It is wrong for a law department to negotiate a fixed fee, but pay actuals aif they are less

Writing in the ACC Docket, Jan./Feb. 2012 at 18, Ron Pol discusses some of the financial and ethical pitfalls of fixed fees. He cites the frustrated managing partner of a major law firm: “In-house counsel often seek alternatives to hourly rates, then demand hours and rate information as well, forcing the firm to accept the lowest figure – whether that be the agreed retainer (‘as we agreed to pay’) or time cost (‘it would be unfair to pay more than your time cost’). The firm has now all but given up trying to be innovative.”

Like Pol, I recommend against creating that bind. If you negotiate a fixed price, you have settled on the value you seek for what you are willing to pay. It is the firm’s privilege to provide that value – and to make as much profit as they can from the deal. It’s not fair to have heads I win, tails the firm loses.

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