Redwood Analytics

I realized when I started this series that hypothetically it could go on forever.  In previous posts, we have discussed fixed fees, capped, fees, contingent work, value based pricing, retainers, and other alternatives to the standard hour arrangement.  The interesting part is we have just scratched the surface and there are new arrangements being created every day.  Frankly, I think that is great. 

There is no doubt that alternative arrangements quickly became the hottest topic this year.  It is by far the number one topic firms are asking about.  As firms and clients are looking for additional predictability with acceptable results (in terms of payment for the firm and results for the client) you have brilliant minds coming up with new and improved alternative arrangements.  Clients, attorneys, and consultants alike are creating ways to work within the confines of this economy, demand for services, and need for predictability.

Last month the Association of Corporate Council held their annual meeting and at the event new alternative arrangements were discussed.  Granted most of them are variations off of current ones that we have posted on before.  As an example, risk sharing was discussed which falls directly in line with sharing success in capped fee arrangements.   One discussion item I do want to mention was "exclusivity in exchange for a discount."   I don't necessarily like tying this arrangement with the term "exchange for a discount."  Instead I think that it should apply to all proactive alternative arrangements. This is not new as we have addressed gaining exclusivity by proactive customer service, cross selling, and pricing for years.  The difference is that in all of those scenarios we have worked under the umbrella that by being proactive internally with cross selling and providing additional value to the client, additional work would follow.  In this arrangement your firm essentially assures itself at the first shot on forthcoming matters.  Part of me thinks this is just solidifying what should already happen, but heck if it adds security of a chance at additional work to the firm and quality with cost predictability to the client, then it makes sense.

This is just one of many examples of alternative arrangements that are being coveted by firms and clients alike.  It just provides more evidence that this change in the legal industry is structural and those attorneys biding their time thinking it is cyclical need to wake up.  Alternative arrangements are not new, nor will they go away.  Each day that goes by new examples are created and they become more and more engrained into the inner-workings of this industry.