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Do Alternative Fee Arrangements Work? - A Real World Test

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Many purchasers of legal services are still wondering: Do alternative fee arrangements work in the real world? There is a way to find out - test an AFA pilot program in the real world with the right law firm partner.

The best way to select a law firm partner to work with you to build a successful AFA program is to "check under the hood" of your law firm candidates. Traditional law firms are fairly criticized for showing little or no evidence that the "get it" when it comes to re-tooling for cost efficiencies and work methods. How is the law firm designed and run? Are they doing business the same way they did 5, 10 or 20 years ago? Most are.

Measure your law firm by the following check list of key indicators. A good AFA law firm will include most of the following features:

  1. Paperless - all digital document management (simple, inexpensive and efficient - if the firm is not digital, this is the #1 indicator they don't get it!)
  2. Virtual Associates and Support Staff (the firm should have at least some of its professional and support staff outside the expensive "brick-and-mortar" structure).
  3. Scalability (the firm should incorporate "just-in-time" resourcing to address peaks and valleys of work load swings - E.g. part-time, home based lawyers that can work more hours during trial).
  4. Leveraged Technology (the law firm should have more than just legal research software. Do they harness their knowledge though a specialized database? Do they track key indicators of results such as the firm's track record with specific ADR professionals? If not, move on.
  5. Firm Leadership (check to see if the firm is following the AFA trend, or leading it).

Once you have identified the right AFA law firm partner and program, put them head-to-head against your best traditional hourly firm over at least a 36 month timeframe. In your test market, give 50% of your work to your best traditional hourly firm and 50% to the AFA firm let them battle it out. If the AFA program works, expand it.

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