meet the requirements imposed by court or tribunal rules.

The efficiencies gained from the standardisation of internal processes and documents can be significant and very beneficial.
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This reliance focus becomes that of performing the process well (a "process-driven approach"), rather than crafting a solution that meets the client's goals ("outcome-driven approach"). This may lock the client into a course of action that looks reasonable and justifiable on paper, but which "railroads" the client into a suboptimal outcome.
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Fixed-fee billing requires a fixed scope of work as its basis, which by its nature can be incompatible with the variation and changes in the work required as contested legal disputes progress. So while fixed-fee billing may be an appropriate option for standardised process-driven legal work where "one size fits all", it often lacks the flexibility necessary to be responsive to dynamically opposed dispute litigation.

Some firms nevertheless advocate fixed fee billing for litigation, and seek to overcome some of its limitations by applying it on a "staged" basis, with fixed fee quotes being limited to progressive sections of the dispute resolution process as the dispute unfolds.

However, while claiming that this provides clients greater "certainty", attention is rarely drawn to issues of lack of transparency and accountability that can accompany staged fixed-fee charging when it comes to unpredictable changes to the scope of work. In this regard we note:

• Efficiency is important and can be greatly assisted through standardisation of processes and documents. This can work especially well for heavily process-driven litigation (provided that the savings made are passed onto the client - but they usually aren't).
  
  To be properly functional, fixed fee billing requires standardisation of a lawyer's work, which usually depends on providing services that are limited to a fixed internal process using a predefined series of standardised documents to meet the basic requirements of an external legal process (such as a court proceeding). The focus becomes that of performing the process well (a "process-driven approach"), rather than crafting a solution that meets the client's goals ("outcome-driven approach"). This may lock the client into a course of action that looks reasonable and justifiable on paper, but which "railroads" the client into a suboptimal outcome.
• Under fixed-fee arrangements, firms are not required to disclose how much time was spent on an item of work. This allows old work to be recycled without passing on the savings of reduced time spent to clients. Under a time-costed model, the time spent must be disclosed upon request. Law Force does this as a matter of course.
• To ensure profitability across all jobs, most law firms add an undisclosed premium to the fixed fee amount as a contingency in case a particular job takes more work than expected. Under a time-costed model, the fee rate must be disclosed - or it can't be charged.
• Depending on the firm's terms of trading, the firm may be able to increase the fees payable for work overall in any event, by either treating unanticipated variations to the work required as an extra "stage" to be paid for, or simply adding it into the fixed fee price of the next stage.

Law Force's billing practices allows it to delivers flexible, responsive outcomes in dynamic opposed legal disputes in accordance with its client's objectives.