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Four Reasons Why Alternative Fees are here to Stay

As we can see from search trends, AFAs spiked dramatically in 2008 and have remained high.

As we can see from search trends, AFAs spiked dramatically in 2008 and have remained high.

As we can see from search trends, AFAs spiked dramatically in 2008 and have remained high.

When Law Technology News Editor-in-Chief Monica Bay took the stage at ILTA to run a Q&A following Tuesday’s key note presentation she made a reference to alternative fee arrangements: She’s been forecasting the rise of AFAs for 15 years and while AFAs are certainly a hot topic, the prominence and longevity of AFAs is still debated.

AFAs dominated the discussion in a later panel titled, Sorting It All Out: Law Firm Competitive Intelligence.  Undoubtedly, the panelists believed AFAs were here to stay, and near the end of the session, I had the chance to ask them why: Given Monica’s rightful assessment, why are AFAs here to stay now?

The answers I heard in response were economic pressure, better tools, the availability of data and refined skill sets. Here’s how we see those answers in a broader context:

1. Economic pressure.   At the tail end of a recession that brought AFAs to the forefront, this is the new normal. The demand curve simply won’t support the billable hour model.

2. Better tools.  As technology developers we’ve gotten better at devising intuitive tools that work how legal professionals work.

3.  Data availability. Google CEO Eric Schmidt once said we create as much information in two days as we did from the dawn of civilization up until 2003.  We see it firsthand every day:  Our law firm customers are using tools like Redwood Analytics to sift through reams of data to find business insights – and there are billions of dollars in law firm bills running through our own enterprise legal management system, CounselLink, annually.

4. Refined skill sets. Experience comes with time, and there’s little doubt that law firms and GCs alike are getting better at scoping AFAs. Add to the mix, that corporate procurement professionals are increasingly involved in bringing law firms onboard for legal projects.  One panelist remarked that he’s seeing in-house counsel being removed from the pricing discussions altogether.

We’d add two more points to this list of reasons:

You’re turn!  What would you add, debate or change about the discussion on AFAs?

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About Frank Strong

Frank Strong
Frank Strong is the communications director for the LexisNexis software division located on NC State’s Centennial Campus in Raleigh. In this capacity, he leads communications efforts in support of software products for law practice and law department management and also litigation tools – across large law, small law and corporate counsel segments. With more than 15 years of experience in the high-tech sector, Strong previously served as director of public relations for Vocus, which developed marketing, PR and media monitoring software. He has held multiple roles both in-house with corporations, ranging from startups to global organizations, and has also endured the rigors of billable hours, having completed gigs at PR firms including the top 10 global firm Hill & Knowlton. A veteran of two year-long deployments, Strong has concurrently served in uniform in reserve components of the military for more than 20 years, initially as an enlisted Marine and later as an infantry officer in the Army National Guard. Strong holds a BA in Film and TV production from Worcester State University, an M.A. in Public Communication from American University, and an M.B.A. from Marymount University. He is a PADI-certified Master Scuba Diver and holds a USPA "B" skydiving license.