Research Memo: Ethical Pricing on Automations

My document automation tool saves me loads of time. Can I still charge my regular flat fee?

But is it ethical?

This question is sure to follow any presentation relating to the value of legal tech. It’s especially common in conversations about document automation. For example, if I can reduce the time it takes me to generate an estate package from 6 hours to 45 minutes, can I still charge $2,500 for the service? Is it ethical?

SUMMARY RESPONSE: Probably yes, but do you still want to?

grayscale photo of round metal tool
Photo by Evergreens & Dandelions on Unsplash

It’s a fair question but let’s be honest, this is an attorney’s ethical concern, not a client-centered discussion about the value of the service. Clients are typically concerned with value, not hours when a flat rate is concerned.

For the reasons outlined below, the answer to the question is probably, yes. However, should you? Is this price set within ethical guidelines to meet well-defined business goals? Or, are we merely counting hours as if we weren’t using the tool?

Both approaches are arguably ethical, even the latter approach. There’s the old tale of the plumber who charges … a thousand bucks, let’s say… for fixing a failing heating system by spending a just a minute banging on a pipe. When asked why the fee was so high, the plumber replied, “That’s $1 for the service and $999 for knowing which pipe to bang.” An attorney’s expertise isn’t acquired for free and efficient delivery of quality comes at a cost not often apparent to clients. Moreover, an attorney’s expertise is a factor in determining reasonable fees under Rule 1.5 (Fees).

Most industries, however, don’t suffer from cost disease1 in the same manner suffered by the legal profession. Document automation, generative AI, and other tools can change this. So, this memo briefly reviews the question under two lenses; an ethical lens and a professional business lens.

Rule 1.5

All US jurisdictions2 adopt some form of ABA Model Rule 1.5. The rule outlines factors to be considered in determining the reasonableness of a fee. Notably, Rule 1.5 factors include community fees and results obtained, two factors which arguably speak to value, not hours. Rule 1.5 factors include:

  1. the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
  2. the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
  3. the fee customarily charged in the locality for similar legal services;
  4. the amount involved and the results obtained;
  5. the time limitations imposed by the client or by the circumstances;
  6. the nature and length of the professional relationship with the client;
  7. the experience, reputation, and ability of the lawyer or lawyers performing the services; and
  8. whether the fee is fixed or contingent.

In our hypothetical, if the work product is good and the fee is similar to other fees in the region, we have two factors favoring reasonableness.3 And does the attorney know which pipes to bang? If so, item seven also likely favors our price. Sure, not all factors weigh in favor of reasonableness but no single factor is dispositive in determining the reasonableness of a fee. Instead, all factors must be considered collectively, not just time. Plus, not every factor may be relevant in every situation.4

Also note that the ease of a matter isn’t a factor. Such a rule would improperly dissuade attorneys from taking on meaningful work. See for example, Rodriguez Rodriguez v. Munoz Munoz, 617 F. Supp. 518, 521 (D.P.R. 1985):

Defendant argues, in opposition to the fee application, that this was not a difficult case; that pursuant to Puerto Rico Supreme Court cases—Clemente Gonzalez v. Depto. de Vivienda, 83 JTS 101 (1983), and Ramos v. Secretario de Hacienda, 112 DPR 514 (1982)—the outcome of this case could be inferred. The short answer to this self-defeating argument is that to reduce the fee award on the basis that there is a strong likelihood of success makes little sense, for it would penalize the attorney who undertakes a case where the constitutional violation is clear.

Similarly, I’d argue that an estate planner shouldn’t be penalized for building a more efficient service even if that service now looks more like a commodity. It is true that “[u]nlike some other service professionals, [lawyers] cannot charge unreasonable fees even if they are able to find clients who will pay whatever a lawyer’s contract demands.”5 But here, there’s a fair argument that our price, once based exclusively on time, might also be justified under other factors of Rule 1.5.

The real issue regarding adjusting pricing for an automated practice might have more to do with adjusting our attitudes related to commoditized forms. William Henderson put it this way:

Unlike the performing arts, productivity gains in law are not impossible, albeit the biggest constraints have less to do with capital or technology than how lawyers’ minds have been conditioned and socialized.6

What exactly is wrong with commodifying legal services?

Mere Business for Profit

The Puerto Rican version of Rule 1.5 probably best summarizes the prevailing sentiment:

The fixing of professional fees should always be governed by the principle that our profession is an integral part of the administration of justice, and not a mere business for profit.”

§ XXIV Fixing the amount of the fee, T. 4 Ap. IX, § XXIV.I

This use of the term ‘mere’, does the work of ensuring we’re not confusing profit incentive for the reason we administer justice. This is proper in my view, but this usage7 also improperly discounts the importance of business practice in the profession. First, if profit is ‘mere,’ why are we still mired in an A2J crisis? I acknowledge this oversimplifies the issue but the standard hourly rate for legal services remains an inflation-adjusted $300.8

Second, businesses for profit are beholden to consumers in a way the profession is not. Recently, Professor Rick Petry and I hosted ‘competing’ conversations with the students of the Mitchell Hamline Legal Practicum. I argued that it’s proper, important even, to think of clients as customers. Professor Petry reminded students that lawyers are professionals and that clients aren’t only (not ‘merely’) customers. Fair enough. Ultimately, I think, we concluded that it’s not an either/or proposition. For lawyers, it’s both/and. We owe fiduciary duties to our clients and we honor our customers with the courtesy of quality customer service9.

Consider the following example:

a group of people standing in front of a pyramid
Photo by Maxime Steckle on Unsplash

Back in February 2024, participants waited for as long as four hours for assistance in a local expungement clinic. The newspaper subhead reporting on the event reads, “Around 300 people were assisted with filing for expungement, which Moriarty said shows a need.” Need indeed.

One participant said he’d been waiting for over a decade so what’s a few more hours?

To what extent is this clinic a model of pro bono service? To what extent is it a sign of disfunction in our justice system? Discussing legal need in terms of consumer demand is perhaps unseemly but I suspect it’s easier for us to identify with the outrage of consumers queuing up for the privilege of updating a phone plan than it is to empathize with ex-cons seeking to secure rights and privileges already due, past due, in fact.10

‘Customer service’ invokes unpopular business tropes (i.e., the customer is always right) but it might also properly be viewed as a legitimate form of delivering justice insofar as it humanizes the experience of engaging with complex subject matter during a challenging time in a person’s life. Customer service is not ancillary to our professional obligations. It’s central, not because we desire repeat business but because we operate in the public trust. We’re a self-regulated profession. Nevertheless, we call it ‘customer’ service because ‘client’ service isn’t recognized or popularly understood as a method of delivering a quality experience.

Some attorneys complain that it’s now a ‘race to the bottom’ as companies like LegalZoom and Trust&Will grow and flourish. But the tools these services rely on are available to all attorneys, making it possible for conventional firms to compete. This doesn’t mean attorneys must reduce prices. Instead, these tools give us the flexibility we need to seriously evaluate value-based pricing. William Henderson writes, “Commoditized products are my favorite solution to cost disease because it comes closest to making the legal industry look like every other consumer industry.”11 Getting comfortable with statements like this one might be a challenge for the legal industry but it’s not a concession. We’re not operating businesses for mere profit. We’re serving clients using using the best available tools like any other business. We are not asking to be relieved of our ethical obligations.

Research Notes

  1. In simplest terms, cost disease is an economic theory that explains why the prices of services in industries like the performing arts continue to rise, even though productivity growth is low. Whether you’re training with Suzuki or some other method, there’s still only one best way to deliver concert worthy [live] performances; practice, practice, practice. See William Henderson’s, We’ve got a bad case of Baumol’s cost disease, Legal Evolution (184) ↩︎
  2. Download our quick AI-generated jurisdictional survey from Westlaw Precision ↩︎
  3. Searching for a community’s flat rate can be challenging. With a few exceptions, prices are not typically published on lawyer websites. The Clio Legal Trends Reports offer a little help. See for example, page 61 of the 2024 report. For hourly community rates, see Clio’s Legal Rates Calculator. ↩︎
  4. See, for example, Clark v. Gen. Motors, LLC, 161 F. Supp. 3d 752, 759 (W.D. Mo. 2015) and Simler v. Conner, 228 F. Supp. 127, 133 (W.D. Okla. 1964), aff’d, 352 F.2d 138 (10th Cir. 1965).

    If you’re a Westlaw user, search for similar cases using KeyNumber 46Hk232 or the group of KeyNumbers under 46HVII. AI tools do a remarkable job of finding relevant cases with simple prompts but we still like Boolean. For example, check out these good results with adv: 46Hk232 and HE(time /3 alone solely only). The nice thing about Boolean is you can create targeted queries using KeyNumbers as search terms. You can also quickly broaden the query by removing the field restrictor (HE for headnote in this case) so that the terms appear anywhere in the document. ↩︎
  5. In re Sinnott, 2004 VT 16, ¶ 16, 176 Vt. 596, 600, 845 A.2d 373, 379 (2004) ↩︎
  6. See note 1, supra. ↩︎
  7. Once ‘sheer’ or ‘perfect’, now ‘ordinary’ or ‘feeble,’ per the OED. Oxford English Dictionary, s.v. “mere (adj.2), sense II.5.c,” December 2024, https://doi.org/10.1093/OED/2486943708. The term is in OED’s frequency band 6 (between 10 and 100 times per million words in modern written English) so, not archaic, but dropping off apparently:



    ↩︎
  8. See, Review, Stanford Law, and Salma Abdelrahman. The Making of the A2J Crisis. Stanford Law Review, April 27, 2024. https://www.stanfordlawreview.org/online/the-making-of-the-a2j-crisis/ (citing the Clio Legal Trends Reports). ↩︎
  9. Though, maybe not as often as we should. See the ‘secret shopper’ reports from the Clio Legal Trends Reports. Links at note 4, supra. ↩︎
  10. For more stories on the challenge of delivering past-due public service, see Jennifer Pahlka’s excellent book, Recoding America: Why Government is Failing in the Digital Age and How We Can Do Better. ↩︎
  11. See note 1, supra. ↩︎