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TITLE OF PRESENTATION
CLIENT/LATERAL NAME
DATE
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Law Firm Pricing Strategies
ALA Meeting
May 26, 2016
Brad Antici
Director of Strategic Pricing and Analysis
Butler Snow, LLP
OBJECTIVES
• Discuss current trends that are affecting pricing
in the legal industry.
• Understand the various types of Alternative Fee
Arrangements (AFAs).
• Discuss how law firms can improve in these
areas going forward.
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What is going on in the legal industry?
• Great Recession of 2008-2009
– Reduction in, and more scrutiny on, legal spending
– Pricing pressures from clients
• Commoditization of certain legal practices has led to declining
profits in those practices
• Third-party options for outsourcing of certain legal work has
created the need for firms to rethink delivery of services
• Dominant use of Alternative Fee Arrangements (AFAs)
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Fixed or Flat Fees (per deliverable, matter, portfolio)
TYPES OF
AFAS
Phased Fees (per task, project of itemized deliverable)
Capped Fee (with or without collars)
Contingency or Success Fees
Incentive or Performance Based Hold Back
Blended Rates
Hybrids
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Common Types of AFAs
• Flat Fee per Period
– Flat fee paid for a period of time to provide specified legal services
related to issues or matters of a certain type
– Ex. for a monthly flat fee, providing advice and compliance opinions in
connection with HIPAA regulatory matters
• Flat Fee per Project
– Predetermined flat fee paid for a distinct project in situations where
tasks can be identified and separated for pricing on a per unit basis
– Ex. client pays a flat fee for each construction lien requested to file.
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Common Types of AFAs
• Fixed Fee per Phase
– Fixed fee to handle all aspects of a distinct phase of a larger project
– Ex. client pays a fixed amount for legal services provided as part of
the discovery phase in a products liability case
• Capped Fee
– Set limit on amount of hourly fees client will pay for a particular
piece of work or for a particular period of time
– Ex. Legal fees for firm’s representation in a premises liability case will
not exceed a certain amount this calendar year
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Common Types of AFAs
• Incentive or Performance Based Hold Back
– Portion of overall fee is contingent on the outcome achieved
– Ex. firm will set aside 15% of fees billed during a matter and will only
receive 15% if the firm is able to get the case dismissed before trial
• Pure Contingency
– Legal fees depend entirely upon achieving certain outcomes for the client
– Ex. client engages the law firm for representation in a breach of contract
case and will compensate the firm by paying 35 percent of the damages
recovered in the matter
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Common Types of AFAs
• Blended Rate
– Hourly rate is set for all members of an engagement team, without
regard to seniority; encourages the firm to efficiently staff matters
• Hybrid
– Combination of one or more of the above structures for a singular
matter or for an entire portfolio of the client’s business
– Ex. client pays a certain amount for all litigation of its product liability
claims and a bonus for all cases settled before trial
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TIPS FOR PREPARING AFAS
• Has your firm worked on similar cases
in the past
Defining
Evaluating
• Does your client have historical
information that they could provide
Scoping
• The more information you have, the
better your proposal will be
• Does the AFA proposal have
appropriate flexibility
Managing
Assessing
Implementing
• Defining “Value” is paramount
• Relationships are IMPORTANT
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How Can We Get Better?
• Understand your margins (all revenue is not good revenue)
• Monitor client profitability
• Be intentional about talking with the client on the front end of
the matter
– Understand what the client needs
– Focus proposals on the client, not your firm
• Matter management is paramount
• Collect appropriate data for matters (phase codes, task codes,
etc…)
• Evaluate matters at the end and incorporate what you learn
into future matters
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QUESTIONS?
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