Law firm and client perspectives on AFAs

July 16th, 2012 by Altman Weil

ALM Legal Intelligence has released a new survey, Speaking Different Languages: Alternative Fee Arrangements for Law Firms and Legal Departments.  Some of this is well-travelled ground:  almost all those surveyed use at least some alternative fees; AFA use is increasing, but slowly; law departments like AFAs because they help to control costs and make costs more predictable; law firms like them primarily because their clients like them.

But the survey also provides some interesting new insights, particularly in the comparison between the law firm and law department experiences:

  • Law departments initiate the discussion about AFAs 81% of the time; law firms initiate only 13% of AFA discussions
  • 39% of law departments routinely make specific suggestions on how to structure AFAs; only 18% of law firms do so
  • 54% of law firms and 51% of law departments believe that firms have ‘insufficient experience defining or managing work on an AFA basis.’  Only 26% of firms and 25% of departments believe that corporate law departments have insufficient experience.
  • However, law firms are trying to close the experieince gap - 60% report AFA training efforts for partners and/or associates, while only 22% of law deparments offer training.  
  • 90% of law firms have measures in place to assess the financial success of AFAs.  In marked contrast only 20% of law departments are measuring the value of AFAs to their organizations.
  • Law departments think law firms are making steps in the right direction:  55% say law firms are more cooperative in structuring and implementing AFAs than they were two years ago.  In addition, 19% say firms are making ‘a lot of progress’ on AFAs and 59% say that are making ‘a little progress.’

Read it at ALM Legal Intelligence

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