Alternative Fee Arrangements (AFAs)

The billable hour may still be the standard fee arrangement at the legal services industry, but it’s not for everyone. Relationships with clients cannot always be based on how many six-minute increments it took to complete a task. This is why depending on the case we are ready to employ alternative fee arrangements (AFAs). 

The employment of AFAs is consistent with our practice’s core value: Simplicity. Billing based on time sometimes cause people to spend more time on matters. This means that matters may become more complex; we want things to remain simple. And predictable for the client.

While worldwide there is a variety of AFAs employed, below is a list of AFAs, with which we have worked in the past and are familiar with:

Retainer Agreement

This type of arrangement is suitable for our long-term clients or clients who have outsourced their legal departments to our practice. A standard monthly fee is paid to perform a (broadly) defined work and in most instances this leads to a member of our team being available without limitations to the client for the duration of the retainer. This AFA provides predictability for routine or recurring work that is to be performed over a durationally significant period of time.

Fixed Fee

Under the fixed fee arrangement the client pays a defined sum for a defined amount of work and the practice assumes the risk of overruns.  This type of arrangement works well for straightforward one-phase litigation or simple deals.

Phased Fee

This type of fee arrangement works best for multi-phase litigation and multi-step deals. Where work can be broken down in segments and be estimated in advance, the phased fee arrangement creates predictability over time and allows client to exercise expense management for large projects.

Collar Fee

A collar fee arrangement sets an amount the practice is to be paid. If the practice’s hours come in on target or at a specified percentage above or below, the fee becomes final. If the hours fall below the agreed percentage under, the savings are shared. If the hours exceed the agreed percentage over, the lawyer is paid only a percentage of the excess amount billed. This is a risk-sharing arrangement between the practice and the client that works well for projects, wherein fee estimates would otherwise be too wide.

Value Fees

This fee arrangement is suitable for litigation work where the client is not interested or unable to finance the trial.  It works best when client is the plaintiff in a lawsuit. Client transfers to the practice a percentage of the amount sought in a lawsuit and the practice receives the percentage fee contingent upon successful conclusion of the trial.

 

In a standard hourly billing agreement or in the hourly billing component of an AFA we always strive for fairness and transparency. We never employ block billing. In our bills each line item succinctly describes the task performed and the legal reason for the task. We employ cutting-edge cost-saving project management methods and we have adjusted our billing practice to the outside counsel policy of some of the most sophisticated organizations globally, in whose preferred counsel list we have been accepted.