Alternative Fee Agreement Savings: Real or Illusory?

As I have stated in prior posts,  when it comes to the subject of alternative fee agreements (AFA), clients and their lawyers have diametrically opposing reasons for wanting to enter into them. When lawyers bring up the subject of AFA, it is usually with the idea of possibly making more money than they could than by doing straight hourly billing. And when insurers or other corporations bring up the subject of AFA, it is usually with the idea of possibly saving money.

When it comes to whether clients can save on legal costs by moving to flat fee billing – especially when lawyers are looking to make more money – I must admit to being a skeptic. Most flat fee agreements produce winners and losers which is hardly a good basis for measuring the true success of a flat fee agreement or to promoting a long term relationship. Moreover, most flat fee agreements that I have seen are focused too much on costs and ignore other vital measurements of success.

Adding to my skepticism are the articles or posts on discussion group sites I have read. The attorneys and insurers or corporate lawyers who write the articles or posts boast about the success of their flat fee agreements but offer few details on how that success is measured. Continue reading