Alternative Fee Arrangements — A Primer (via Kowalski & Associates Blog)

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Alternative fee arrangements and value billing came of age in 2010 and may soon largely supplant hourly billing models.

Recent polls indicate that 55% of corporate clients require their outside counsel to provide alternative fee arrangements or similar value billing arrangements and that over 90% of American law firms offer some forms of AFA’s. Journalist Gina Passarella recently provided an analysis (at ) of law firms’ reports on revenues and profitability for 2010 and noted that a principle reason so many law firms experienced a reduction in revenue while increasing profitability was because so many matters were handled on an AFA basis and realizations on such matters often exceeded those achieved on standard hourly billing arrangements. We demonstrated almost two years ago that this result could be attained on a well managed AFA engagement to the mutual benefit of both the client and the law firm.

Simply put, Alternative Fee Arrangements and value billing will be a cornerstone for The Law Firm of the Twenty-first Century:

Our original primer on alternative fee arrangements and value billing, published in March 2010, has been one of the most widely read posts we have published, reaching tens of thousands of readers. Accordingly, I take this opportunity to re-post that original primer.

Alternative Fee and Billing Arrangements: A Primer                                                                                  Jerome Kowalski                                                                              Kowalski & Associates                                                                              March, 2010 The most significant current public discourse regarding law firm revenues which will surely continue in the mo … Read More

via Kowalski & Associates Blog


6 Responses

  1. […] clients encourage such behavior.” One would think (perhaps hope) that with the increased focus on value billing and alternative fee arrangements, minimum annual billing requirements would have fallen by the wayside and metrics measuring […]

  2. […] exchange billing and shipping instructions.  Rather, the next step is often a discussion of an Alternative Fee Arrangement, which requires significant input from a firm’s risk management function and its legal project […]

  3. […] eDiscovery and digital forensics vendors have a symbiotic relationship with law firms.  Thanks to the existence of Shark Week, we can confidently use the simile of ediscovery vendors being like remoras.  Ultimately, ediscovery vendors are only as healthy as our hosts (law firms), and our hosts have been under remarkable pressure over the past couple of years from a number of threats.  As Kowalski & Associates Blog has pointed out in prior posts, law firms are faced with threats from, among other things, Internet based legal providers, legal project outsourcing companies and alternative fee arrangements. […]

  4. […] was also rising concern at Citi concerning the continued growth of Alternative Fee Arrangements and lowered reliance on billable hours, which Citi is concerned might result declining law firm […]

  5. […] on Sir Richard’s seminal work “The End of Lawyers?”  My first thought was whether all of my work on AFA’s over the past few years was for naught. Or was it like the chimera of the tooth fairy, the Easter bunny or […]

  6. […] Continued rise in use of alternative fee arrangements. […]

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