Alternative Fee Structures in Appellate Practice

D. Todd Smith at the Texas Appellate Law Blog has a nice post on the suitability of alternative fee structures for appellate practice.  I generally concur with his post.  Appeals are far more predictable than the progress of a lawsuit in the trial court, which generally enables an appellate practitioner to estimate the time that will be spent on a case and formulate a fair flat fee.  Smith also addresses contingent fees.

Like Smith, I too was a “big firm” lawyer and enslaved by the concept of the “billable hour” for years.  As a solo, I am far more conscious of every minute I spend on a case.  The freedom that a flat fee allows is quite liberating.  (I still keep timesheets, in the event my client needs to submit evidence of my work to the court.)  The client is happy too, because the fee is known in advance.

Nonetheless, with a flat fee arrangement,  the attorney assumes some risk that the time spent on a case will, at the attorney’s normal hourly rate, be worth far more than the flat fee.  That risk can be mitigated through any number of mechanisms.  For example, the fee agreement can utilize “task billing” —  one fee for reviewing the record and preparing the opening brief, another fee for preparing the reply brief, and another for preparing for and appearing at oral argument, and even for a petition for rehearing, if necessary — while allowing for hourly billing of unanticipated motion activity.  Or the flat fee can be set based not only on the estimated time involved in the representation, but also on the amount of money at stake.  The larger the case, the larger the flat fee, which can allow the attorney more leeway in setting a flat fee that is likely to cover the attorney’s time at something close to his or her normal hourly rate.

I think an appellate lawyer needs to be creative with fee structuring to suit each client.  The last thing a lawyer wants to do is compete on price.  But offering alternatives to the billable hour is, in my opinion, competing on trust and confidence in your ability to handle the case efficiently, not on price.

UPDATE (8/27/07): Welcome to readers of Blawg Review #123, in which this post was featured. Come back again!