03/03/2010 04:24:00 PM EST
An Interesting Point in Support of AFAs
Anthony Tijan's article in the Harvard Business Review about bundling services and goods goes on to make an intriguing point about Alternative Fee Arrangements (AFAs):
"I remember receiving a legal bill that carefully showed the breakdown of all the expenses. As the buyer of these services, I appreciated the detail and it ended up playing to my advantage.... One expense line item jumped out: document reproduction of an article that was priced at $600.... [T]hat single line item made us angry and caused us to question several other items, which ultimately resulted in us receiving a lower bill. A single bundled price would have benefited the legal office. We were pleased with the work overall and would have readily paid the total bill on a "value-priced" basis if it were billed as a total fee. [Emphasis mine]"
Fixed-fee billing for matters is not a one-way street. Firms can do well while keeping clients happy.
Patrick Lamb of Valorem Law Group and I are giving a talk at the Alternative Fees conference in New York in a few weeks, and we were going over our presentation on the phone this morning. Valorem is one of the leaders in AFAs in litigation, and both of us believe that AFAs in general, and fixed or flat fees in particular, can be a win/win for both firms and clients. Of course, my dog in this fight is Legal Project Management; to succeed with fixed fees, you need to control costs, meet schedules, and manage risks, and I see LPM as key to achieving those goals repeatably.
To read the entire post, visit the Lexician Blog.