The legal market is remarkable for its lack of solid market research. There is much discussion about alternate fee arrangements (AFA), for example, but little data about how extensive the market is. I’m going to take a flyer and estimate total AFA from one data point.
I learned to generate estimates from virtually no data as a management consultant. I frown on this practice but my goal here is more to provoke others to come forward with data than to call the market size.
The Alternative Pricing page at Hildebrandt.com reports that “Hildebrandt consultants have assisted law firms in the development and implementation of pricing strategies that have resulted in over $1.8 billion worth of non-hourly engagements in just the last year alone.”
I don’t know Hildebrandt’s share of legal market consulting. It’s big, long-established, and widely cited. I’ll assume it’s share is 30% and that its competitors provide comparable (to their size) levels of AFA advice. With these admittedly SWAG assumptions, then the AFA market is worth $6.0 billion (= 1.8 / 0.30). That’s less than 10% of the AmLaw 200 revenue (which was $80 billion in 2008).
Can anyone step forward to refine this estimate? If it’s right, does anyone else think the number is really low given all the general counsel bluster about fees?