Mutually Beneficial Alternative Fee Arrangements

Deborah Kuchler, a founding partner of Kuchler Polk Schell Weiner & Richeson, LLC in New Orleans, Louisiana, put forth an enlightening thesis on why alternative fee arrangements, if done correctly, can reward success, efficiency and creative thinking.  Her article, prepared for the Federation of Defense and Corporate Counsel (FDCC), assures her readers that attorneys will be able to retain existing clients and attract new ones with a well-crafted fee arrangement.  

For instance, with a fixed monthly fee, Kuchler notes, efficient, experienced attorneys are encouraged to focus on determinative tasks.  Working to provide outcomes in such a manner deters attorneys from getting bogged down in tasks that might produce a lot of work but won’t necessarily contribute to the results.  

Another form of alternative billing would be what is referred to as a “budget ceiling”. Costs above the established ceiling amount would serve as the cap for various phases in the budget.  Alternatively, the client and attorney would determine that any overages wouldl be automatically rolled over into the next billing cycle.  

The firm might arrange to send the client an advice-only retainer.  (A firm would also have the option of choosing to pay an outside contractor in this manner.)  The way this works is that a flat monthly fee is paid an attorney or consultant for analysis and advice.  It would be determined in advance just how many hours this fee would cover.  

In litigation cases, contingency fee agreements can take several forms other than the well-established and traditional flat contingency rate.  Depending on the client and attorney’s mutual goals, there are other ways in which fees may be collected contingently.   It might be agreed, for instance, that fees will be paid out depending on the amount of money recovered. 

Also, percentages may vary depending on whether the matter settles or goes to court. Finally, a guaranteed but reduced hourly fee may be part of the agreement.  This hourly fee would then be credited against the percentage fee, if the client wins.  

There is also task-based pricing, where each task in litigation will have a set price.  For example, each motion, deposition and discovery preparation—regardless of the time or complexity involved—will be the same fee to the client.  In such scenarios, attorneys must be careful to price carefully and to manage well the time spent on each task.  

Ms. Kuchler lists a total of 12 such creative fee arrangements, including one with additional incentives for non-legal services, such as providing material to a client’s legal department’s intranet site, or participating in training programs. And, in the matter of eliciting prompt payment, says the author, “law firms may offer a discounted rate for [quick] electronic payment, or, conversely, they may offer back loading or front loading…”   To read the PDF document in its entirety, go here:   See also:  Making Alternative Fees Work in Litigation: How to Approach and Craft AFAs



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