Wisconsin Lawyer: Your State Bar Déjà vu Again?:

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    Déjà vu Again?

    Here’s a tip from your predecessors: “alternative” billing arrangements aren’t so unconventional.

    George C. Brown

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    For the last several years, there has been much talk about lawyers moving away from the billable hour, or, as some have said, the “tyranny” of the billable hour. Suggested replacements include flat-fee billing, value billing, and contingent fees. While this may seem novel to many lawyers, on occasion I am reminded that nothing about compensation is truly new.

    George C. Brownorg gbrown wisbar George C. Brown is the executive director for the State Bar of Wisconsin.

    Such a reminder came in the mail a month or so ago, when a Wisconsin lawyer sent me his lawyer father’s 1957 minimum-fee schedule.

    At its September 1957 meeting, the Board of Governors of the then newly mandatory State Bar of Wisconsin adopted the schedule. This was Wisconsin’s first statewide minimum-fee schedule (though some county bar associations had issued schedules since the mid-1800s). According to the 1986 history of the organized bar in Wisconsin, “this new schedule was estimated to have raised the lawyers’ income by 25% to 50% within three years.” Although couched as suggested minimum fees (as guides to “fair compensation”), many lawyers viewed them as mandatory.

    Most Wisconsin lawyers who graduated from law school after 1975 probably have never seen a minimum-fee schedule. In 1973, the U.S. Department of Justice convinced the State Bar Board of Governors to rescind the schedule because of its antitrust implications. The 1975 U.S. Supreme Court decision in Goldfarb held that Virginia’s fee schedule violated antitrust statutes, thus ending all minimum-fee schedules.

    The 1957 fee schedule was a blend of fixed, or flat, fees ($150 per day for circuit court appearances, $15 for a simple will or share-crop document); percentage fees (10 percent of the first $2,000 in a real estate foreclosure with a minimum of $175); and contingent fees (25 percent before trial, 40 percent after supreme court appeal). The now ubiquitous hourly billing rate was listed under consultation and office work, where, in four lines in the 12-page document, an initial consultation was listed at $3 (for public relations purposes) and consultations, office work, and income tax returns were listed at a minimum of $15 per hour.

    Most Wisconsin lawyers who graduated from law school after 1975 probably have never seen a minimum-fee schedule.

    Hourly billing is, of course, very prevalent today, though used less since 1998, when the State Bar’s Economics of Practice Survey determined that 96 percent of lawyers charged some of their time by the hour. In the 2013 survey, 78 percent of respondents reported charging an hourly rate. Flat fees were the second most often used fee in 1998 (62 percent) and in 2013 (57 percent). However, flat fees tend to be used only for certain types of work. Similar to 1957, preparation of simple wills, deeds, and powers of attorney are top examples, though the 2013 rates averaged $235 for a will and $123 for a power of attorney. Today, directives to physicians (not even listed in 1957) are also more likely to be charged at a flat fee.

    What will be interesting in the future is whether there will be an increase in flat fees for actions such as court appearances and various divorce proceedings, or in value billing, which, in some respects, appears similar to the percentage fees that used to be standard in probate, foreclosure, collection, and real estate matters.

    Will history repeat itself by those who never experienced it and will they think it’s all new?