You Should Push For Alternative Fee Arrangements

“The death of the billable hour has been foretold for years, but it’s still prevalent,” writes Michael S. Zullo in this Today’s General Counsel Article. He suggests that legal departments should push for alternative fee arrangements (AFAs) and outside counsel who haven’t begun to take them seriously should do so. An AFA has many advantages, he says, among them simplicity and the fact that it “eliminates much of the administrative, non-productive time spent by outside counsel preparing the bills, and the corresponding time spend by the in-house lawyer approving the bills.” Fear of over-committing to the unknown can be an issue, he acknowledges, particularly for outside counsel, but he says this can be tempered by thoughtful drafting of agreements at the outset in a way that leaves room for exceptional circumstances and complications. This article includes a listing and brief description of some variations on the AFA concept, including fixed fees, capped fees, annual fees, blended hourly rates, and failed deal rebates.