POSTED: Monday, September 7th, 2009 at 1:00 am

BY: dmc-admin

Attorneys in Wisconsin are not ready to declare the billable hour dead just yet. But several midsize firms are preparing for, and in some cases embracing, alternative fee agreements.

That includes a flat fee for service, an option which more clients are asking for during the ongoing recession.

Axley Brynelson managing partner John C. Mitby said the firm has “tested” the billing option in its estate planning practice, offering newly married couples a fixed rate for wills.

“We gave a flat fee for estate planning of not more than $300. We’re thinking it was a good place to start,” Mitby said.

The firm recently expanded the option to include transactional business work, including the preparation of LLC documents and IRS forms, although not at the $300 rate.

Mitby said the firm has seen about a 15 percent increase in requests for flat fees as a billing option compared to a traditional hourly rate.

“I would say other firms in the area do the same thing, but I don’t know if they have been as aggressive,” he said.

Bruce D. Huibregtse, managing partner at Stafford Rosenbaum LLP in Madison, said the firm has fielded calls from clients asking for more cost certainty in their billing.

For the most part, Huibregtse said the firm has been open to the concept of flat fees, especially in municipal law matters, which tend to be routine, and allow attorneys to quote clients a set rate.

“We’re advocating it to some degree,” he said. “[But] it certainly doesn’t lend itself to litigation where you can’t control what the other party does in terms of discovery.”

At Ruder Ware in Wausau, managing partner Lon E. Roberts formed a committee to research the benefits and drawbacks of alternative fee agreements. The committee is expected to issue a report to shareholders in September.

He said at this point the firm has only received a handful of calls from clients asking about flat fees, but he wants to take a “proactive” approach if the trend continues.

“I would say it has not arrived yet, but it’s definitely on our radar,” he said. “If it does get here, we don’t want to be caught flat-footed.”

‘Value billing’ increasing

According to a 2008 survey conducted by the State Bar of Wisconsin, more than 75 percent of respondents said they used the standard hourly rate as a guide for calculating fees.

At the time, only 16 percent said they offered “value billing” as a payment option for clients.

But national legal consultant Alan C. Olson suggested that number has increased in the last year.

Olson is a principal with Altman Weil Inc., and works out of the firm’s Midwest office in Milwaukee. He said that in his experience working with clients, interest in alternative fee agreements has “increased substantially.”

“We counsel our clients not to market primarily based on price,” he said. “However, structuring a fee arrangement and relationship with a client using alternative fee agreements can [create] a marketing and competitive advantage.”

While the option of a flat fee for some legal services may entice potential and existing clients, Weiss Berzowski Brady LLP managing partner Michael M. Berzowski cautioned that the billing method also has to benefit the attorney.

In a situation where an attorney quotes a client a $1,500 fee for handling a commercial real estate transaction and the costs end up being thousands more because of zoning issues or environmental problems, Berzowski said a lawyer who tries to collect more runs the risk of an angry client.

But if the lawyer absorbs the additional costs, “Is that fair? I think it probably isn’t,” he said.

Berzowski said that it’s important to explain all the variables of a case when discussing the fee arrangement and then decide what works best for both sides.

“From a marketing point of view, you don’t want to scare people out of the place,” he said. “[But] there is a tension with the lawyer’s interests on one side and the client’s interests on the other.”

Roberts noted that if flat fees and other forms of alternative billing become too prevalent, the competitive benefits for firms that embrace it will be short-lived.

“It’s not going to be a strategic advantage for anyone,” he said.

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