Navigating the World of Alternative Fee Arrangements

The Network of Trial Law FirmsLitigation Management: Driving Great Results

Naples, FloridaMay 12-15, 2011

Linda S. WoolfGoodell, DeVries, Leech & Dann, LLPBaltimore, Maryland

Panel MembersLinda Woolf

Goodell, DeVriesKevin Schiferl

Frost Brown ToddNicole Bearce Albano

Lowenstein SandlerRick Barnes

Goodell, DeVries

Marjorie Adams-FranzblauADP

Rita McConnellMedtronic

Michael TroisiSamsung Electronics

What’s on the AFA Menu?Risk CollarFixed/Flat FeePhased feesFee Cap PricingTask-Based BillingBlended Hourly PricingReverse ContingencyVariations of all of the above and more

Real Life Experiences with AFAs

MedtronicFord Motor Co.ADPSamsungExperiences of Outside Counsel

Advantages of AFAs for the ClientsPerspective of corporate counsel

Cost CertaintyAlignment of Interests and GoalsEliminate time spent reviewing budgets and billsLaw firm shares in riskInstills trust and loyaltyEarly assessment of case

adds value later

Advantages of AFAs for Law FirmsPerspective of outside counsel

Predictable incomeStronger relationshipBetter understanding of client’s goalsEliminate time spent on

budgeting and billingReduce conflicts over

billing issues

Concerns/Disadvantages of AFAs for Clients

Perspective of corporate counselEarly resolution makes AFA a bad dealPush down of work to less qualified attorneysAFA matters put on back burnerFinancial cushion required by law firm may be

too largeSmaller companies lack experience to properly

price AFAs

Concerns/Disadvantages of AFAs for Law Firms

Perspective of outside counselRequires time up front for which law firm may not

be compensatedDifficulty in pricing case/engagement correctlyDifficulty determining individual attorney

compensationRisk that cost overruns will be shifted to law firm

Concerns/Disadvantages of AFAs for Law Firms

Perspective of outside counsel (cont’d)Training attorneys to focus on efficient

resolution rather than billable timeChange or increase in client’s demandsAgreeing on what is considered a “win”

Ethical Implications of AFAs

Detailed written agreementsInterests of lawyer and client divergeTermination of relationship mid-streamEntering into partnership with non-lawyersStaffing and prioritizing cases with best

interest of client in mind

Metrics

Monitoring and evaluating an AFA program

Practice Pointers

Do your homework in advanceOne size does not fit allInclude fail-safeSpread the riskInvest in up-front time with clientFlexibility is keyKeep lines of communication open