An Altman Weil study in 2009 found that 28 percent of respondents at law firms believed that increased use of alternative fee arrangements (AFAs) would prove to be a permanent change to the business of law. By 2013, that number had jumped to 90 percent. The acceptance of this industry shift is good news for legal departments with smaller budgets for outside counsel, but some legal professionals are concerned that pricing pressure might cause their law firm relationships to turn adversarial. With the right information and approach, it is possible to negotiate win-win fee structures that meet your budget needs and keep your partnerships with your firms healthy and collaborative. AFAs can be a useful tool for sharing some risk with law firms and grounding fees to results, but negotiating an AFA isn’t a simple matter. Information and structure can help.
Demystify the assumptions