Any time it is feasible, I prefer to price our work using alternative fee arrangements (AFAs) of some sort. They give our customers, which are generally major law firms, predictability and a sense of control. In addition, they provide predictability and control to the ultimate client that is paying the bills, which is typically a large corporation.
For A2L, alternative fee arrangements, such as fixed fees, fee structures with a floor or a ceiling, or bonuses for winning a case, offer enormous benefits as well. We achieve the same financial predictability that our clients seek, and AFAs allow us to create closer relationships with our clients.
And for firms like ours, our clients, and their clients (the major corporations), alternative fee arrangements do something much more important than creating financial controls. They return the focus to winning.
Perhaps nothing is more distracting for a consulting firm like ours than a client who has not paid in the midst of an engagement. The only thing worse is how a client feels when a vendor or consulting firm pesters them for a fee payment during an engagement.
In this situation, alternative fee arrangements do not help much. After all, just because you have a fixed price, or a floor, a ceiling, or a percentage fee sharing, or a bonus for winning, none of these arrangements ensures that you will actually get paid. That's where the most important piece of alternative fee arrangements comes in -- the payment structure.
At A2L, we've done fixed fee arrangements for litigation graphics, for jury consulting and for the services of trial technicians. We have been a pioneer in our field in doing so. However, I find that the most important component that makes alternative fee arrangements work is that when defining them, it’s crucial to structure the payment terms as well as the price.
For example, if a case requires litigation graphics and trial technology and is estimated to require an investment of between $70,000 and $140,000 over a four-month period, a very reasonable strategy might be to fix the price of the engagement at $120,000 and structure, four $30,000 payments over each of the four months.
Working out this type of arrangement will truly allow a litigation consulting firm, the law firm client, and the corporate client to stop focusing on administrivia and to focus exclusively on winning the case – which is what we should all be thinking about.
Other A2L articles and resources discussing alternative fee arranagments, pricing strategies, and preferred vendor agreements include:
- 12 Ways in Which We Make a Boutique Litigation Firm Feel Like a Big Firm
- 10 Fears That First-Time Users of Litigation Consultants Have
- 10 Ways Timely Payment Helps You Save Money On Litigation Consulting
- 24 Things to Know About The "New Normal" of The Legal Economy
- 17 Tips for Great Preferred Vendor Programs
- 12 Alternative Fee Arrangements We Use and You Could Too