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May 13, 2026

Estate Planning Firm – Flat Fee Effective Rates

Question:

I am the managing owner of a three lawyer estate planning and estate administration firm in Nashville, Tennessee. There are three paralegals, a receptionist, a bookkeeper, two legal assistants, and a firm manager working at the firm. Our estate planning has for many years been billed on a flat rate basis. Our effective rates have been and continue to be much lower than our time bill rates and this is having a very negative effect on firm profitability. Should we consider billing estate planning matters on a time bill basis? I would appreciate your thoughts and suggestions.

Response:

I am currently working with quite a few estate planning/estate administration/elder law firms that have high net worth clients. The majority of these firms use “time bill” billing arrangements. Firms that represent mom and pop smaller net worth clients are using flat fee arrangements for estate planning and asset protection matters and “time bill” arrangements for estate administration and other matters.

Few firms that are using flat fee arrangements are realizing effective billing rates even close to their standard “time bill” rates. In some cases I have found effective rates $100 to $150 per hour less than their standard “time bill” rates for attorneys and paralegals. In some cases the problem is not working effectively or efficiently. In other cases the flat fee price has not been properly set or limits placed on the work that will be done for the flat fee – for example – number or document rewrites, etc.

I believe that more than ever clients are wanting the budgetary certainty that flat fees provide.  I think that a flat fee pricing strategy is a good strategy but the scope of work and proper price point must be properly established. A couple of suggestions:

  1. Do some basic market research – secret shopping – and obtain the best information that you can on competitor pricing.
  2. Review time charges on typical estate planning matters and get a handle on the amount of time that it typically takes – by each office professional – for matters of varying levels of complexity. Include time that is not obvious for administration of the matter, calendaring, communications with client, etc.
  3. Based on these time estimates determine flat fees using the desired standard hourly rate and then add a risk premium of 10% – 20%. If a matters typically takes 10 hours and your desired rate is $200 per hour – set the flat rate fee at $2200.00 – $2400.00.
  4. Incorporate into your engagement letters, fee agreements, etc. Include a provision that allows for time billing when there are extra re-drafts, unforeseen events caused by the client, etc. specified beyond the limits specified for the flat fee amount.
  5. Get at least 1/2 of the fee before commencing work and the other half before delivering and executing the final documents.
  6. Keep time sheets on the matters for time expended.
  7. Review at least quarterly effective rates realized on completed flat rate matters.
  8. If effective rates are below your target rate review the time detail and determine where the problem lies.
  9. Make changes and adjustments if needed.

Recently an estate planning firm client of ours asked their attorneys and paralegals how much time is took for a typical estate plan (trust). They advised as follows:

The problems with the above time estimate was that it did not provide time spend writing up consultation notes and posting to the system, communication with clients, modifications and changes to documents, calendaring, notes to the file, and all the other administrative matters pertaining to the matter. While the initial analysis showed that the effective rate per hour far exceeded the time bill rate – such was not the case when the actual total time expended on the matter was considered.

I believe that properly implemented and managed flat fees can be a worthwhile strategy.

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John W. Olmstead, MBA, Ph.D, CMC

 

Posted at 02:12 PM in Uncategorized

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