Beyond the Billable Hour: How to Leverage AFAs to Build a Better Practice

Beyond the Billable Hour: How to Leverage AFAs to Build

a Better Practice

888-432-1529 www.rocketmatter.com

What the ABA Says“AFAs are not about charging more than what an hourly rate might be — they are about charging an appropriate fee based on what value the client receives and how that client perceives value. Alternative billing should be based on what is fair and reasonable both to the client and the lawyer. Keeping track of time should be the lawyer’s measure of cost, not necessarily a measure of the value he or she is providing the clients in their legal needs.”


The Debate


Setting Expectations


Delight with Details


Leverage Technology


Types of Alternative Fee Arrangements


Fixed or Flat Fee• Total fee or a portion of your overall fee (can be

periodic)

• Often employed where approximate workload and resource requirements can be easily estimated

• Value-based fixed fee can be created and split into equal payments for a predetermined period (e.g. quarterly, monthly, etc.)

• “Look back” which allows for reassessment of the fixed fee due to unexpected developments


Contingent Fee• Based on desirable goals and

achievements • Requires a very clear agreement

defining the scope and desired outcomes

• Fees will typically depend on a range of events or specific recovery


Performance-Based Success Fee/Holdback• Can be used with hourly and fixed fee

arrangements • Percentage of client’s fees placed into

separate account or “held back”• Benchmarks determined in collaboration with

client, and fees may be disbursed to firm, refunded to client, or divided between them


Task Based Billing• Identified tasks and projects are used to

measure and trigger the fee• Complex litigation or transactional

matters with many tasks and steps


Percentage Fee• Based on a percentage of the dollar

value of matter• May be consistent or graduated


Retrospective Fee• Based on value of the outcome• Exact amount is unknown until the

conclusion of the case• Agreement must outline all the factors

involved in determining the fee after successful or partially successful outcome


Hybrid Fee Arrangements• Blended hourly rate• Phased Fixed Fee with Collar• Fixed fee with hourly• Fixed fee with success fee• Hourly rate with contingency


Other Arrangements• Volume Discounts• On-site legal expertise• Multiple Matter-based Relationship Incentives• Fixed fee with success fee• Hourly rate with contingency


Where to get AFA Language


Sample AFA Language

Portfolio Fixed FeeThis letter is a proposal for a fixed fee arrangement for counseling on privacy matters betweenSky Bros, and Jones, Bierko and Hill Law Firm (JBH Law). To that end, we propose an arrangement whereby Sky Bros would be able to call upon JBH Law on an as-needed basis for rapid responses to spot global business counseling issues, a concept that we believe will provide a cost-effective arrangement that encourages utilization of JBH Law’s resources:

1. The agreement would cover general counseling on privacy matters (“Covered Matters”).

2. For its services in connection with Covered Matters, JBH Law would be paid a flat fee in monthly installments of $5,000. In addition to the payment of fees provided for in this agreement, Sky Bros would be responsible for reasonable expenses and disbursements, if any, in accordance with the guidelines set forth in our prior agreement.

3. To the extent that the value of JBH Law’s time for any single privacy counseling matterexceeds $7500 (based on JBH Law’s standard rates), or by mutual agreement of Sky Bros and JBH Law, a separate matter would be opened. If Sky Bros elects to retain JBH Law for any such new matters, fees for those matters would either be billed pursuant to our prior agreement or we can negotiate a new arrangement specific to that matter.


Another Helpful Drafting Resource


Easily manage varying AFAs with Legal Practice Management Software

Thank [email protected]

[email protected]

Beyond the Billable Hour: How to Leverage AFAs to Build a Better Practice

Law

Transcript of Beyond the Billable Hour: How to Leverage AFAs to Build a Better Practice