As some folks know, I am Jonathan Pollard. Florida lawyer, writer, renegade, reformer. I’m going to talk about flat fee agreements in complex litigation.
These days our law practice consists of two separate buckets of work: First, we do a great deal of plaintiff-side employment litigation. This involves discrimination, retaliation, sexual harassment and the like. All of this is contingency fee and very high risk, very high reward. I’m good at what I do. And I prove it. Because I put my money where my mouth is.
The other bucket of work that we do: Complex non-compete / trade secret / tortious interference / unfair competition litigation. This bucket is the relevant one for today’s discussion.
I / we began litigating non-compete and trade secret cases 10+ years ago. We have a huge track record in that space. We developed a particular expertise in defending non-compete and trade secret cases. At first, I did this mostly for poor people, working people, middle class people. Then I got really good at it. And our firm started getting into big boy cases. Executives. Entrepreneurs. Companies with a bunch of money. Many millions of dollars on the line.
Did we win all the time? No, of course not. Sometimes we lost. That happens when you litigate lots of big, tough cases. But: We won far more often than we lost. And, in many cases, we were able to get a good business resolution or business outcome.
In the business / non-compete / trade secret arena, I don’t litigate cases just to litigate cases. I litigate cases to accomplish a specific business goal. That goal is usually to dispose of a particular bucket of risk / exposure and help my client maximize their gain. Example: Company X hires an executive and 3 other high-ranking employees from a competitor, Company Y. It’s Florida. So everybody has a non-compete agreement. Company Y sues and screams like smashed cats. “They stole our trade secrets! Everything is confidential and proprietary! We want an injunction and $10 million!”. I have seen this movie countless times.
In that scenario, my goal – as stated – is to dispose of the risk. Consider all the factors and variables. Squash it. Maximize our client’s gain and market position. And accomplish this in the most expeditious and efficient way possible.
Why I Don’t Bill Hours
My goal, my approach, and my framework makes me an outlier in this type of litigation. My goal is not to bill hours. And, in fact: I don’t bill hours anymore. Because nobody could ever pay me what I’m actually worth on an hourly basis. Because I think I’m a genius and have plenty of other mega lucrative stuff I can do with my time. My value is not based on time. My value is based on doing brilliant work and solving complex problems.
Beyond this: I have no interest in spending multiple days a month reviewing and line-editing draft bills. This is my life. This is my law firm. I do what I want. And I have reached a point in my career where I am not willing to waste my time billing time and line editing bills. To paraphrase Tupac: Real g’s do what they want, shook betas do what they can.
Finally: The billable hour model for complex litigation is all wrong when it comes to incentives. If we are honest (as I always am), many (or most) lawyers are incentivized to litigate cases in a way that maximizes billable hours. Let’s cut the bullshit and be real. There are good lawyers. There are lawyers who truly are fiducaries to their clients. And then there are lawyers whose primary goal is billing hours. We’ve all known them. I’ve encountered lots of them.
There was one particularly absurd Florida lawyer who would constantly send the longest email on the most basic point. If 1 or 2 sentences would do, his email would be 3 pages. We always joked, “He’s getting those billables.” And you all know that it’s true. Oh no. I broke the omerta by speaking the obvious truth about a dysfunctional model. I’m certain there will be various reprisals against me. There always are.
So the incentives are all wrong. The billable hour model incentivizes … wait for it …. billing hours. Did you ever wonder why certain lawyers and law firms go hog wild in discovery when it seems unnecessary and like total overkill? Did you ever wonder why certain lawyers never take a deposition that is less than a full 7 or 8 hours? Did you ever wonder why certain lawyers and law firms basically do things like … say … file a 30+ page motion to dismiss that has zero chance of success? The answer is obvious. We all know what is going on here. So let’s say the truth and stop the secrecy and denial. Certain lawyers litigate in a way that is designed to maximize billable hours while still having plausible deniability or an otherwise defensible explanation for their litigation conduct / strategy. [“Oh no I’ve said too much / I haven’t said enough”].
Turning to the other side of the equation: What do I consider good or attractive business?
If you’re a stone-cold expert / strategist / tactician whose goal is to resolve cases, solve problems, squash the risk, and keep it moving — It makes zero business sense to litigate cases on a billable hourly basis. Because you get penalized for doing brilliant work. I once solved a $5 million+ problem with a single letter. I made about $7,500 for it. A truly wise, evolved client would have said, “JP, thank you. We want to pay you a success fee of X, because what you did for us was so valuable.” I didn’t present that as an option (I was younger and less sophisticated back then). And the client wasn’t evolved enough to think that way. But I learned from that situation and evolved. My multi-million dollar problem solving skills are not so cheap these days.
Who I Am Writing This For
Most people reading this are C-level executives, in-house counsel, other lawyers, entrepreneurs, and otherwise sophisticated business folks and have meaningful experience with complex litigation. Facts. That’s not surprising given that I’m in or on Business Insider, Inc. Magazine, NPR, PBS, The Wall Street Journal and lots of other places. Given that I have 80,000+ followers on LinkedIn. A random lawyer from Florida with this kind of following and credibility. And nobody follows me for feel good fluff and clickbait. They follow me because I’m a thinker and have interesting things to say.
A very dear friend of mine is general counsel of a Fortune 100 company. We regularly talk shop. I know the game. I know the business. I know what smart companies want in outside counsel and what a good value is. But most companies are dumb when it comes to hiring litigation counsel. Even if those companies have gobs of money and can hire virtually anyone they want.
Flat Fees in Complex Litigation
Is it possible to litigate every single complex case in the world on some sort of flat fee basis? No. I’m sure there are exceptions. BUT: In my wheelhouse (non-compete, trade secrets, unfair competition, etc.), I have litigated well over 100 cases. I can look at a case at the outset and get a pretty good handle on the landscape and the defcon level. Right? Is it a little skirmish? Is it a battle? Is it World War I? Is it World War II? Is it nuclear war and armageddon?
That’s what happens when you do something 100+ times at a high level over the course of 10+ years. You get a sense of how it all works. The options. The possible ways the case unfolds. The risks. The contingencies that can be accounted for. The contingencies that cannot be accounted for (unknown unknowns as Rummy would say).
The upshot: I have been creating and structuring very sophisticated flat fee arrangements for complex litigation.
These agreements often have different phases of the case with a corresponding price. IE: Injunction, discovery, summary judgment, pre-trial, trial.
There are safe harbors (i.e. massive volume of documents produced in discovery).
There are carveouts (i.e. in-house vs outside document review / what is included and what is not).
There are phases of the case that are not included in the base flat fee but are assigned a price in the event they become necessary (i.e. an appeal, an emergency TRO, a parallel arbitration, etc).
There are sometimes kickers for early resolution. But there are exceptions to the kicker based on existing market conditions or something the client already had in place to leverage against their rival / adversary.
Flat Fees: Other Rules of the Road and How We Engage
Our flat fees are not designed to be cheap. They are designed to be a good value for both our clients and our law firm. I believe it is possible to create a flat fee arrangement where both law firm and client feel good and get good value. I believe these arrangements, when structured correctly, allow an outside law firm and the sophisticated client to feel like true partners in the venture (litigation or broader dispute). The exact fee and fee structure depends on the specifics of the dispute.
Whether there is a minimum of $200,000 or $300,000 or some other minimum base fee — that number all depends on the exact case. Likewise, the specifics of the case dictate what different phases cost, whether or not there is a kicker, etc.
I personally evaluate all of that, map out the arrangement, and make the proposal. And if client suggests some reasonable modification, I may be receptive to that. But I am not receptive to clients trying to haggle or negotiate a discount. Not all business is good business. And I have enough business to pick and choose.
Creating and structuring these types of engagements takes a significant amount of my time and mental energy. So, naturally, I don’t do it for free. I don’t do the BIGLAW dog and pony show for corporate general counsels. I’m not BIGLAW. I do things my way. And, within my general area of expertise (the non-compete / trade secret / unfair competition bucket), I believe I do outstanding work and provide a good value vs. my competitors. Because who are my real competitors? Who am I really competing against? Elite litigation boutiques and BIGLAW firms.
I have further thoughts on flat fees and complex litigation. Those will be forthcoming in a subsequent post.
About Jonathan Pollard
Jonathan Pollard is a lawyer and writer. He is the founder of Pollard PLLC. Pollard has been recognized by Chambers and Partners, Super Lawyers, and others for his legal work. He has appeared in or on Business Insider, Inc. Magazine, NPR, PBS, The Wall Street Journal, Bloomberg, and more. The firm can be reached at 954-332-2380.