Alternative fee arrangements – AFAs – are here to stay.
The term “alternative fee arrangements” [AFAs] generally means all fees not based strictly on quoted rates for billable hours. Some versions like contingency fees and flat rates have been around forever. Newer hybrid arrangements allow both client and law firm to share the risk and offer rewards for process efficiencies and success.
AFAs assume strong relationships and teamwork.
The point of an alternative fee arrangement is to provide maximum value (as defined by clients) to the clients while simultaneously achieving profitability for the firm. The growing number of options for obtaining routine legal work requires law firms to answer “how much does it cost?” before “what will you do?” This gives firms a tremendous opportunity to demonstrate client-centricity by adjusting fees so they reflect client needs rather than billable hours.
