Alternative Fee Arrangements (AFA) are Not as Hard as You Think

Last week I spoke at the Ark Group Conference on Alternative Fee Arrangements (AFA). I gave a short presentation called Unbundling Repetitive Aspects of Large Matters, my effort at de-mystifying and simplifying alternative fees. 

Inside and outside counsel would find AFA easier if, instead of thinking about entire matters, they thought about the components of big matters. By big matters I mean single large matters such as major litigation or an M&A deal or “portfolio” matters such as real estate transactions, sales contracts, or managing NDAs.

These big matters typically include high volume, repetitive elements that can be treated as fairly discrete activities and therefore costed and priced separately. Here are some examples of common “discrete activites:”

The key to achieve reasonable alternate fees for both clients and firms is to unbundle these and other high volume tasks and treat them as discrete activities. Doing so can lower the cost and improve the predictability. All that’s needed is to apply the appropriate selection of process, technology and human resources:

• Process
• Workflow analysis
• Metrics and QC
• Data analytics (EDD)
• Knowledge management
• Business intelligence
• Project management
• Technology
• Document assembly
• Conceptual review tools
• Repositories
• Contract management
• Human Resources
• Paralegals
• Contract lawyers
• Outsourced lawyers (onsite, onshore, offshore, multi-shore)

By unbundling – that is, separating matters into discrete “chunks of work” – and then applying the tools above, tracking costs and effort, and monitoring and repeating the process to refine estimates, clients and lawyers likely will find that they reduce cost and, as important, make cost more predictable. That in turn should make AFA much easier.

Am I missing something, or is AFA easier than meets the eye?