Predicting the future has become a critical skill for lawyers—at least when it comes to budgeting for case work. Clients want as much certainty as possible for planning and allocating legal expenses, which inherently carry uncertainty. Consequently, clients routinely ask for fixed-cost alternative fee arrangements (AFAs), requesting law firms help shoulder the ''uncertainty'' burden.
This shift in fee arrangements means lawyers must develop a new set of skills, in addition to their legal expertise. When an AFA is used, it's critical for law firms to employ precise planning and budgeting practices because any miscalculations in an underlying fixed-fee arrangement can directly impact the value proposition for the client and the firm. In recent years, we have crafted numerous AFAs for civil litigation matters, which involve some of the most unpredictable work in the industry. However, by deploying a few basic strategies to mitigate risk and avoid pitfalls, firms can increase their chances of executing effective and successful AFA arrangements for their clients.
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Originally published by Bloomberg BNA's Corporate Law & Accountability Report, October 2017
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