Are Flat-Fee Contracts Good for Law Firms? Lawyer Learns Tweaking Needed
Posted Jan 26, 2010 7:13 AM CST
By Debra Cassens Weiss
A lawyer overseeing a fixed-fee contract with boating and sporting equipment maker Brunswick Corp. jumped to K&L Gates and tweaked the contract to make the arrangement more profitable.
The flat-fee contract, now in its second year, covers national litigation, including product-liability and breach-of-warranty cases, the Chicago Tribune reports. Brunswick general Kristin Coleman is happy with the results: The contract cut the company’s legal bills for outside lawyers working on litigation by 30 percent last year.
But did the law firm that first provided representation under the contract, Kelley, Drye & Warren, feel the squeeze? David Rammelt, now a partner with K&L Gates, told the Tribune that taking the contract to a new law firm helped increase profitability.
Rammelt said he jumped to K&L Gates in September because it has 23 U.S. offices, 18 more than Kelley Drye. At Kelley Drye, Rammelt was forced to hire outside lawyers when Brunswick was involved in a lawsuit outside its locations. Now he will likely be able to use a K&L Gates lawyer at a lower cost.
Rammelt keeps track of the time spent on Brunswick’s matters, despite the flat-fee billing, so he has a benchmark for comparison. He says the realization rate—the rate of collection versus hours billed—is not as high as he would like, the story says. Some tweaks in the contract give Rammelt’s firm more protections this year.
One change: Now a case may be ousted from the fixed-fee program if it hits a ceiling on rates.