Approaching Alternative Fees
Under constant pressure to do more with less, law firm clients are increasingly interested in alternative fee arrangements that deliver real value and greater predictability.
The "Law Department Metrics Benchmarking Survey, 2010 Edition" (published by ALM Legal Intelligence) reported that 72.8 percent of fees paid to outside counsel in 2009 involved billing arrangements that were not based on standard hourly rates or the billable hour.
Despite this clear trend—coupled with low inflation and a stagnant economy—a recent study by Altman Weil Inc. showed that large law firms anticipate raising billing rates an average of 4 percent in 2011.
This statistic could signal a return to the days when annual rate increases regularly outpaced inflation and large law firms held up profits per partner as a primary metric of success.
Against this backdrop, midsize law firms—even those that choose to implement modest rate increases—have an opportunity to employ alternative fee arrangements to secure a significant competitive advantage over their larger competitors.