By Tom Hagy

It seems as though alternative fee arrangements, or AFAs, suffer more from great expectations than anything else. They were once touted as the great alternative to hourly billing. They were to solve all of the problems associated with rising, enigmatic and unpredictable legal expenses. Every survey in the last couple of years shows that they are prevalent and now account for billions of dollars in legal fees. Still, they do not seem to have caught on like many predicted. That is because the typical forms of alternative billing can only solve some of the problems with legal expenses and for only certain types of legal work. We have seen a focus more on better understanding the client’s expectations (your expectations), how the client values different services, and the results a law firm can achieve for a client.  So, if we’re seeing more customized, value-based, performance-based fee agreements, that means law firms are working out contracts with clients more like someone who is renovating an old home. The total price may not be simple. It may depend on what you value most, your tastes, your region, who your neighbors are, what’s behind that wall and whether they deliver the results you wanted. Hourly billing, flat fees, blended rates and capped fees are great, but are not one-size-fits all. They are a little too simple given the myriad variables that go into legal work. It makes sense that rates would be as sophisticated or as simple as the legal work itself.

In an article I wrote for the LexisNexis InHouse Advisory, I cite experts on legal billing and share their insights on trends and best practices for firms and in-house counsel.  Read the full story.

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