Alternative Fee Arrangements—From Theory to Practice

Dear Colleague:

Change in the legal industry with respect to alternative fee arrangements is no longer a question of “whether” but one of how much and how fast will it occur. The focus upon alternative fee arrangements is now moving towards how to responsibly and fairly match up the risk and reward elements to specific case scenarios. But there is more to the issue than just pricing, and industry thought leaders are going beyond the prelude of this story and looking at what happens next, why it is going to happen, and how.

Alternative fees are not “discounts” to hourly rates, or at their heart another way of pricing the same thing. That is clearly not what clients want any more than law firms want to do the same thing they have been doing—but for ten, twenty, thirty, or forty percent less! There are instead at least two significant components driving the demand for a ‘partnering’ relationship, which are results driven compensation and higher operating efficiencies (which reduce the cost to the law firm of participating in such arrangements). Neither of these were true drivers behind the traditional “cost plus” pricing of the billable hour model.

When given the choice between hourly fees and AFA’s, many clients still opt for the hourly fee model because they perceive that they are indeed getting good value. However, from a competitive standpoint, law firms must develop their value billing capabilities regardless of what their current clients are demanding as the profession begins to shift institutional risk from the client back to the lawyer.

Alternative fee arrangements thus trigger, perhaps for the first time in three decades, a comprehensive review and rethinking of how lawyers should do what they do.

The proposition of delivering “value” for clients calls into question the internal operations of law firms and how to create and deliver legal products and services at a level of quality that both the profession and the clients must have—and at a delivery cost that adequately rewards the lawyers for their efforts.

Ark Group/Managing Partner Magazine’s Alternative Fee Arrangements—From Theory to Practice, represents an opportunity for law firms and their clients to take this discussion to the next level—stepping outside of the comfort zone and delving into some of the structural and cultural changes that must occur for value billing to truly be successful.

This interactive forum is designed to help you:

• Cultivate a value-focused legal delivery system centered on the true meaning of partnership between law firm and client—sharing in both risk and reward
• Manage risk in experimenting with other fee arrangements by achieving cost-certainty yourself before offering cost-certainty to your clients
• Realize a compensation system built upon the longevity of partners and an open dialogue at the firm—rather than reliance on billable hours
• Approach alternative fees head-on—confronting the key elements that have structurally compromised the modern law firm
• Navigate engagement project stages delivering high client value with controlled costs that maintain firm profitability
• Understand how the experience/results model for quality and efficiency links to superior recruitment, training, mentoring, advancement and retention of talent
• Define value while fostering relationships that reward service