I don’t know enough about the practice of law to be able to be able to comment on whether flat fees are better than hourly billing, but the comparison did lead me to think of another point: if the flat fee arrangement is a form of insurance, then it means that lawyers who charge a flat fee needs to add a “risk premium” in order to justify taking a case on a flat fee. This may not always be to the client’s benefit. In particular, wealthy clients who are able to “self-insure” may be better off paying an hourly fee to avoid the risk premium, and in effect bear the cost of risk themselves.

Because the cost of risk is inversely proportional to wealth (i.e., the risk premium needed to justify taking on a risk of given magnitude), then it suggests that there may be a simple answer to the question of when a lawyer should charge a flat fee: if the client is wealthier than the firm, charge hourly, otherwise, charge a flat fee. All of this is assuming, of course, that the flat fee is solely a risk management device.

The issue raised by Norm elevated one concern over others, and likely would have been ruinous for many lawyers who might be persuaded that it was the way to go. The virtue of honest hourly billing, assuming such a thing exists, is trumped in criminal defense by the unfortunate likelihood of non-payment, whether intentional or a matter of circumstance. No lawyer can survive for long if clients don’t pay the fee, and few CDLs have a clientele inclined and capable of paying monthly bills, or willing to retain a lawyer without some idea of how much the entire legal feel will eventually be.

These are the ordinary issues that a CDL faces in private practice. That they are discussed from time to time is merely to help those new to the discussion (and the practice) like Jamison understand the issues at play and make a reasoned decision.