Flat fees are attractive to both lawyers and clients—simple, predictable, and easy to budget. But in California, the ethics rules draw critical distinctions between a true flat fee, a retainer, and an advance. Mixing them up can lead to serious ethical consequences, especially if a dispute arises or the representation ends early.
Let’s define the terms first:
- A flat fee is a fee paid for specified legal services, regardless of how much time the lawyer actually spends.
- An advance is a deposit toward future legal work, which remains the client’s property until earned.
- A true retainer is a fee paid to secure your availability—not for work performed.
Under Rule 1.15(b), advances must be deposited into a trust account and only moved to operating once earned. By contrast, flat fees can be placed in your operating account—but only if you comply with certain conditions, including written disclosure and client consent.
Here’s the most common problem I see: a lawyer charges a “flat fee” up front, puts it in operating, then the client fires the lawyer a week later. If the fee wasn’t truly earned—and no written agreement says otherwise—the lawyer may have to refund the full amount, or worse, face a fee arbitration or State Bar complaint.
To protect yourself:
- Clearly define the scope of the flat fee in your engagement agreement.
- If you’re charging a flat fee, include the Rule 1.5(b)(1) disclosures.
- Always keep records of time spent and services performed, even on flat fee matters.
Remember: if it’s not in writing, it didn’t happen. And the burden is on you to prove the fee was earned.
Flat fees are a powerful tool—but only when paired with clear ethics and airtight contracts. I help law firms draft agreements that meet the Bar’s standards and make sense for the business of law.
Don’t let fee disputes ruin client relationships—or your license.