To read the full feature story on alternative fee arrangements, click here.
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If you are incorporating AFAs, it might be a lot of work at first--and it might be tempting to think that they will make all the difference. But alternative fee arrangements are most effective when they are a piece of a wider departmental strategy to stay on point, cut costs and build efficiency. And while many companies live and die by Six Sigma-type programs on the business side, that doesn't always take root in the legal department.
"Now that everyone is talking about alternative fee arrangements, it may be a kneejerk reaction," says Jayne Rothman, corporate counsel for Epiq Systems, a legal technology provider. "But alternative billing is only one piece of the puzzle--it isn't going to mask inefficiencies. The only way to know where you are in the process is to have a solid project management plan and to check it often."
On the business side, Epiq Systems is accustomed to guiding clients to a desired outcome by forming a clear project plan, including resources estimates and key milestones, and then scrutinizing it for potential efficiency-builders. It's just the type of project management that often is ignored by law firms--as well as clients who fail to provide adequate oversight or who don't understand their own processes.
And a clear understanding of what's to come, on both sides, also makes structuring AFAs for unpredictable litigation that much easier.
"For many law firms, what's lacking is strong, innovative, tech-based processes that can allow them to be more efficient and better manage flat fee work," says Jennifer Wolfe, founder of Wolfe LPA. "What I need from our client [to help me do that], and what is the most difficult thing to get from them, is for them to spend time with me so I can really understand their business and how they get things done internally. Then we can look at how we can either improve that or blend it so we can deliver more value on a flat fee."
