http://www.wilmerhale.com/about/alternative_fee_arrangements/

blog.larrybodine.com/2012/07/articles/money/survey-finds-slow-adoption-of-alternative-fee-arrangements-for-legal-services/

http://lawmarketing.com/alternative-fee-arrangements-new-and-better-ways-to-price-legal-services/#

http://www.jaffepr.com/about-us/industry-insight/white-papers/marketing-law-firm-value-alternative-fee-arrangements

http://www.wilmerhale.com/about/alternative_fee_arrangements/

http://abovethelaw.com/wp-content/uploads/2013/01/Citi-Hildebrandt-2013-Client-Advisory.pdf

http://www.geeklawblog.com/2012/08/toby-brown-on-iltatv-afa-or-lpm-find.html

Law �rms and their clients are clearly comfortable with using billable hours as a primary payment structure, and while AFAs may be o�ered, they are not necessarily widely used. However, there’s little doubt from legal practitioners that this will change in the coming years. For law �rms willing to get ahead of the curve, there looks to be considerable opportunities with AFAs to increase e�ciencies, increase revenues and better meet their clients’ expectations.

CONCLUSION

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84%

somewhat to very

satis�ed

72%

somewhat to very

satis�ed

Who is happy about using AFAs?

9%2% 3%

Not SureYes No

88%

6%

92%

Do you think AFAs will remain a permanent part of legal matter billing?

19% said: A lot of progress

59% said: A little progress

18% said: Hardly any progress

5% said: Not sure

Relative to two years ago, do you think law �rms are making progress with AFAs?

DecreaseIncrease Remain the same

4%

26%

70%

2%

14%

74%

Do you expect to see an increase or decrease in the use of AFAs?

Both Law Firms and Legal Departments believe AFA work will increase,

but each side sees it slightly differently.

WHAT DOES THE FUTURE HOLD?

Do not even know what percentage of their legal work was billed using a method other than the billable hour or

discounting.

6% 17%

vs.

2011 2011

A bad sign?

2011 2012 2013

19%

16%

67%

used AFAs for less than 1/4 of their

billing in 2011.

AFA billing as a percentage of revenue

Despite wide adoption, AFAs still represent a low percentage of Law Firm revenue

REVENUE FROM AFAs

said they initiated

jointly initiated law �rm initiated54% 18% 3%

AFA AFA AFA AFA

Clients, not law �rms, are spearheading the use of AFAs, and the largest companies are leading the charge. GC’s and CLO’s reported the following:

AFA Growth

Why Isn’t It Used More ?

52% said: Law �rms are more comfortable with the billable hour

40% said: Corporate law departments are more comfortable with the billable hour

10% said: AFAs are too risky for the �rm's overall revenue

4% said: Partners object or refuse to cooperate

61% said: Law �rms are more comfortable with the billable hour

32% said: Law �rms resist alternative fee arrangements

Biggest perceived obstacles to wider adoption of AFAs

95% of law �rms now o�er some kind of AFA, and all �rms with 150+ lawyers do so.

Breakdown of billing type for companies with annual revenues of +$1 billion

�at fee

partial �at fee

46%

billable hour

12%60%

12% of legal departments used AFAs for more than 1/2 of the legal work they assigned to outside counsel in 2011.

Widely Adopted.. ..but not Widely Used

Law Firms

Law Departments

ADOPTION RATES

Alternative•Fee•Arrangements (AFA)In the practice of law, AFA’s occur when payments to a law �rm are based on a method other than billable hours.

Law �rms are under increasing pressure from clients to reduce costs and justify expenditures, and are showing a growing interest in Alternative Fee Arrangements (AFAs) to add more value. But while there's lots of buzz surrounding this new billing structure, how widely is it actually being adopted? And how will the use of AFAs fare in the future? These stats shed some light...

Alternative Fee Arragements The Facts Behind The Buzz