While Performing a public service, remember that you need to serve not only your clients, but your own purposes as well…
by R. Jason Huf — Principal, JASON HUF INTERNATIONAL, pc
Stephen Furnari, a neighbor, colleague and fellow transactional practitioner, was bold enough to initiate a public discussion on why attorneys should take action, after exhausting remedial measures, when clients refuse to pay for spurious reasons. I could not agree more, and further assert that both the clients and their professional representatives are better off when, from the very beginning, the structure of the engagement mitigates the possibility of billing disputes down the road.
At the end of last year, I was invited to insert my voice into the discussion with two articles on the changing economics of lawyering and innovative billing models. Following that, I was asked to elaborate on situations wherein a monthly fee arrangement could be successfully offered at the beginning of an attorney-client relationship.
Monthly flat fees are tricky.
If you have a flat monthly price, as work ebbs and flows, you will overbill the client one month, and get clobbered the next. While monthly billing cycles may “even out” over the course of a given year, they may not either. One way of avoiding this is making sure the agreement is not “all-inclusive”, listing which services are included and, perhaps more importantly, which are not.
This can help to generate greater predictability with the work flow, which helps with determining a monthly fee that is more likely to be reasonable for all concerned. However, there is a significant downside: Work occasionally falls outside of the agreement. The more this happens, the more likely that a client may lose faith in the value of the arrangement altogether.
Generally speaking, these arrangements are more successful when entered into after the attorney – client relationship is already well-established – they know each other, and the attorney has a more complete understanding of the client’s needs, including work flow and capabilities, including its realistic budget for legal services. Further, the client is already aware of the value provided to it by its service provider. And, believe it or not, most attorneys actually enjoy giving their best clients something of a break – this gives them a chance to do so.
One example of when such an arrangement is offered from the jump (because it has to be) is when my law firm bids on contracts for Town Attorney in the State of New Jersey. My firm offers an “Annual Flat Fee” arrangement, paid monthly, that provides for reliable budgeting while preventing billing abuse. At this point, it may be helpful if I refer you to a quick note on my own website about a proposed change to New Jersey law concerning the retaining of attorneys by public entities.
Be Certain about what the client needs – and what you need
Understanding bills paid by the particular governmental entity in previous years, as well as studying the issues a community has before it, is critical. When you submit a bid, you must spell out the proposed fee. Try to be as accurate as possible, take a small haircut and, while in discussion with the relevant board members, express a genuine willingness to do minor things not necessarily included in the agreement gratis for the sake of good will (after all, you are seeking to perform a public service).
I make clear what is (and what is not) included in the flat fee. I am specific about what I would farm out to another firm, and strive to reach mutual clarity on the process for selecting such an outside firm. For instance, Affordable Housing (COHA) litigation is always farmed out. And, when I say “extraordinary expenses” are not included in the flat fee, I list examples of those AND define certain terms, even going so far as to say how many pages constitutes “heavy copying” and giving the public entity the option of having such copying performed on their own facilities.
It is impossible to predict the entirety of a public entity’s legal budget with absolute accuracy (at some point, someone is going to slip, fall and sue the Township), but a community can control its transactional legal costs if it contracts with an Attorney who is willing to invest a considerable amount of work in determining pricing before bidding on the contract. What happens when the Town Fathers take your painstakingly crafted proposal and just hand it to a “friend of a friend” who then underbids you by US$ 20,000? Well, in New Jersey, that particular pitfall can’t always be avoided…
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R. Jason Huf, Principal at JASON HUF INTERNATIONAL, pc, is a New York-based transactional business attorney with offices in NYC and Jeddah, KSA. Mr. Huf is admitted to practice law in New York, Pennsylvania and New Jersey, and focuses on commercial, corporate, banking and energy law, with years of experience working in Middle Eastern legal systems. He also has interests in alternative education solutions, contractual matters for certain classes of individuals and trusts and estates law. Prior to becoming an attorney, Mr. Huf served as Fire Commissioner for his hometown of Mount Holly, NJ.
For more about Mr. Huf and his practice, please visit www.huflaw.com
