Most firms value close relationships with their clients. Each positive interaction leads to greater job satisfaction on the part of the client and greater investment on the part of the attorney. In fact, many firms work hard to cultivate these strong, mutually beneficial relationships. Over the past year, one tactic to improve client satisfaction has grown increasingly popular – alternative fee arrangements.
If your law firm spends a significant portion of time working as outside counsel to corporate clients, it’s time to consider alternative fee arrangements. In this article, we’ll answer your common questions, share some of the benefits of alternative fee arrangements, and offer our tips for adopting this new strategy.
What is an alternative fee arrangement?
Alternative fee arrangements are essentially a replacement for billable hours. The most high-profile example of this system can be found at Microsoft and their outside counsel. Microsoft pays the law firm a monthly flat fee, with a discretionary bonus based on performance. Hours are no longer monitored and billed individually.
How does this system benefit my clients?
For large corporations, particularly those in the technology sector, working with outside counsel can be an exercise in frustration. In order to provide the best legal advice, your firm must have an intimate knowledge of relevant regulations as they evolve. Furthermore, you’ll need to keep up with changes inside the company and changes that might affect a product or service. When working by billable hours, most clients do not want to allocate time for their outside counsel to get involved and immersed in their business. This results in frustration from the in-house legal team, and ineffective advice from the outside firm.
By transitioning to an alternative fee arrangement, you’ll have more time to spend on the work that matters most. For example, in the case of Microsoft, their outside counsel now focuses on strategic priorities and measurable outcomes. Moreover, your client will feel a greater sense of connection with your firm. When they’re not worried about racking up billable hours, clients are more likely to reach out for advice on small decisions. They can also freely provide the information needed to immerse your firm with daily operations. That immersion directly translates to more valuable contributions and greater client satisfaction.
How does this system benefit my law firm?
The most obvious benefit of the alternative fee arrangement is that it eliminates the hassle of time-tracking and billing. Of course, the benefits for your firm don’t stop there! Increased client satisfaction means better client retention. By becoming an integral part of daily operations, you can ensure a continued, long-term relationship. Individual attorneys feel more fulfilled as they deliver meaningful and nuanced advice, and over time they develop expertise, which reduces the time they must spend on more basic issues pertaining to each case.