Creating Alternative Fee Arrangements Focusing On Value

In-house counsel hire outside counsel for specific purposes, for example: to document and implement a transaction; to obtain a favorable outcome in a dispute; to provide specialized expertise or counsel; or to provide guidance for complying with a regulation. These services derive their value from the outside lawyer's ability to deliver a favorable result at the most efficient cost – addressing exposure to risks without an undue level of effort and cost.

For decades, law firms have used the legal industry's preferred economic model – the billable hour – to track time as the primary method of determining value. However, the time it takes a lawyer to perform a particular task doesn't always relate to the value of the legal service to the client. In these instances, clients are demanding that lawyers explore ways to better translate the value of the services rendered.