The use of alternative fee arrangements for legal services is becoming increasingly common. In-house legal departments who had previously sought cost control from their outside firms are now demanding cost reductions and greater predictability. The trend towards alternative fees is part of a broader strategic shift in the way in-house counsel manages outside counsel. At Argopoint, where we advise general counsels of Fortune 500 legal departments on leading management practices, alternative fees have been one of the most powerful tools to drive efficiency and value in the legal services marketplace. More business-minded legal leaders at some of the world’s most respected legal departments are embracing this practice in a significant way. This is a marked shift from even five years ago, when alternative fees were often considered (and debated) in theory, but rarely adopted or implemented.
It seems clear that alternative fees and models are not an appropriate economic model for all legal services. This debate regarding alternative fees often overlooks that there are very effective alternative fee models and very ineffective alternative models. For those who have no interest (or incentive) to consider alternative fees, it is easy to dismiss alternative fees as “risky” or as “increasing the likelihood that the client will pay more.” Argopoint’s experience reviewing numerous alternative fee arrangements is that poorly designed alternative fees can increase risk and negatively impact economics for in-house clients.
Developing truly effective alternative fee arrangements (that improve quality and the cost-effectiveness of the legal services delivered) require effort and creativity to develop. At Argopoint, we are encouraged that forward-thinking legal departments are leading the charge to improve the way “legal does business.” All the data that we see leads Argopoint to believe more in-house corporate clients will follow suit. Our knowledge of law firms, coupled with experience advising general counsel and corporate law departments, uniquely position us to assist legal departments in designing win-win alternative fee arrangements.
Argopoint works with in-house counsel interested in alternative fee arrangements to:
- Analyze cost drivers and data: Argopoint analysts turn existing cost data into actionable information through data analysis. We break matters into their component parts and draw rational assumptions in scoping and pricing future work for alternative fee arrangements.
- Restructure work for cost-effectiveness: Argopoint works with in-house lawyers and practice groups to restructure their projects through better staffing choices, delegation and use of technology in order to reduce costs leveraging alternative fee arrangements
- Create effective alternative fee proposals: We help design alternative fee models and alternative fee arrangements that provide the value at the right cost.