Last week, ALM published a new white paper titled Alternative Fee Arrangements at Legal Departments and Law Firms, largely based on a newly completed survey of law firms. Alternative Fee Agreements, or AFAs, have become an increasingly common word in the legalese lexicon and the survey may offer indications as to why.The report finds, “19 percent of corporate legal departments used AFAs for more than half of their legal work last year, up from 12 percent who said the same thing a year ago, and 51 percent said that their volume of AFAs had increased in the past year.”
However, we’ve notice these findings are at odds with another ALM study, 2013 Corporate Counsel Agenda, published in November 2012. That survey found, “there was a steep drop—57 percent to 17 percent—in the number who saw an opportunity to negotiate new billing methods not based on the billable hour.”
So which is it? Are AFAs trending up or down?
It’s hard to tell from the survey data, and perhaps harder to discern from anecdotal evidence. For example, Steven J. Harper’s opinion piece in The AM Law Daily, Why the Billable Hour Endures, made the rounds on social media in recent weeks.
LexisNexis has a substantial sample of billing data that suggests AFAs are trending up albeit gradually. For example, Kris Satkunas, Director of Analytic Consulting with LexisNexis, wrote in a recent post, Looking Under The Hood For Data Insights that:
…at a high level the percentage of matters with some sort of alternative fee structure has been fairly constant, between 11% and 13% from 2009 through 2012 (YTD). That lines up with some references to the lack of growth in AFAs.”
Just this week, I touched base with Kris by email and her viewpoint remains solid. She noted in an email her numbers “are based on actual bills we process through CounselLink.”
New Event! Roundtable Discussion on AFAs in Washington, DC
To advance the discussion on AFAs, LexisNexis has teamed with Sandpiper Partners, LLC to host the Second Annual Pricing and Profitability Conference in Washington, DC on May 22, 2013. The event titled, Anatomy of a Fixed Fee Negotiation: The New Market Dynamics, will feature speakers from some prestigious firms and companies:
- Pamela L. Bernstein, Executive Director, Miller & Chevalier Chartered
- Loren Brown, Co-Chair, Product Liability and Mass Tort Practice, DLA Piper, LLP (US)
- Jacob W. Buchdahl, Partner, Susman Godfrey, LLP
- Mary J. Hackett, Partner, Reed Smith, LLP
- Justin P. McCarthy, Senior Vice President and Associate General Counsel, Pfizer Inc.
- R. Bruce McLean, Partner, Formerly Chairman, Akin Gump Strauss Hauer & Feld LLP
- Peter Lane Secor, Director of Strategic Pricing and Project Management, Pepper Hamilton LLP
- Thomas G. Trujillo, Director of Operations, Legal Department, Bank of America
The panel will be moderated by Russ Haskin, Director of Consulting and Services, LexisNexis Redwood Analytics.
- What: Anatomy of a Fixed Fee Negotiation; the New Market Dynamics
- When: Wednesday, May 22, 2013 from 9:00 a.m. to 1:30 p.m. (including lunch)
- Where: The Washington Marriott, 1221 22nd St NW, Washington, DC
- Cost: Complimentary to the first 25 registrants
Register by contacting Lisa Colombo by phone (973) 278-8800 or email firstname.lastname@example.org.
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