A three-year term discourages low-balling to buy into a set fee arrangement

The other day I heard an argument new to me for an extended fixed-fee period. The period was three years. Three years seemed right to this general counsel because law firms could not afford to run at a loss (low-ball) for such an extended period. For one year, they might write off chunks of time to buy their way into a prestigious client; for three years, the pain would be too great. By the way the fee did not have to stay the same each year.

My concern would be that a three-year commitment probably brings with it a built-in premium just for the length of time. Like a 30-year mortgage rate topping a 15-year mortgage rate, there are more unknowns for the law firm so the fee proposed rises.

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